With 97% of their members in favor of a strike, the United Automobile Workers (UAW), is all set to go up against the Big Three—General Motors, Ford, and Stellantis. With the UAW strike date firmly set for 14 September 2023, there is uncertainty all around with limited updates on how the companies are planning to settle the UAW contract demands.
Why Is the UAW on Strike?
The UAW is currently in the middle of contract negotiations with the three companies and has threatened to strike if their contract demands are not met by Sept. 14 when their previous agreement ends. While UAW President Shawn Fain has conceded that they are open to negotiations, the counter-proposals that have come in from Ford and GM so far were deemed “insulting”. As opposed to the 46% wage hike demand, Ford made an offer of 9% while GM came back with 10%. None of UAW’s other strike demands were met either. Despite Fain himself describing the demands as “audacious”, he believes the workers deserve the compensation expected.
“We’re demanding double-digit pay raises. Big Three CEOs saw their pay spike 40 percent on average over the last four years. We know our members are worth the same and more”, the UAW website states.
At the core of the matter, the strike could help the UAW secure better wages for all its members, whether in permanent or temporary employment, or ever retired. With CEOs and top-level employees benefiting from a disproportionate share of company income, a strike could hit them hard enough to allow better wages and quality of life for all employees. The UAW strike demands include ending tiered wages and providing pension benefits that would be a big change for all its members.
UAW’s previously successful strike against GM and the rest had established the UAW’s commitment to its workers and the September 2023 strike is likely to follow the same path. The union had focused on striking against one company the last time, using the contract to arrive at deals with the other companies as well. This time, while some believe that the strike might be focused on Stellantis, it seems likely that a simultaneous walkout could be expected at all three companies.
The UAW’s demands and sustained efforts so far have signaled their firm commitment to their workers; a positive sign for people everywhere to join a union in their industry. While union membership is down to 10.1%, about 67% of Americans see unions in a favorable light, as per a Gallup survey. Another union win could convince more to join their ranks. Similar to how the UAW has been drawing inspiration from Teamster in its deal with UPS, success here would be a big win for unions everywhere.
Despite these benefits of striking, however, the unions might hurt themselves in the long term and could cause severe disruption to the economy.
Potentially Harmful Impacts of the Strike
A strike is an expensive undertaking, as it means the workers of the UAW union will have to forego their wages from the company. A CNBC report indicated that the UAW has more than $825 million in its strike fund, which will be used to pay the workers who are eligible under their guidelines. With $500 pay per week for each member and 150,000 UAW members going on strike, the UAW would have to expend around $75 million per week. If the numbers are correct, excluding additional health care expenses, the union will have approximately 11 weeks to meet its goals.
It is also crucial to consider how this could impact future job availability. If labor costs reach a breaking point where either production outside of the U.S. or automation becomes a more affordable long-term solution, then companies might settle on ensuring new plants are adapted accordingly. With the UAW’s strike demands including a four-day work week, automotive companies might lose the edge they need to stay ahead in such a competitive industry, which might make the use of robotics a more appealing alternative.
Additionally, a disruption in the supply chain could halt production and cause used car prices to rise. According to J.P. Morgan, this could further strain auto insurance margins and insurers might have to provide higher coverage limits on their policies. Auto parts suppliers are also bracing themselves for the production interruption, as they might incur losses of their own, leading to further layoffs within their companies. The ripple effect might be drastic for companies that are not prepared.
The automotive industry is already in a state of disarray with the shift to electric vehicles and companies trying to overtake each other, but a strike, while essential for worker rights, could mean very big changes for the industry as a whole. As the UAW strike deadline draws close, the companies have little time to settle on which strike demands they are willing to meet.
