Tesla's Nevada Gigafactory Workers To Receive Increased Pay Amid Unionization Fears

Tesla Inc. TSLA has decided to raise the salaries of its hourly workers at Nevada Gigafactory, according to internal sources reported by CNBC.

What Happened: Tesla aims to hike the hourly rates for its fixed-rate employees at its manufacturing unit in Sparks, Nevada, with increases ranging from $2 to $8.30 per hour. The lowest wages will see a rise from $20 to $22 per hour, while the highest will increase from $30.65 to $34.50. Furthermore, the pay of several levels earning between $26.20 and $30.65 per hour will be adjusted to $34.50, reported CNBC on Wednesday.

Termed as “cost of living adjustments,” these wage rises will reflect a 10% or more increase for most hourly workers. The changes are slated to begin in early January.

This move by Tesla is being seen in the context of potential unionization efforts among its employees. By adjusting wages, Tesla could potentially discourage its workers from forming a union or pushing for a collective agreement in Nevada.

See Also: Gary Black Sees Rivian Delivering 54K Vehicles This Year, Says EV Maker To Turn Gross Margin Positive By 2024 End

The electric car giant has recently been dealing with labor unrest, including a strike that spread across several Scandinavian countries and criticism from the United Auto Workers union.

Why It Matters: Before Tesla’s move, the United Auto Workers (UAW) union had been at odds with major automakers like Ford Motor Co, General Motors, and Stellantis NV over compensation and benefits. The strikes resulted in significant disruption, affecting over 45,000 workers across 47 locations. The UAW had reached a tentative agreement with Ford in October, promising increased compensation.

The UAW strikes also had a ripple effect on the economy, with experts predicting a surge in payrolls following the resumption of work, counteracting a slowdown in job growth.

Amidst this backdrop, Tesla’s wage adjustments could be seen as a strategic move to preempt similar labor unrest and potentially discourage unionization efforts.

Price Action: On Monday, Tesla shares closed 0.6% lower at $252.08 in the regular session and fell 0.35% in the after-hours trading.

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