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Detroit’s “big three” automakers are reeling from the first simultaneous strike in their history. Targeted work stoppages at General Motors, Ford and Stellantis plants by the United Auto Workers union are just the latest sign of action from an emboldened U.S. labor movement that has won some inflation-curbing wage increases but led to the most lost days of strikes this year since 2000. Activism poses political risks for President Joe Biden, who calls himself the greatest ally unions have ever had in the White House. But it is also a highly risky strategy for the unions.
Labor activism reflects a variety of factors. The pressure on companies to cover the rising cost of living for their employees is enormous. Many workers feel that high inflation, on top of the health risks they took while working at the start of the pandemic, means they deserve excessive raises. Union leaders point to robust growth in corporate profits and executive pay over the same period. Workers from Detroit to Hollywood are also facing the impact of new technologies like electric vehicles and AI.
Some wage demands and increases were noticeable. The Teamsters negotiated a contract with United Parcel Service under which the average driver would earn $170,000 in annual salary and benefits within five years. The pilots’ unions agreed on salary increases of up to 40 percent with the three largest US airlines. The UAW is seeking a 36 percent wage increase over four years and other improvements; the car manufacturers offer around 20 percent.
All of this requires Biden to tread a very fine political line. The president’s pro-union beliefs are backed by a sound electoral calculation: Union leaders are important to Democrats going into the election, especially for a candidate who has struggled to excite the base. But the president’s election chances in 2024 also depend on his ability to maintain a strong economy and control inflation. Steep wage increases for autoworkers, higher car prices for consumers and costly strike-related disruptions in Midwestern swing states would be a gift to Republicans.
The impact of the Detroit automaker strikes will be felt far beyond the companies themselves. The Anderson Economic Group, a consulting firm, warns of “cascading economic damage,” including lost wages and earnings, reduced work hours and possible closures at smaller suppliers. With unions now representing only 6 percent of U.S. private sector workers, generous collective bargaining agreements have less impact on overall wage inflation. But some executives say cases like the Teamsters’ UPS deal are raising pay expectations even at non-union companies.
Biden’s pro-union rhetoric has already been tempered by pragmatism, and his administration is now wading into UAW talks, similar to when railroad and longshore workers threatened strikes that would have brought U.S. supply chains to a standstill. The longer the strike lasts, the harder it may become for unions to maintain support.
Trade unions must also be careful not to exaggerate in the face of technological and ecological change. Ford CEO Jim Farley said the auto industry will need 40 percent fewer workers to build electric vehicles with fewer parts. Extended UAW strikes could accelerate a shift in jobs from Detroit-based companies to its all-electric vehicle, non-union rival Tesla, as well as to foreign-owned plants located mostly in the southern United States where wages are lower.
This raises questions about the goal of modern unionism: is it to maintain job numbers, or is there simply better pay for the industrial jobs that are likely to remain? These are issues that American union leaders must carefully consider.
Source : www.ft.com