The United Auto Workers (UAW) strike has entered a critical phase, with the union signaling its intention to extend the strike to additional plants, and political figures becoming increasingly involved. Notably, Republican presidential contender Donald Trump has announced plans to address the striking workers on September 27. Meanwhile, voices within the Democratic party are urging President Joe Biden to demonstrate greater solidarity with the workers on the picket lines.
Economists and political analysts are now assessing the potential impact of the UAW strike on both the broader economy and the political landscape. Nonetheless, what stands out most prominently is the relative infrequency of such work stoppages in recent decades, particularly in contrast to the post-World War II era, making the UAW strike a focal point of political and economic discussion.
In the 1950s, an average of 352 strikes occurred each year, affecting 1.6 million workers – a stark contrast to the past decade, where there have been only 15 strikes per year on average, impacting 140,000 workers. This represents a staggering 91% reduction in annual strike occurrences.
This decline in strikes has been viewed positively for the economy. Capital Economics noted in a September 19 analysis, “The UAW strike will strengthen the perception that the US has been plunged into a new period of industrial unrest at the hands of resurgent unions. But this is hardly a return to the chaos of the 1970s.”
Debates persist, however, on whether the underlying trends responsible for this drop in strikes are ultimately beneficial. Union membership has dwindled from a peak of 34% just after World War II to a post-war low of 10.1% last year. With unions historically affording workers greater bargaining power, their decline has left some employees with diminished leverage in demanding improved pay, benefits, and working conditions.
A report from the Treasury Department in August drew a connection between the decline in union membership and the stagnation of middle-class wages, as well as the deepening income inequality witnessed over the past four decades. The report concluded, “Increased unionization has the potential to contribute to the reversal of the stark increase in inequality seen over the last half century.”
However, the landscape of unionized labor has shifted significantly, with manufacturing employment, most likely to be unionized, decreasing from 30% in 1950 to just 8.3% today. The majority of workers now operate in the service sector, which is notably less prone to unionization.
Public approval of unions has also undergone transformation, dropping from a high of 75% in the early 1950s to a low of 48% in 2009, a period marked by union contracts contributing to the bankruptcies of General Motors and Chrysler. While unions have experienced a resurgence in popularity since then, this may reflect a theoretical belief in their potential to assist struggling workers, rather than a judgment on their actual effectiveness.
In 2023, there has been a modest uptick in strike activity, offering reassurance to some labor activists. Approximately 530,000 workers have engaged in strikes across 34 different labor actions, marking the highest number of striking workers since 1986.
The Screen Actors Guild strike, initiated in July and involving 160,000 workers, remains ongoing, alongside a Writers Guild strike that began in May and encompasses 11,500 workers. If the UAW strike escalates, it could potentially encompass over 100,000 workers and lead to a shortage of certain vehicles on dealer lots, just as the auto industry is recovering from pandemic-related disruptions.
Nonetheless, it appears unlikely that a new era of robust labor unions is on the horizon. Granting the UAW workers their demands would put the three Detroit automakers at an even greater disadvantage in terms of labor costs compared to non-unionized competitors like Tesla, as well as most foreign brands with US-based factories.
General Motors, Ford, and Stellantis have alternatives at their disposal, given their substantial operations in Mexico, where labor costs are notably lower. While they can still generate healthy profits from producing high-margin trucks and SUVs with union labor in US plants, many lower-priced vehicles may only be economically viable if manufactured outside the United States.
As of now, there are fewer than 400,000 unionized auto workers in the United States, with UAW membership declining by 11% since 2017. In contrast, the number of auto workers in Mexico exceeds twice the number of UAW workers and continues to grow. While the UAW maintains some leverage in 2023, the union’s peak influence appears increasingly distant.
The UAW strike has evolved into a significant focal point, drawing attention not only from labor activists but also from prominent political figures, such as Donald Trump, who are positioning themselves within the discourse. As the strike intensifies, its political implications underscore the enduring relevance of organized labor in shaping the socio-economic landscape of the United States.
Source: Yahoo finance
