Hyundai Joins Honda and Toyota by Increasing Worker Wages

Hyundai, the South Korean car manufacturer, has come on board alongside Honda and Toyota to increase the wages of its factory workers. This move comes in the wake of new contract agreements the United Auto Workers (UAW) union successfully negotiated with Detroit automakers.

Hyundai announced on Monday a projected wage hike of 25% for its factory workers by 2028, aligning with the general wage increase the UAW secured in the same time frame. Toyota will commence the new year with a salary increase of 9% to 10% for its factory workers in January, while Honda announced an 11% wage increase for the same period.

Speculations from labor analysts suggest these wage increments are largely a strategic move to counteract UAW President Shawn Fain’s attempts to unionize U.S. car factories operated by international automakers and Tesla. This is aimed at extending the union’s negotiation power. Fain indicated that nonunion plant auto executives are escalating wages out of fear, dubbing Toyota’s salary hike the “UAW bump.”

Both Toyota and Honda have also expedited the time it will take for a new employee to attain the maximum pay rate, matching or nearly matching the time frame set in the new UAW contracts.

Harry Katz, a professor of collective bargaining at Cornell University, surmised that the UAW settlement likely influenced the wage raises at nonunion factories. Katz pointed out the strong labor market and the flourishing state of these companies as other contributing factors. “They’ve always wanted to stay nonunion, and they try to stay close to the Detroit top-tier wages,” Katz stated.

Hyundai, while announcing its wage increase, did not disclose the current hourly wage at its Montgomery, Alabama, factory or the anticipated pay at its upcoming electric vehicle factory near Savannah, Georgia. However, the company projects a 14% wage increase for factory workers within the next year.

Katz estimated Hyundai’s current wages to be about $25 per hour, and he noted that the retirement, healthcare, and other benefits at these nonunion plants usually do not match those offered to UAW workers.

Toyota’s top factory worker pay is set to reach $34.80 per hour in January following its increases. Although Honda has not released its intended hourly rate, analysts predict it will be on par with Toyota’s.

Despite the UAW’s new contract, Katz noted that it may not persuade workers at nonunion plants to join the union, given that these plants are often located in regions typically wary of unions.