US Unions Win Big Raises in Tight Labor Market; Boeing Workers Eye Strike


In the US labor market, unions have successfully negotiated substantial contracts due to tight labor circumstances, with substantial salary increases in fields like auto and aviation in 2023. However, Boeing, unlike auto industry workers, is struggling with financial losses and a competitive market dominated by Airbus following a shocking incident with the Alaska Airlines Boeing 737 MAX jet. The IAM union, which represents the Washington state workers building Boeing’s 737 MAX jets, is pushing for improved retirement perks and significant wage raises.

US Labor Market Sees Hefty Union-Driven Contracts

Workers in diverse sectors in the US have benefitted from tight labor markets, with sectors including mainline pilots and autoworkers witnessing significant wage increases in 2023.

Boeing Struggles amidst Airbus’ Dominance

Unlike auto industry counterparts, Boeing faces financial difficulties, losing $2.2 billion in 2023 and $5 billion in the previous year, largely due to increasing competition from rival Airbus and issues with its 737 MAX aircraft.

IAM Union Demands Better Salary and Benefits

The IAM union, representing over 30,000 workers in Washington who manufacture Boeing’s 737 MAX jets, seeks improved retirement benefits and significant wage increases, citing years of stagnant earnings.

The Seattle-area workers represented by the IAM’s District 751 President, Jon Holden, suggest an urgent need for better compensation. Worker strikes are planned for consideration after the contract ends on September 12, having ratified a contract in 2008 and approval of extensions in 2011 and 2014.

Boeing Optimistic about Negotiating a Beneficial Deal

Boeing expressed confidence in their ability to negotiate a deal that satisfies their workforce and enables them to succeed in a tough global market. The company seeks to balance the union and workforce’s needs with their business goals. An anonymous official confirmed that workers’ take-home pay has maintained pace with inflation over the last decade, with contracts detailing yearly cost-of-living adjustments.

Momentum for Pay Increases Amid High Inflation

Contrarily, Holden asserted the workers’ difficulty in managing high inflation despite four 1% pay rises over the last eight years and a pension freeze since 2014. High inflation coupled with the increasing cost of living essentials, has led to strong momentum pushing for better pay.

Likelihood of Strike

Analysts predict a workers’ strike is highly likely considering union leverage and worker disappointment with the terms of the 2014 extension. Added to this, the US aviation regulators have restricted Boeing’s production due to safety scrutiny. David Nolletti, Head of the Aerospace practice at Riveron consultancy, believes the IAM possesses substantial leverage in the current scenario and anticipates a strike unless management meets most of their demands.

Political Support Possible

It’s also likely that workers might gain political backing, considering President Joe Biden’s emphasis on supporting labor, demonstrated during his visits to auto workers’ picket lines last year.

Strategic Investment Insights

Investors with stakes in Boeing should keenly follow the developments in the ongoing talks between the IAM and Boeing. Given the potential strike and the earlier financial losses, there may be short term turbulence for the aviation giant. However, investors should remember that despite its recent struggles, Boeing continues to be a leading player in a duopoly market. Closely observing how the labor dispute unfolds will be crucial, as a strike could further impact production deliverables and profits. The company’s ability to navigate these issues will be a strong indicator of its potential success and long-term stability.


PIP Penguin