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An Insight Into Economic Impact of the United Auto Workers’ Protest

Migena Satyal

The United Auto Workers have been on strike for the past three weeks as they demand better benefits and a wage hike from Detroit’s Big Three: Ford, General Motors(GM), and Stellantis. The UAW represents workers in almost every field from multinationals to non-profit organizations. As of date, there are over 400,000 active members and more than 600 unions within the UAW. On September 15, over 12,500 workers walked out of the Big Three plants in Missouri, Michigan, and Ohio and received support from the union members under the “stand up” strike strategy. Patrick Anderson, CEO of Anderson Economic Group, states that this “reflect[s] a strategy that will ensure a large number of suppliers and dealers are affected, while reducing the number of UAW workers that, at least initially, are on strike and receiving strike pay.” The strike comes in the aftermath of the Big Three hitting record profits while failing to offer benefits to the workers that were stripped during bankruptcy over a decade ago. The group seeks a 40 percent wage increase, reinstatement of cost of living adjustments, elimination of the two-tiered wage structure, four-day workweek, right to strike, and pension and healthcare benefits.

The companies countered with a 20 percent pay increase and additional concessions while claiming that the union’s demands were high and would hinder their long-term investment abilities. In response, Emily Yettaw, an auto worker claimed that “people are fed up. We want there to be a middle class. They’re making billions in profit and deserve better.” The inability to reach a deal between the workers and the auto companies has had an adverse effect on the U.S. economy. The Anderson Economic Group found that the first two weeks cost workers USD 325 million in lost wages and more than USD 1 billion was lost in manufacturing. The additional costs to suppliers, dealers, and consumers create an economic loss of USD 4 billion. The findings in this research do not include “plant closures, additional strike targets or layoffs that took effect after Sept.29, including an additional 7,000 workers who joined the picket line.” While the economic impact has been relatively limited, prolonged strikes will worsen the economy even further. The continuation of the strikes is also expected to affect inventories of vehicles, imposing challenges for car dealerships and customers as car prices and auto loan interest rates are increasing. Ford and GM have also started laying off workers due to the impact of the strike. On October 2, Ford announced it was furloughing 330 workers while GM plans to furlough 130 employees. In September, GM laid off 2,000 employees, and Ford temporarily laid off 600 employees. JP Morgan reports that the strikes have cost Ford and GM USD 145 million and USD 191 million respectively. The Unlike GM and Ford, Stellantis has averted further expansion of the strikes due to progress on negotiations. Due to the strike, Ford went down by more than 2 percent in early trading and GM was down by over 3 percent while Stellantis was down bt 1.5 percent. The economic impact of this strike demonstrates the collective power that unions can have in the industry. Therefore, it is imminent that these employees who keep it running should be compensated fairly from the companies considering the record-breaking profits that the Big Three has been aaccumulating. It is unfair that the earnings of the company does not suffice the livelihood, especially with inflated cost of living post pandemic, of the people who make up the backbone of the automotive industry.


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