The potential Strike of the United Automobile Workers (UAW) is something that keeps families and business owners on the edge of their seat every few years, and this year is proving to be no different. At the heart of the issue is the UAW’s demands for better wages and benefits for its members. But the potential strike has a lot more at stake economically for both labor and business.
The UAW has been in negotiations with the Detroit Three automakers (Ford, GM, and Chrysler) since last fall. The negotiations have been complicated and stalled due to disagreements over wages, job security, healthcare, and other issues important to both sides. In May the union voted to authorize a strike and began to set up picket lines.
The economic impact of such a strike is considerable. The Detroit Three make up a large portion of the total US auto industry, accounting for about a third of all auto production. Furthermore, this production supports an estimated 650,000 jobs in the US. Any disruption in this production would therefore be difficult to ignore.
Meanwhile, the employees of the Detroit Three have cited substandard pay and benefits as a major issue. With wage increases falling behind inflation and the average wage for a UAW worker at only around $30,000, union members rightly feel that they are being shortchanged. If the strike does go ahead, the wage gap is likely to be a major point of contention.
Interestingly, the threat of a strike may have been partially responsible for the current negotiations taking place. While the Detroit Three have been notoriously resistant to UAW demands, the threat of a disruption in production has been a motivating factor for both sides to negotiate in earnest.
Whatever the outcome of the negotiations, the potential UAW strike should be viewed as a bellwether for labor issues in the US. With wages falling and the average cost of living rising, the strike could be a sign of greater labor unrest to come if wages continue to lag. The Detroit Three and UAW are under pressure to make a deal that adequately rewards workers for their labor, while also sustaining the viability of the companies and their mostly US-based job base. Ultimately, the success of this deal will be a telling sign of the prospects for labor in America going forward.
