Fourth in a series on jobs whose pay system matters more than the salary. Previous entries covered airline pilots, railroad crews, and harbor pilots. This one is the closest to home, because the thing the UAW won back in 2023 is the exact thing most American workers have never had: a raise that fires automatically when prices rise. Every figure is cited, and where the contract and the press release disagree, I use the contract.
In 1948, General Motors and the United Auto Workers signed a two year agreement containing what the Bureau of Labor Statistics later called "two adaptive wage clauses." One of them tied wages to the Consumer Price Index. For every 1.14 point change in the index, up or down, wages moved by a cent. Reviews happened quarterly.
That clause is the origin of the cost of living adjustment in American labor. By the end of 1950, roughly two million workers were covered by escalator clauses. By the end of 1951, about three and a half million.
In 2009, in the middle of the financial crisis and the bailout, the UAW gave it up.
In 2023, after a strike, they got it back. This is what it actually says, and what it has actually paid.
The documentary proof, which is better than the press release
You can watch the suspension and the restoration happen in the contracts themselves, which is more persuasive than anyone's characterization.
The 2019 GM national agreement contains Document No. 4, titled "Suspended Agreement Provisions." It reads, in part, that the suspension of the following will continue: "Cost of Living Allowance, Paragraphs (101)(d) through (101)(l)" and "COLA Calculation, Document 87." The identical letter in the 2015 agreement says the suspension continues through the term of the 2011 agreement.
In the 2023 agreement, that letter is gone entirely. Document No. 4 is now about paid parental leave.
One clause, present in three consecutive contracts and absent from the fourth. That is what fourteen years of a surrendered escalator looks like on paper.
What the restored formula actually says
Here is where the contract is more interesting than the coverage, in four ways.
It does not run off headline inflation. The index is the CPI-W for All Items Less Medical Care, not the CPI-W everyone quotes. That is a deliberate choice, and it interacts with the next point.
It is quarterly, with 18 scheduled adjustments, the first calculated off August through October 2023 and paid in December 2023, the last calculated in early 2028 and paid in March 2028. The base is the average index for May, June and July 2023, stated in the contract as 289.128.
The rate is one cent for each 0.090 change in the index. The pre-2009 GM formula was engineered to pay one cent for each 0.08159 change. The restored clause is therefore roughly ten percent stingier per index point than the one that was surrendered. Winning something back is not the same as winning it back on the old terms.
And then there is the diversion. Each quarterly increase "shall be reduced by ten cents, or by the amount of the increase, whichever is less," to fund healthcare. The contract adds that the sum of those diversions "will continue into perpetuity."
What it has paid, which is the part nobody reports
Through the September 2025 adjustment, the formula generated 1.75 dollars an hour in gross cost of living allowance. 0.65 of that was diverted to healthcare. Workers actually received 1.10 dollars an hour.
The diversion absorbed 37 percent of the escalator. And in two separate quarters, the entire quarterly increase was consumed by the ten cent diversion, so workers received nothing at all from the COLA those quarters.
At 2,080 hours, the 1.10 dollars actually paid is worth about 2,288 dollars a year. The union projected 1.78 dollars an hour over the full term, or roughly 8,800 dollars per worker.
There is also a genuine curiosity coming. The Bureau of Labor Statistics never published an October 2025 CPI-W, because of the lapse in appropriations that year. The contract addresses an index "not issued before the effective date." It does not address an index that will never exist. How the parties handled that quarter could not be verified.
The three numbers that all get called "the raise"
This is the most useful thing in the article for a reader trying to make sense of headlines, because all three are circulating and they mean different things.
| What it is | Figure | What it actually measures |
|---|---|---|
| Simple sum of the wage increases | 25% | 11 + 3 + 3 + 3 + 5, added up. Not how compounding works. |
| Compounded general wage increase | 27.36% | 1.11 × 1.03 × 1.03 × 1.03 × 1.05. The honest base wage figure. |
| The headline | ~33% | Compounded increases plus a projected 1.78 dollar COLA. An estimate, not a contractual guarantee. |
The general wage increases are 11 percent on ratification, retroactive to October 23, 2023, then 3 percent in each of 2024, 2025 and 2026, then 5 percent in 2027. The contract runs to April 30, 2028.
Only the middle number is a promise. The headline depends on what inflation does, which is the entire point of an escalator and also the reason you should not treat it as guaranteed money.
What a junior and a senior worker actually earn
At ratification rates, annualized at 2,080 straight time hours, which is the union's own convention:
Junior, a new hire at the 70 percent step:
| Employer | Hourly | Per week | Per month | Per year |
|---|---|---|---|---|
| Ford | $24.91 | $996 | $4,318 | $51,813 |
| GM | $25.12 | $1,005 | $4,354 | $52,250 |
| Stellantis | $24.68 | $987 | $4,278 | $51,334 |
Senior, topped out:
| Employer | Hourly | Per week | Per month | Per year |
|---|---|---|---|---|
| Ford | $35.58 | $1,423 | $6,167 | $74,006 |
| GM | $35.88 | $1,435 | $6,219 | $74,630 |
| Stellantis | $35.26 | $1,410 | $6,112 | $73,341 |
By the end of the contract in 2027, a GM top rate reaches 41.17 dollars on the wage increases alone, or about 85,634 dollars a year, and roughly 89,336 with the projected COLA.
None of that includes overtime, shift premium, or profit sharing, and profit sharing is not small. Over the four years before the contract, eligible payouts were worth about 26,800 dollars at Ford, 40,000 at GM, and 44,700 at Stellantis.
The tier system, and the three years that replaced eight
The gap between those two tables used to take eight years to close. Now it takes three, and that is arguably the biggest win in the agreement.
The two tier structure dates to 2007, and GM described it plainly in its own annual report that year: new hires in the lower tier "will receive base wages of approximately 15 dollars per hour versus approximately 28 dollars per hour for existing employees," plus higher cost sharing, a cash balance pension, and a dollar an hour 401(k) contribution instead of retiree medical.
Under the 2019 contract, a new hire started at 18.04 dollars, about 37,523 a year, and climbed through eight annual steps to a 32.32 top rate. The 2023 contract replaces that with four steps: 70 percent of the top rate for the first year, 75 percent after one year, 85 percent after two, and the full top rate after 156 weeks.
Temporary workers did even better proportionally. Starting pay went from about 16.67 dollars to 21.00. Everyone with three months of continuous service converted to full time on ratification, with a hard nine month cap for everyone else. Converted temps kept their original hire date for seniority. And they became eligible for profit sharing for the first time since the plan began.
Ford's own arithmetic for a temporary worker riding the new progression to the top is a 145 percent compounded increase, before COLA.
The one clause that still divides the workforce
Here is the sentence that matters most, and it is nine words long.
The 2023 In-Progression memorandum says workers hired on or after October 16, 2007 are covered by the benefit plans "except for the UAW-GM Hourly-Rate Employees Pension Plan, Exhibit A."
One exception clause. Two workers doing the same job, on the same line, at the same wage, land in completely different retirements depending on which side of a date in 2007 they were hired.
The legacy worker accrues a defined benefit of 58.55 dollars per month for every year of credited service. That figure went up by five dollars in 2023, which was its first increase since 2007. A thirty year worker accrues:
30 years × $58.55 × 12 months = $21,078 a year, guaranteed for life
The post-2007 worker gets a 401(k) contribution that the 2023 agreement raised from 6.4 percent to 10.0 percent of straight time hours, with no employee contribution required. On a topped-out GM wage of 74,630 dollars, that is about 7,463 dollars a year into an account.
Ten percent non-elective is genuinely good. It is better than almost any private sector match, and it is real money the worker does not have to fund. But it is not the same instrument. The pension is guaranteed lifetime income and the account is a balance, with market risk, sequence risk and longevity risk all sitting on the worker.
The union does not pretend otherwise. Its own materials say: "Though the union did not win back defined benefit pensions for post-2007 hires, the employer contribution to their 401(k)s is massively boosted to 10 percent."
And there is a tell in the agreement itself. It lets In-Progression members buy an annuity at a discount using their 401(k) funds. That provision exists because an account is not a pension, and everyone at the table knew it.
The twelve flat years
If you want one number that explains why 2023 happened, it is this one.
Average hourly earnings for production workers in motor vehicle manufacturing were 29.31 dollars in 2007. In 2019 they were 29.61.
Nominally flat for twelve years, across a period when the CPI-W rose roughly 22 percent. That is a substantial real pay cut delivered without a single announced wage reduction, just by holding a number still while prices moved. It is the same mechanism as the railroaders' six dollar meal allowance, at national scale.
Then the same series jumped 15.1 percent inside 2023 alone, from 32.20 in January to 37.07 in December, and reached 40.26 by May 2026.
One more thing worth noticing, because it is where the story is not finished. The 2023 contract covered assembly plants. In the May 2025 federal data, assemblers in motor vehicle manufacturing averaged 31.76 dollars an hour, while assemblers in motor vehicle parts manufacturing averaged 21.43. That ten dollar gap is a tier the contract never reached.
What a salaried reader should take from this
An escalator is the whole ballgame, and it is rarer than you think. The UAW had one from 1948 and lost it in 2009. Most workers have never had one at all. Everything else in this series, the pilots' indexed per diem, the railroaders' frozen meal allowance, the harbor pilots' rates benchmarked to other ports, is a version of the same question: does your pay adjust by formula, or does it adjust when someone decides?
Read the offsets, not the headline. A restored COLA that pays one cent per 0.090 instead of per 0.08159, and then diverts the first ten cents of every quarterly increase to healthcare, delivered 1.10 dollars of the 1.75 it generated. Thirty seven percent went somewhere else. The headline said 33 percent; the contract says something more complicated.
Compounding is not addition. Eleven plus three plus three plus three plus five is 25. The actual compounded increase is 27.36 percent. Anyone quoting the sum of percentages is doing it wrong in your favor here, and will do it wrong against you somewhere else.
And watch for the date-of-hire line. The single most consequential clause in this contract is an exception naming October 16, 2007. Structures that split a workforce by hire date are common, they are usually invisible from outside, and they are almost never reversed. If you are evaluating an employer, the question is not what the benefits are. It is what the benefits are for people hired now.
That is the same lesson the pilots piece reached from the opposite direction, where FedEx raised its pension for existing workers in the same contract that closed it to everyone arriving after.
Related reading
- How airline pilots are paid: credit hours, rigs, and an 18 percent non-elective retirement contribution.
- How railroad workers are paid: paid by the mile, and a meal allowance frozen since 1994.
- COLA versus the merit raise: the argument this contract is a live demonstration of.
- The raise written into the contract: the wider set of workers whose raise is a document.
Fact-check notes and sources
Contract provisions are cited to the ratified agreements published by the union. Where a union summary and the contract text differ, the contract text is used.
- The 1948 origin, including the quarterly review cadence and the one cent per 1.14 point formula, is from the Bureau of Labor Statistics Monthly Labor Review, which also supplies the escalator coverage figures for 1950 and 1951.
- The suspension and restoration are documented in the agreements themselves. Document No. 4, "Suspended Agreement Provisions," appears in the 2019 GM national agreement and in the 2015 agreement, and is absent from the 2023 agreement. No SEC filing from Ford or GM names the COLA suspension, so this is documented from contract text and union statements rather than corporate disclosure.
- The restored formula, including the CPI-W All Items Less Medical Care index, the quarterly cadence and 18 adjustments, the 289.128 base, the one cent per 0.090 rate, the ten cent healthcare diversion continuing in perpetuity, and the 2028 fold-in, is contract text at GM paragraphs (101)(d) through (h), with identical provisions in the Ford and Stellantis agreements. The pre-2009 rate of one cent per 0.08159 is from the superseded GM Document 87.
- What the COLA has actually paid (1.75 dollars generated, 0.65 diverted, 1.10 paid through the September 2025 adjustment) is computed from the published CPI-W series applied to the contract formula. It is arithmetic from cited inputs rather than a published figure, and it is labeled as such. The absence of an October 2025 CPI-W is recorded in the BLS footnote file as "data unavailable due to the 2025 lapse in appropriations"; how the parties handled that quarter is unverified.
- The wage schedule of 11 percent plus 3, 3, 3 and 5 percent, and the April 30, 2028 expiry, are contract text and are also stated in GM's FY2023 annual report. The compounded 27.36 percent figure is my arithmetic. The roughly 33 percent headline includes a projected COLA and is an estimate, not a contractual guarantee.
- Rate tables and annual figures: hourly rates are from the union's contract highlighters and the agreements' rate schedules; annual figures are my arithmetic at 2,080 straight time hours, the union's own convention, and exclude overtime, shift premium and profit sharing. The Ford highlighter is the source for the end-of-contract projections and the profit sharing history.
- The tier structure: the 2007 origin and the approximately 15 versus 28 dollar description are from GM's FY2007 annual report. The October 16, 2007 boundary, the four step progression, and the pension exclusion clause are contract text in the 2023 In-Progression memorandum. The reduction from eight years to three is confirmed in GM's FY2023 annual report and in Stellantis' equivalent filing.
- Retirement: the 58.55 dollar monthly basic benefit per year of credited service and the five dollar increase, its first since 2007, are in the 2023 UAW-GM pension plan Exhibit A. The 401(k) increase from 6.4 to 10.0 percent with no employee contribution required is from the union highlighters and is stated in GM's annual report as a 3.6 percentage point increase. The thirty year pension figure and the 401(k) dollar figure are my arithmetic. The union's own acknowledgment that defined benefit pensions were not won back, and the annuity purchase provision, are from union materials.
- The twelve flat years: average hourly earnings of production and nonsupervisory employees in motor vehicle manufacturing are BLS series CES3133610008 from the published data files. The parts plant comparison is May 2025 Occupational Employment and Wage Statistics for motor vehicle manufacturing versus motor vehicle parts manufacturing. Note that the older team assemblers occupation code has not been published separately since May 2016, so industry level figures are used instead.
This post is informational and journalistic, not career, legal or financial advice. It describes published collective bargaining agreements, securities filings and government wage data. Contract rates escalate on scheduled dates and the agreement runs to April 2028, so verify current status before relying on any figure. Mentions of specific employers and unions are nominative fair use, and no affiliation is implied.
