In a move to match the wage increases achieved by the United Auto Workers (UAW) union, South Korean automaker Hyundai announced on Monday that it will raise factory worker pay by 25% by 2028. This development comes after Honda and Toyota also pledged to raise factory wages, with Toyota increasing pay by 9% to 10% starting in January and Honda planning to raise wages by 11% during the same period.

The decision to raise wages is seen as a strategic response to the UAW President Shawn Fain's efforts to organize U.S. auto plants of foreign automakers, including Tesla, in an attempt to bolster the union's bargaining power. Fain stated that nonunion auto executives were unnerved by the UAW's organizing strategy, leading to the wage increases. Referring to Toyota's pay raise as the "UAW bump," Fain highlighted the impact of the union's negotiating prowess.

Approximately 146,000 UAW members are currently voting on new contracts with General Motors, Ford, and Stellantis, the maker of Jeep, which include a 25% general wage increase over the next four years and eight months. When considering cost of living adjustments, workers are expected to receive around 33% raises, with the highest-paid assembly line employee earning approximately $42 per hour.

To align with the new UAW contracts, Toyota and Honda have also shortened the time required for starting employees to reach the top pay rate. The timeframes now mirror or closely resemble those specified in the UAW agreements.

Labor experts believe that the UAW settlements have likely influenced wage increases at nonunion factories. Harry Katz, a professor of collective bargaining at Cornell University, explained that the companies' desire to remain nonunion while staying competitive with top-tier wages in Detroit has driven the pay raises. Katz estimated that Hyundai pays around $25 per hour, noting that the nonunion plants typically offer inferior retirement and healthcare benefits compared to UAW workers.

While the specifics of Hyundai's hourly wages were not disclosed, the company stated that its factory worker pay has increased by 14% over the past year. Hyundai's Chief Operating Officer, Jose Munoz, emphasized the company's commitment to maintaining competitive wages and benefits in line with industry peers.

Toyota's top factory worker pay will rise to $34.80 per hour in January, while Honda did not disclose its hourly rate, though it is expected to be comparable to Toyota's.

Although the new UAW contract is unlikely to drive workers at nonunion plants to join the union, according to Katz, who cited a historical disparity in wages and a general skepticism towards unions in those regions, the UAW's substantial deal victory is still considered significant.

"While it might not make a significant difference, winning such a large deal does not harm them," Katz said.

In conclusion, as Hyundai joins Honda and Toyota in raising factory worker wages, the UAW's successful contract negotiations appear to have influenced nonunion automakers in their efforts to maintain competitiveness in the labor market.