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Ahead of labor talks, GM puts pressure on itself

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GM announced this week it’ll give shareholders $5 billion in dividends and a $5 billion stock buyback. That’s good news for investors, and for GM, which managed to avoid a major clash with hedge fund interests on the board.

Times are good for automakers like GM.  But when the company opens negotiations with the United Autoworkers Union this summer, it’s going to try to keep a lid on wages, says Kristin Dziczek, director of the Industry and Labor Group at the Center for Automotive Research.

The union will think, “If they had the kind of money that they had to pay out for this stock play, they’ve got money to fund what the union is looking for,” she says.

Some workers haven’t had a raise in more than eight years. And Dziczek says the UAW says the ones who did still aren’t earning enough.

Ross Eisenbrey, vice-president of the Economic Policy Institute, says GM can increase share prices at the risk of everything else, or take the long view: investing in new equipment and the workforce. He says GM has to balance all of those things against a desire to reward shareholders. 

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