Even companies without Boeing's massive employee numbers can draw lessons from the machinists' strike at the aerospace giant that ended last week, according to a Cornell University labor relations expert.
The International Association of Machinists and Aerospace Workers union members voted to approve the company's third contract offer, increasing wages by 44% over the next four years and ending a seven-week strike for the 33,000 workers. The biggest lesson from the strike: Long-term labor contracts are risky, says Art Wheaton, director of labor studies at the Buffalo office of Cornell's School of Industrial and Labor Relations.
Wheaton traces the roots of the strike to a company-friendly contract signed 10 years ago that fomented worker resentment. "Sometimes you can win the battle and lose the war," he says.
Ten years ago, Boeing went to court to force a vote on a contract proposal over the objections of the local union bargaining team, and the union approved it with a bare 51% majority. That contract eliminated the union's defined-benefit pension and locked in small increases to wages, which cut company costs but also set the stage for billions of dollars in losses from the 2024 strike—likely much more than what Boeing saved during the long-term labor pact, Wheaton says. An analysis by the Michigan-based Anderson Consulting Group estimated that Boeing lost $5.6 billion in earnings through six weeks of the strike, with an additional $4.2 billion in combined losses for workers, suppliers and other entities outside the company due to the strike.
"That was just a poor strategy," he says. "Now, 10 years later, they're trying to make up for 10 years of bad contracts all in one day."
Another takeaway for companies from the Boeing strike: Don't bargain through the media.
Boeing made a mistake by trying to convince union members through the media to ratify the company's contract proposals, Wheaton says.
"It was a really bad idea," he says. It is usually understood in a contract negotiation that the union bargaining team communicates with union membership and management negotiators with management. But Boeing went behind the back of union leadership by making its case directly to union members and the press, saying "here's what we did, so you'd be foolish not to ratify this," Wheaton says.
Boeing's moves backfired, sparking resentment, undercutting the union's role as the exclusive bargaining agent for its members and probably contributing to the union members' vote against the first two proposals for 27% and 40% four-year wage increases, Wheaton says. "It isn't technically illegal, but it certainly is not smart."
The Boeing strike should also remind other companies of the value of taking preemptive actions to head off labor disputes, Wheaton says. "Everyone thinks that 'Oh, these greedy workers are only after the money.' And the answer is, a lot of times money's not the sticking issue," he says.
Other labor disputes, such as the failed union organizing drive in 2021 at an Amazon center in Bessemer, Alabama, have been sparked by the denial of seemingly trivial worker requests, such as adequate bathroom breaks. With Boeing, a main issue of contention was the defined-benefit pension plan that the machinists had sought to reinstate, even though the company realistically was never going to grant the request, he says.
None of the tens of thousands of contracts that he tracks have reinstated a defined-benefit pension plan once it was dropped; they're simply not affordable for companies. "They're just going away. It's dramatically lower now than what it was," he says.
With the shift toward defined contribution plans, companies have increased their education efforts about retirement options and financial health, Wheaton says. Companies should convey the message that "we want to make sure that you're saving now for what you need for the future and we want to take care of you for the rest of your life. And we want to be a good employer," he says. That can also include implementing Employee Assistance Plans to improve worker health and wellness.
As with the proposed wage increases, Boeing increased its retirement benefits offer in the third contract proposal, which was approved by the union: The company 401(k) match was increased to the first 8% of the employee pay, plus an automatic 4% of employee pay contribution by the company; employees eligible for the legacy pension payments will receive an increased monthly payment, to $105; and the company will pay the fees of a new annuity pension option.
