Boeing workers vote on new contract that could end strike
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(SEATTLE) — Tens of thousands of striking Boeing machinists are casting ballots on Monday over whether to approve a contract offer that could end their work stoppage after seven weeks.
The new offer delivers higher pay increases and a bolstered ratification bonus that would deliver each worker $12,000 if the union approves the deal, according to the International Association of Machinists and Aerospace Workers (IAM), the union representing 33,000 Boeing workers in Washington, Oregon and California.
The ongoing standoff has strained the finances of both sides. Union members have received $250 per week from a strike fund, beginning in the third week of the work stoppage. That compensation marks a major pay cut for many of the employees.
Boeing and its shareholders have lost about $5.5 billion since the strike began in September, according to an estimate last month from the Anderson Economic Group. Shares of Boeing have plummeted 40% this year but have ticked up slightly over the past month.
Union members resoundingly defeated two previous proposals from Boeing, but the latest offer marks the best deal the workforce is likely to receive, the union said in a public letter to membership on Saturday.
“This is truly the time to lock in these gains and work to build more in future negotiations,” IAM President Jon Holden and the union’s negotiating committee told members. “Allow yourself to capture this win and be proud of your sacrifice.”
The proposed contract would deliver a 38% raise over the four-year duration of the contract, upping the 35% cumulative raise provided in a previous offer overwhelmingly rejected by workers in a vote two weeks ago. Workers had initially sought a 40% cumulative pay increase.
The proposal also calls for hiking Boeing’s contribution to a 401(k) plan, but it declines to fulfill workers’ call for a reinstatement of the company’s defined pension. Workers lost a traditional pension plan in a contract ratified by the union in 2014.
Nearly two thirds of union members rejected the most recent contract offer in a vote last month. The outcome followed the overwhelming defeat of a previous proposal in September, which drew rebuke from more than 90% of union members.
“It’s time we all come back together and focus on rebuilding the business and delivering the world’s best airplanes,” Boeing CEO Kelly Ortberg wrote in a memo to employees on Friday. “There are a lot of people depending on us.”
It will take a majority vote of union members to approve the contract offer. If workers ratify the deal, they can return to work as early as Wednesday, the union said.
“The decision to end this strike is right where it needs to be — in the membership’s hands,” Holden and the negotiating committee said in their public letter.
(NEW YORK) — Borrowers have waited years for a sign of relief from high interest rates for everything from credit card loans to mortgages. The wait may come to an end this week.
Investors widely expect the Federal Reserve to cut interest rates at a meeting on Wednesday. The move would dial back the central bank’s benchmark rate from a 23-year high, reversing some of the rate hikes initiated three years ago in an effort to fight inflation.
Questions, however, remain about the size of the rate cut, what it means for borrowers and how it may impact the 2024 presidential race.
Experts spoke to ABC News about what to know ahead of the potential interest rate cut.
Why is the Fed expected to cut interest rates?
In 2021, the Fed began aggressively raising interest rates in an effort to bring inflation under control. The policy has largely succeeded. Inflation has slowed dramatically from a peak of about 9% in 2022, though it remains slightly higher than the Fed’s target of 2%.
Meanwhile, the job market has slowed. A weaker-than-expected jobs report in each of the last two months has stoked concern among some economists. The unemployment rate has ticked up this year from 3.7% to 4.2%.
Those trends have shifted the Fed’s focus away from controlling inflation and toward ensuring a healthy job market.
In theory, lower interest rates help stimulate economic activity and boost employment; higher interest rates slow economic performance and ease inflation.
“The Fed has been very much guided by data,” Anastassia Fedyk, a professor of finance at Haas Business School at the University of California Berkeley, told ABC News. “ Inflation numbers in the last few months have started looking good, and things are not looking so hot in terms of the jobs reports.”
What will the size of the rate cut be?
The chances of an interest rate cut at the Fed’s meeting next week are all but certain, according to the CME FedWatch Tool, a measure of market sentiment.
Market observers are divided nearly down the middle over whether the Fed will impose its typical cut of a quarter of a percentage point, or opt for a larger half-point cut. The tool estimates the probability of a quarter-point cut at 51% and the odds of a half-point cut at 49%.
“There is that much uncertainty because it seems not all Fed officials are of the same opinion,” Gregory Daco, chief economist at accounting firm EY, told ABC News.
Some Fed policymakers appear to prefer a gradual approach to rate cuts in light of easing inflation and a resilient, albeit weakened, labor market, Daco said. By contrast, others seem to favor a large initial cut that would help avert a more severe job market slowdown.
What would a rate cut mean for credit card fees, mortgage rates?
An interest rate cut would mark a major milestone as the Fed shifts toward a lowering of rates and an easing of costs for borrowers, experts said. Still, they added, the initial rate cut would not substantially lessen loan payments.
“In the grand scheme of things, it’s peanuts,” Daco said.
Nevertheless, some loan relief has already emerged in anticipation of a gradual lowering of interest rates over the coming months.
Mortgage rates fell last week to their lowest level since April 2023, Freddie Mac data showed. The 10-year treasury yield, which helps set the level of many consumer loans, has plummeted nearly a percentage point since July.
“This is a sign of a trend that’s going to start, but it’s going to take a lot longer and be milder than an immediate transition,” Fedyk said.
What would a rate cut mean for the November election?
Typically, lower interest rates make borrowing less expensive for businesses and consumers, propelling companies to invest in new projects and everyday people to stretch for bigger purchases. That all should help propel economic growth and buoy consumer optimism.
In turn, an economic surge could benefit the incumbent party, dispelling concern about a recession and improving the livelihoods of everyday people, some analysts previously told ABC News.
However, the benefits of a forthcoming rate cut could prove more limited, since rate moves take hold after a period of delay that can last months, analysts said.
The most recent Democratic presidential candidate who failed to win reelection, Jimmy Carter, lost his bid amid a historic series of rate hikes at the Fed.
A rate cut would deviate from the policy approach taken by the Fed prior to many recent presidential elections, a Reuters analysis found. Policy rates were left unchanged for six to 12 months before the 2020, 2016, 2012 and 2000 U.S. presidential elections, according to Reuters.
To be sure, the Fed says it bases its decisions on economic conditions and operates as an independent government body.
When asked about the 2024 election at a press conference in Washington, D.C., in December, Fed Chair Jerome Powell said, “We don’t think about politics.”
(SEATTLE) — Tens of thousands of Boeing workers are set to cast ballots in a vote Thursday that could potentially trigger a major strike against the embattled aerospace company with far-reaching implications for the U.S. economy.
Boeing reached a tentative agreement earlier this week with the International Association of Machinists and Aerospace Workers, or IAM, the union representing 33,000 workers at Boeing plants in Washington State, Oregon and California.
However, union members could potentially reject the contract agreement, walk off the job and send the two sides back to the bargaining table.
A work stoppage would weaken Boeing as it struggles to recover from a years-long stretch of scandals and setbacks, hamstringing the nation’s largest exporter, experts told ABC News. But, they added, workers are frustrated with what they perceive as inadequate compensation and a sense they must sacrifice to make up for the company’s mismanagement.
The ratification vote concludes at 9 p.m. ET, and the union will release the results in a press conference soon afterward. If union members reject the contract, they will take a second vote on a strike that could begin as soon as Friday morning.
“This is a very, very high-stakes game of chicken,” Henry Harteveldt, a travel industry analyst at Atmosphere Research Group, told ABC News.
Here’s what to know about what’s behind the strike and its implications for the U.S. economy:
Why are Boeing workers threatening to strike?
Neither Boeing nor the IAM want a strike. The workers might carry one out anyway.
The tentative agreement struck this week delivers a 25% raise over the four-year duration of the contract, as well as worker gains on healthcare costs and retirement benefits. The union had sought a 40% pay increase over the life of the deal.
The agreement also features a commitment from Boeing to build its next commercial plane with union labor in Washington state.
Boeing touted the strength of its offer earlier this week. “Simply put, this is the best contract we’ve ever presented,” Stephanie Pope, Boeing Commercial Airplanes president and CEO, wrote in a letter to union members obtained by ABC News.
The union echoed support for the agreement, urging workers to ratify the deal.
“We have achieved everything we could in bargaining, short of a strike. We recommended acceptance because we can’t guarantee we can achieve more in a strike,” IAM District 571 President Jon Holden, who leads the union local involved in negotiations, told members in a public letter.
In response to ABC News’ request for comment, a Boeing spokesperson pointed to a letter sent to union members by CEO Kelly Ortberg.
“I hope you will choose the bright future ahead, but I also know there are employees considering another path — and it’s one where no one wins,” Ortberg said.
“For Boeing, it is no secret that our business is in a difficult period, in part due to our own mistakes in the past. Working together, I know that we can get back on track, but a strike would put our shared recovery in jeopardy, further eroding trust with our customers and hurting our ability to determine our future together,” Ortberg added.
IAM declined to respond to ABC News’ request for comment.
Still, workers may defy the company and the union. For years, West Coast Boeing workers have taken issue with their level of compensation, especially in light of strong company performance and a surge in the cost of living, experts said.
“There are years and years of pent up frustration among Boeing workers,” Jake Rosenfeld, a professor of sociology at the University of Washington who studies labor, told ABC News. “This is an expression of being completely fed up.”
Union members also view themselves as being asked to make sacrifices made necessary by the company’s mismanagement, said Harteveldt, of Atmosphere Research Group.
In January, a door plug blew out of the company’s 737 Max 9 aircraft during an Alaska Airlines flight, prompting a federal investigation. The renewed scrutiny arrived roughly five years after Boeing 737 Max aircraft were grounded worldwide following a pair of crashes in Indonesia and Ethiopia that killed a combined 346 people.
In 2021, after a two-year ban, Boeing 737 Max aircraft were permitted to fly.
Boeing is carrying nearly $60 billion in debt, Pope noted in her letter to union members. The company’s share price has plummeted almost 40% since the outset of 2024. Ortberg took over as CEO last month.
“The workers cannot and should not be expected to bear all of the burden of the changes needed at Boeing,” Harteveldt said.
“But I don’t think Boeing is asking them or expecting them to do that,” Harteveldt added. “Boeing has extended what appears to be a very generous offer with substantial wage increases.”
What’s at stake in a potential Boeing strike?
Boeing, which employs 145,000 U.S.-based workers, is a major U.S. firm with a sprawling network of suppliers, experts said.
The company estimates that it contributes nearly $80 billion to the U.S. economy each year, and indirectly accounts for 1.6 million jobs.
A prolonged strike would weaken production with the potential to slow output, diminish income and trigger layoffs, Harteveldt said.
“There’s a risk of a downward spiral,” Harteveldt said.
Such a strike would not impact flight activity or down planes, however, since the workers at issue take part in manufacturing new products. That stands in contrast with an averted railroad strike in 2022, which would have halted a sizable share of the nation’s cargo trains.
“This wouldn’t be as devastating,” Rosenfeld said.
Still, he added, a potential strike would hold implications for a signature U.S. firm.
“It would further damage an iconic company that has already had years of setbacks,” Rosenfeld said.
(NEW YORK) — Tens of thousands of Boeing machinists on Wednesday will vote on a new contract proposal that could end a weekslong work stoppage against the embattled aerospace company.
Workers overwhelmingly rejected a previous offer last month, putting the outcome of the impending vote in doubt.
Hours before workers were set to cast ballots, Boeing released an earnings report showing the company had lost a staggering $6.1 billion over the most recent quarter due primarily to costs associated with the strike.
“We have some really big rocks that we need to get behind us to move the company forward,” Boeing CEO Kelly Ortberg said in a letter to investors on Wednesday.
Ortberg singled out the strike as an issue that must be addressed “first and foremost.”
“We have been feverishly working to find a solution that works for the company and meets our employees’ needs,” Ortberg said.
The new offer delivers a 35% raise over the four-year duration of the contract, upping the 25% cumulative raise provided in the previous offer. The offer, however, falls short of workers’ demand for a 40% cumulative pay increase.
The proposal also hikes Boeing’s contribution to a 401(k) plan, but it declines to fulfill workers’ call for a reinstatement of the company’s defined pension. The contract includes a $7,000 ratification bonus for each worker, as well as a performance bonus that Boeing had sought to jettison.
The International Association of Machinists and Aerospace Workers (IAM), the union representing 33,000 Boeing workers, released a statement on Saturday calling the proposal “worthy of consideration.”
“With the help of Acting U.S. Secretary of Labor Julie Su, we have received a negotiated proposal and resolution to end the strike, and it warrants presenting to the members,” IAM said.
The company and its workers have faced significant financial losses during the nearly six-week strike.
Union members have received $250 per week from a strike fund, beginning in the third week of the work stoppage. That compensation marks a major pay cut for many of the employees.
Mid-ranking workers involved in the strike typically make $20 per hour, which totals $800 per 40-hour work week, while higher-paid members earn salaries upward of $100,000 per year, or nearly $2,000 per week
“The question is whether the employees and their union determine that they have the power to get more from Boeing,” Henry Harteveldt, a travel industry analyst at Atmosphere Research Group, told ABC News. “It’s whether they think they can extract more from Boeing, or Boeing says, ‘You know what, this is it.'”
The strike was set to cost Boeing $108 million per day in lost revenue, amounting to as much as $5.5 billion in losses should the work stoppage last 50 days, investment bank TD Cowen said in a report reviewed by ABC News at the outset of the dispute. So far, the strike has lasted 40 days.
In September, Boeing announced furloughs and pay cuts for some white-collar employees in response to the strike. Last week, Boeing CEO Kelly Ortberg announced plans to cut 17,000 jobs, which amounts to about 10% of its global workforce.
“This is really painful for Boeing,” Richard Aboulafia, managing director of aerospace consulting firm AeroDynamic Advisory, told ABC News.
The most recent IAM strike against Boeing in the Pacific Northwest, in 2008, lasted 57 days. Work stoppages undertaken by unionized Boeing employees in the same region have historically lasted an average of 60 days, a Bank of America Global Research analysis found after examining seven previous strikes, the earliest in 1948.
Workers will cast their ballots in a ratification vote on Wednesday. If a majority of workers back the proposal, the contract will be adopted and the strike will end.
Over the days leading up to the vote, the outcome remained unclear, Jake Rosenfeld, a professor of sociology at Washington University in St. Louis, who studies labor, told ABC News.
“What are the workers going to do?” Rosenfeld said. “That’s a really tough question.”
