Striking unions impacting the economy at a level not seen in decades

The
auto
workers’
strike
is
the
latest
in
a
series
of
labor-management
conflicts
that
economists
say
could
start
having
significant
growth
impacts
if
they
persist.

So
far,
the

United
Auto
Workers
stoppage
has
impacted
just
a
small
portion
of
the
workforce
with
limited
implications
for
the
broader
economy.

But
it
is
part
of
a
pattern
in
labor-management
conflicts
that
has
resulted
in
the
most
missed
hours
of
work
in
some
23
years,
according
to
Labor
Department
statistics.

“The
immediate
impact
of
the
auto
workers
strike
will
be
limited,
but
that
will
change
if
the
strike
broadens
and
is
prolonged,”
Ian
Shepherdson,
chief
economist
at
Pantheon
Macroeconomics,
said
in
a
client
note
Monday.

The
UAW
has
taken
a
somewhat
novel
approach
to
this
walkout,
targeting
just
three
factories
and
involving
less
than
one-tenth
of
the
workers
at
the
Big
Three
automakers’
membership.
However,
if
things
heat
up
and
it
turns
into
an
all-out
strike,
bringing
into
play
the
146,000
union
members
at
Ford,
GM
and
Stellantis,
that
could
change
things.

In
that
case,
Shepherdson
sees
a
potential
1.7
percentage
point
quarterly
hit
to
GDP
at
a
time
when
many
economists
still
fear
the
U.S.
could
tip
into
recession
in
the
coming
months.
Auto
production
amounts
to
2.9%
of
GDP.

A
broader
strike
also
would
complicate

policymaking
for
the
Federal
Reserve,
which
is
trying
to
bring
down
inflation
without
tipping
the
economy
into
contraction.

“The
problem
for
the
Fed
is
that
it
would
be
impossible
to
know
in
real
time
how
much
of
any
slowing
in
economic
growth
could
confidently
be
pinned
on
the
strike,
and
how
much
could
be
due
to
other
factors,
notably
the
hit
to
consumption
from
the
restart
of
student
loan
payments,”
Shepherdson
said.

American
workplaces
have
taken
a
substantial
hit
from
strikes
this
year.

August
alone
saw
some
4.1
million
labor
hours
lost
this
year,
the
most
for
a
single
month
since
August
2000,

according
to
the
Labor
Department.
Combined
with
July,
there
were
nearly
6.4
million
hours
lost
from
20
stoppages.
Year
to
date,
there
have
been
7.4
million
hours
lost,
compared
to
just
636
hours
total
for
the
same
period
in
2022.

Those
big
numbers
have
been
the
result
of
20
large
stoppages
that
have
included
the
Writers
Guild
of
America
and
Screen
Actors
Guild,
state
workers
at
the
University
of
Michigan
and
hotel
employees
in
Los
Angeles.
Some
60,000
health
care
workers
in
California,
Oregon
and
Washington
are
threatening
to
walk
out
next.

After
years
of
being
relatively
quiescent,
unions
have
found
a
louder
voice
in
the
high-inflation
era
of
the
past
several
years.

“If
you’re
a
corporate
CEO
and
you’re
not
anticipating
labor
demands,
you’re
not
tethered
to
reality,”
Joseph
Brusuelas,
chief
economist
at
RSM,
said
in
an
interview.
“After
the
inflation
shock
we’ve
gone
through,
workers
are
going
to
demand
more
money,
given
the
…
likelihood
that
they’ve
lost
ground
during
this
period
of
inflation.
They’re
going
to
ask
for
more
money,
and
they’re
going
to
ask
for
workplace
flexibility.”

Indeed,
recent
New
York
Fed
data
has
shown
that
workers
on
average

are
asking
for
salaries
close
to
$80,000
a
year
when
switching
jobs.

In
the
UAW’s
case,
the
union
has
asked
for
demanded
a
36%
raise
spread
over
four
years,
similar
to
the
pay
gains
that
automaker
CEOs
have
seen.

But
Brusuelas
said
that
prospective
9%
annual
UAW
increases
shouldn’t
have
a
major
impact
on
macroeconomic
conditions,
including
inflation.

Unions
have
made
up
a
progressively
smaller
share
of
the
workforce,
declining
to

a
record
low
10.1%
in
2022,
about
half
where
it
was
40
years
ago,

according
to
the
Labor
Department.
Just
6%
of
private
sector
workers
are
unionized,
while
33%
of
government
workers
are
organized.

“Labor
strife
is
going
to
have
a
relatively
small
effect
on
the
overall
macro
economy,”
Brusuelas
said.
“This
isn’t
that
big
of
a
deal
and
it
shouldn’t
come
as
a
shock
following
such
a
steep
increase
in
inflation.”

Biden
administration
officials
also
are
not
sounding
any
alarms
yet
about
the
potential
economic
impact.

In
the
immediate
term,
the
stoppage
won’t
show
up
in
the
September
jobs
numbers,
at
a
time
when
payroll
growth
is
decelerating.

“I
think
it’s
premature
to
be
making
forecasts
about
what
it
means
for
the
economy,”
Treasury
Secretary

Janet
Yellen
told
CNBC’s
Sara
Eisen
in
an
interview
aired
Monday.
“It
would
depend
very
much
on
how
long
the
strike
lasts
and
exactly
who’s
affected
by
it.
But
the
important
point,
I
think,
is
that
the
two
sides
need
to
narrow
their
disagreements
and
to
work
for
a
win-win.”