US union members see record pay raises

Unionized workers in the U.S. saw record raises, while nonunion workers' pay barely beat inflation over the past 12 months, the latest government data show.

Wages of private sector union workers rose 6.3% in the year ended in March, the largest increase in data back to 2001, according to Bureau of Labor Statistics employment cost figures released Tuesday. 

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Union leaders have led strikes against firms to push for more cost-of-living increases. Last week, a last-minute wage agreement was reached with Daimler Truck Holding in three southern U.S. states to avert a strike. The accord includes pay increases of more than 25% over the next four years.

Earlier this month, workers at Volkswagen in Tennessee voted to join the United Auto Workers, a landmark victory for union organizing in the long-hostile South, after labor groups scored wins at Ford Motor, General Motors and Stellantis.

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The wage gains come after union workers lost income in inflation-adjusted terms from the second quarter of 2021 to early 2023.

The sharp increase in compensation, particularly for union workers, may bolster the argument that the Federal Reserve won't cut interest rates soon and remain on hold for longer than had been anticipated.

Goldman Sachs analysts wrote in a note to clients that "we think that the actual news is even better" because the latest wage data is "a lagging indicator because union workers tend to have longer-term contracts that delay their wage adjustments to past inflation spikes."