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Detroit’s “big three” automakers are experiencing their first simultaneous strike in history. Walkouts at General Motors, Ford, and Stellantis plants by the United Auto Workers union demonstrate a strengthening US labor movement. While workers are securing significant pay raises, the strikes have also resulted in the highest number of lost workdays since 2000. President Joe Biden, who has positioned himself as a strong ally of unions, now faces political risks due to the increasing activism.
The labor activism can be attributed to various factors, including companies’ pressure to meet employees’ rising living costs, workers’ perception of deserving higher wages due to inflation and risks taken during the pandemic, and the stark growth in corporate profits and executive pay. Additionally, workers are grappling with the implications of technological advancements like electric vehicles and AI across industries.
Notable wage demands and increases have been witnessed, such as the Teamsters negotiating a deal with United Parcel Service that could lead to average annual earnings of $170,000 for drivers within five years. Pilots’ unions have agreed to raises of up to 40% from major US airlines. The UAW is seeking a 36% pay increase over four years, while automakers are offering around 20%.
President Biden finds himself walking a tightrope. While his pro-union stance aligns with his electoral strategy, he must also ensure a thriving economy and control inflation to bolster his chances in 2024. Auto workers securing substantial pay raises, increased car prices, and strike-related disruptions in crucial swing states could benefit Republicans. The repercussions of strikes at Detroit automakers extend beyond the companies themselves, leading to economic damages and potential shutdowns among smaller suppliers.
With unions representing just 6% of the private-sector US workforce, generous labor settlements have a limited impact on overall wage inflation. However, some executives argue that cases like the Teamsters’ deal with UPS are raising wage expectations even in non-unionized companies.
Biden’s pro-union rhetoric has already seen pragmatic adjustments, and his administration is getting involved in UAW negotiations, similar to its intervention in railroad and port worker strikes. The longer the strike persists, the more challenging it becomes for Biden to maintain his support for unions.
Unions must also consider the backdrop of technological shifts and the green transition. Ford’s CEO, Jim Farley, has stated that the auto industry will require 40% fewer workers for EV production, given the reduced complexity. Extended UAW strikes could accelerate job migration from Detroit-based companies to non-unionized rival Tesla and foreign-owned plants with lower wages in the US South.
These circumstances raise important questions for modern-day unionism: Should the focus be on preserving the number of jobs or ensuring better pay for the limited remaining industrial jobs? American labor leaders must carefully weigh these issues.
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