By Joe Deaux and Josh Eidelson
A tentative deal struck between Deere & Co. and the United Auto Workers union offers substantial improvements over one that workers rejected before going on strike, including larger wage increases, no new tiers to retirement benefits and a signing bonus of $8,500.
The deal, which is subject to approval by union membership, suggests that John Deere backed down rather than get drawn into a protracted work stoppage with farm equipment demand at the strongest in a decade and earnings at a record.
The contract includes wage hikes of 10% in the first year of the contract and 5% in the third and fifth years, according to a published document of the deal on the union website Sunday. No one was available at John Deere to comment on the latest accord.
Deere shares jumped as much as 1.8% to $348.40 at 7:22 a.m. in pre-market trading in New York. The shares have climbed 27% this year to Friday’s close.
Details of the agreement come more than two weeks after some 10,000 John Deere employees went on strike for the first time since 1986, having rejected a prior deal that called for a 5% to 6% wage increase for the first year. Shares of Deere rose each of the last two weeks, indicating shareholders continued to expect a speedy resolution to the strike.
“The workers’ rejection of the initial deal combined with the enormous gains made between the first and second deals, and the very real improvements that the contract will bring, all of it points to the significant consolidation and exercise of worker power,” said Benjamin Sachs, a labor law professor at Harvard University.
The Deere agreement adds to evidence that U.S. workers are successfully pushing for higher compensation as the U.S. economy emerges from its pandemic-blighted slump. Businesses are increasingly on the back foot when it comes to wage negotiation because they’re struggling to hire workers and retain enough people to cope with swelling demand.
“We’re living in a kind of extraordinary moment of worker mobilization and militancy,” Sachs said. “At this particular moment in history, when workers are willing to fight they’re going to win.”
There are no new tiers in the Deere deal, with everyone hired after 1997 having the same retirement options, according to the document. Deere would also contribute 5% of employees’ annual wages to their 401(k), and a 3% lump sum bonus would be paid in the even years of the contract based on prior-year earnings.
The post-retirement health care fund includes cash balance savings at 2.5% for the first through fourth years, 3% in years five through 14, and 4% for 15 years and above, and it includes $2,000 of seed money per year of service. There were no changes to the cost of health insurance, with employees paying no premiums or deductibles, and still having co-pays.
Michigan Democratic Congressman Andy Levin, a former union organizer and assistant AFL-CIO organizing director, said the Deere workers’ victory should fuel support for pro-labor legislative reforms as well as for other workers’ contract struggles.
“These Deere workers have added a huge boost to the momentum of the broader American working class in saying that we’re done with this kind of ever-increasing income and wealth inequality,” Levin said. “They’ve won for the whole American working class.”
Events surrounding the negotiation have been intense at times. Senator Bernie Sanders, a vocal proponent of labor unions, tweeted shortly after the strike started that “workers who spent years with the company are now being forced off their insurance.”
The company later issued a statement that it will continue providing health care for all striking union-represented production and maintenance employees.
The union reported earlier in the week that a 56-year-old employee at the Milan John Deere Parts Distribution Plant in Moline, Illinois, was fatally struck in a traffic accident while walking the picket line. Deere also won its bid for a temporary restraining order blocking thousands of union members from picketing at a plant in Davenport, Iowa, with a state trial judge saying workers’ conduct was unwarranted.
Deere workers succeeded not only because of their unity but also because, unlike some striking workers elsewhere, they were able to halt production at their company, said former Communications Workers of America president Larry Cohen. “I don’t think it’s all the same, but I think that this will help encourage people to organize as well as to fight for a fair share of what they produce.”