Executive Summary

Strikes have historically been an effective way foremployees to express their grievances about poorworking conditions, and low wages. Strikes haveoccurred in various industries, ranging fromentertainment to education. The automobile sector,in particular, has often been a setting for workerstrikes. With Shawn Fain, the current United AutoWorkers president, at the helm of the resistanceagainst automaker companies, targeted strikes havebeen launched against factories owned by Ford,Stellanis, and General Motors. This brief aims toevaluate the complexities of the current UAW strikeand dive into its history and analyze the policiessurrounding the far-reaching economic implicationsthat this strike will have on the workforce in thefuture.

Overview

On September 15, 2023, the United Auto Workers went on strike, halting production at three Ohio, Michigan, and Missouri plants that produce Ford, Jeep, and Chevrolet, alongside other popular models. Consequently, Ford responded to the strike, claiming that they would have to lay off 600 workers, and GM told its 2,000 workers that they would be shutting down next due to a lack of parts because of the strike in Missouri. ¹ Fain has been at the head of all of these strikes, taking up office six months ago after two former UAW presidents were sent to jail on counts of embezzlement and other offenses. ² His goal is to push automakers into providing a 36% increase in pay, pension benefits for all employees, more paid time off, job protections, limited use of temporary employees, job protections, and the right to strike over plant closings. ³ His methods have garnered the attention of automobile manufacturers, who are now scrambling to come to an agreement that will end the strike.‍

A. Pointed Summary

• Striking Negotiations
• Shifting Dynamics in Labor Relations
• Economic Implications of Long-term Strike‍

B. Relevance

As stated above, the UAW strike inherently has had a large impact on the automakers, with GM and Ford standing to lose $2.5 billion and $3 billion in revenue for every week a widespread strike continues. ⁴ The prevailing sentiment is that the workers should have their demands addressed, with a corresponding expectation that automaker companies should yield. This opinion is shared to avoid future layoffs, shutdowns, and potentially rising vehicle costs. According to Cox Automotive chief economist Jonathan Smoke, "The actions of the UAW will have an impact on the larger auto business, but nowhere near what was experienced in April 2020. Inventory levels will likely slowly decline in the coming weeks, and, if a significant strike drags well into Q4, there could be wider implications for the retail market. Right now, however, it is too early to say." ⁵ President Biden also shared his thoughts, stating, "No one wants to strike, but I respect workers' right to use their options under the collective bargaining system, and I understand the workers' frustration." ⁶ This proceeded with him sending his top aides to Detroit to help resolve the issue. Needless to say, it's easy to see why many believe that the current strike should be resolved swiftly. However, the Biden administration is experiencing some friction due to  his goals for fighting climate change and trying to support unions to expand the middle class. Last year, President Biden signed the Inflation Reduction Act, which would put millions of dollars into incentivizing getting more clean cars on the road. His plans include reducing greenhouse gas emissions by manufacturing more electric vehicles. Many autoworkers are expressing their concerns since electric vehicles require fewer workers to produce, resulting in the fear of fewer job opportunities that allow organized labor. ⁷ Fain also expresses Biden’s actual role in the strike: "It’s not about the former president or any other person prior to that. This battle is about the workers standing up for economic and social justice and getting their fair share because they’re fed up with going backwards.” ⁸ Following unsuccessful negotiations with the three major Detroit automakers, numerous rival companies are concerned that the UAW's demands might have a significant adverse financial impact. For instance, GM and Ford assert that meeting these demands could result in a staggering $100 billion in costs, potentially jeopardizing their viability. ⁹ The UAW has built up a fund of $835 million, allocating $500 weekly to workers participating in the strike. The fund is meant to last about three months if all 150,000 workers went on strike simultaneously. ¹⁰ Despite this, the goal isn’t to necessarily launch an attack by utilizing all 150,000 workers in an attempt to make the fund stretch longer for those who need it. As a result, businesses in the surrounding area will experience losing out on revenue because of decreased spending. Overall, this strike is a pivotal moment that can result in long-term losses for both sides involved. 

History

Striking is a vital tool of the labor movement, granting workers leverage and bargaining power in a fight for better working conditions and pay. Though there were some recorded strikes during the colonial and Revolutionary periods, the first publicized strike was in 1894, when more than 250,0000 workers working on the Pullman Railroad went on strike. This was a notable moment in history because it demonstrated the power of collective bargaining and gave rise to future strikes and the eventual start of the labor movement that would continue until its height in the 1940s. Since the 1930s, the UAW has been instrumental in implementing collective bargaining tactics and has often dealt with the more political side of the union. During World War I, about 10% of the population participated in unions, most of which were associated with left-wing or socialist causes. However, that number reached a high in the 1950s, after the Great Depression brought more left-leaning politics into the mainstream. At this point, more than ¾ of Americans supported unions and about ⅓ were union members. With the increase in automation and college education, the role of unions declined throughout the rest of the 20th century. The UAW had more than 1.5 million members, with its peak in the 1970s, and that number declined to around 430,000 just 20 years later. Fewer Americans were working in the manufacturing sector, as more pursued white-collar jobs in high-growth industries, like the emerging technology sector. Since the decline of American manufacturing due to a lower cost of production in nations like Mexico, China, and Vietnam, the labor movement has become less relevant in national politics overall, despite the strikes showing how unions have always been a present force. 

A. Current Stances

According to a 2023 Gallup poll, Americans have become more supportive of unions and collective bargaining measures over the past 10 years. After the pandemic, workers' rights have become a more relevant topic in the media. Coupled with the rise of prob-labor candidates, like Bernie Sanders, and the increasingly left-leaning viewpoints of millennials and Gen Z, whose political influence is expanding, labor is once again a critical issue, especially in areas like Michigan, where the region’s dependence on manufacturing and traditional unionized industries has not waned over time. Since the UAW strike began on September 15, 2023, Americans have become more supportive of its actions: one week into the strike, support grew from 51% to 54%. 

‍B. Tried Policy 

Though strikes vary in their reach, it is not uncommon for a regional strike to become national news and attract attention from the White House and national government. Due to the necessary nature of manufacturing, a strike has the potential to create an economic downturn, such is what happened in Michigan during the last UAW strike in 2019. The strike lasted 40 days and was resolved when General Motors Executives agreed to meet the demand of strikers. But in the case that corporations and workers cannot come to an agreement, it can cost companies and economies millions of dollars in lost revenue. In certain industries, the government can intervene under the Railway Labor Act, but it is highly unlikely, albeit illegal, that the government will get involved in the UAW strike. 

Policy Problem

A. Stakeholders

The stakeholders in the UAW strike are the unions, auto companies, the auto industry, and the US economy as a whole. The strike signifies that autoworkers will not take no for an answer asking for increased wages, benefits, and resources for employees. The UAW strike follows other labor strikes, including the SAG-AFTRA strikes with a union surge taking the US by storm. The UAW union has asked for a 36% raise over four years for employees, a 32-hour work week for 40 hours of pay as well as a reinstatement of traditional pensions, improved health care, and job security. A union victory ensures that their voices remain heard in the corporate world, showing the impact of unions to benefit workers. The auto companies also have an invested interest in the strike, as without workers, no cars are being created decking their revenue, market share, and public image. General Motors, Ford, and Stellantis are the main companies being affected by the strike and have already hemorrhaged billions of dollars. If the strike lasts for an extended period of time suppliers, manufacturers, and dealerships will be affected by the strike likely leading to layoffs and a large loss in revenue. Currently, the UAW has a $825 million strike fund, meaning the strike is going to last for weeks without an agreed-upon negotiation settlement. The US economy also depends upon the auto industry with revenue from United States motor vehicle and parts dealers being $1.53 trillion as of 2021. The auto industry accounts for 3% of America's GDP. Already the UAW strike has cost the economy $4 billion and a prolonged strike could wreck supply chains across the country, and even across the world. 

B. Risks of Indifference

The risk of not addressing this problem is that the auto industry would spiral and the US economy will be negatively affected. The United States auto industry serves as a staple for employment and economic productivity, so if the strike is not resolved through labor negotiations, it could have long-lasting impacts on the companies, workers, and the economy as a whole. In addition, the strike serves as a litmus test to see whether unions can actually bring change to positively impact worker benefits.

Congress does not usually involve itself in strikes, and the only industries it can formally intervene in are the airline and railway industries. While the Biden administration has shown its support for workers, the dispute will have to be solved by the workers and the automotive industry. However, both sides seem unwilling to accommodate the other’s demands. While workers are asking for better wages and working conditions, auto industry companies argue that they cannot afford the wage increase workers are looking for, leaving both sides locked in a stalemate. The strike has already had massive negative effects on the economy, and if both sides can’t agree, the economic losses will only keep increasing.

Acknowledgment

The Institute for Youth in Policy wishes to acknowledge Michelle Liou, Nolan Ezzet, Donovan Zagorin, and other contributors for developing and maintaining the Policy Department within the Institute.

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