So if automotive manufacturing workers are striking — and I’m not an automotive manufacturing worker — should I care?
Excellent question. Let’s get to that question shortly.
The United Auto Workers (UAW) has decreased in size over the years, now a union with more retirees (580,000) than active members (400,000), residing in the US, Canada and Puerto Rico. They went on strike well over a week ago. They are striking against the “Detroit Three,” which is comprised of GM, Ford and Stellantis (the latter of which is the Fiat-Chrysler merger).
Taking zero sides, let’s acknowledge the dispute. Note the list of demands the union leader revealed several weeks ago. The following are included (accompanied by some added insight or information):
◾ Eliminating wage tiers. (The Big Three employ a two-tiered wage structure in which those who joined the company in 2007 or earlier, are grandfathered in, earning a rough average of $33 per hour plus have defined benefit pensions; those hired thereafter are the lower tier, earning significantly less, ineligible for the pension, and less generous healthcare).
◾ A 46% wage increase over the life of the contract —21% immediately and then a 5% additional raise each year of the four year contract. (Stellantis offered a 21% wage increase with 10% immediately; the union summarily rejected that offer, calling the number a “no-go.”)
◾ Restoring the cost-of-living allowance adjustments to counteract inflation. (These were discontinued in 2007 when GM and Chrysler were rapidly moving toward bankruptcy and a federal bailout; CNN Business said for GM alone, taxpayers were out more than $10 billion.)
◾ Defined benefit pension for all workers. (This, too, was eliminated for new hires when bankruptcy and bailouts were imminent. Now that bankruptcy is not imminent and the companies are making significant profit, the union wants pensions back. A great question to discern is what role — if any — the collective pensions played in the bankruptcy and bailouts.)
◾ The right to strike over plant closures. (According to the UAW website, “The Big Three have closed 65 plants over the last 20 years. That’s devastated our hometowns. We must have the right to defend our communities.” Another excellent economic question would be who gets to choose whether a plant closes.)
◾ A reduced work week and more paid time off. (The union wants a four-day, 32 hour workweek.)
◾ Limiting the use of temporary workers. (The union labels this as unfair treatment or potential abuse. Also a factor is that in said situation there would be no opportunity for increased union membership.)
◾ Increased benefits to current retirees. (The UAW wants back the guaranteed lifetime pension payments and retiree medical care they gave up during the 2008 automotive industry crisis, in addition to a significant increase to current retiree pensions. Note the current makeup of the union, with 59.2% of current members being retirees.)
So back to the aforementioned, excellent question — and a brief foray into the question of care…
An auto workers strike means fewer laborers. Fewer laborers means fewer cars. Fewer cars means a decreased national supply. Assuming comparable demand, a decreased supply means an increase in cost once current inventory leaves the lot. Note, too, if there’s any surge in panic purchases — meaning consumers believe there will soon be a shortage, so they rush en masse to the dealer — such would also drive up demand. Driving up demand on a limited supply will also prompt an increase, potentially instantaneously.
We don’t want that to happen. We want the workers working. Hence, why not just pay the workers more?
Indeed, another excellent question. Let’s be even more concise in our response… well, with one more question, if you will..
If the workers are paid substantially more — 46% — and work fewer hours — 32 — (and please, allow me to toss a bit of a softball question here) — what would you predict happens to the cost of a new car?
Exactly.
Not an easy solve.
Respectfully…
AR