Since the start of the pandemic, companies have been reporting record-high profits, with corporate profits accounting for 60% of inflation. Companies used inflation as an excuse to gouge customers. Yet this extra profit has not been translated into more wages for these companies’ workers; it instead goes to the pockets of executives and board directors, a classic example of corporate greed. Exasperation at this hopeless situation has led to prominent worker strikes in various industries and companies: the railroad industry; UPS; Hollywood’s writers and actors strike; and the most recent, the United Automobile Workers’ strike.
Reasons for Strikes:
The United Automobile Workers’ strike is currently targeting the Big Three:, General Motors, Ford, and Stellantis. These companies, despite being the largest auto manufacturers in the country, have some of the widest pay gaps between their workers and bosses. According to the Economics Policy Institute, CEO pay at the big three companies jumped by 40% between 2013 and 2022; a worker’s pay fell by 19.3%. CEOs of the Big Three have an average of 336 times the pay than that of an average worker’s salary.
Using these metrics as a standard for negotiation, the union is asking for a 40% raise for its workers, aligning with the percent increase in CEO pay over the last 4 years. UAW President Shawn Fain asserts that companies “...could double [workers’] wages and not raise the prices of vehicles, and they would still make billions of dollars. It’s a lie like everything else that comes out of their mouths.” Unfortunately, the Big Three’s offers cut the raises by half, with only a 20% raise increase, and denied the union the other benefits requested like a 4-day work week, a pension, and job security protections.
Additionally, after the 2008-2009 economic crisis, auto workers were forced to comply with a series of cuts in order to save the industry. Automakers were bailed out by the government and were able to continue business as normal, but left their workers crippled in the process with no mention of compensation. These extreme changes in the industry, coupled with former protests and contract revisions, have also created the harrowing issue of tiered compensation, where one group of workers is paid more than another for doing the same work simply due to the terms of their contract and when it was created. It creates problems for people on every tier: it can take a low tier eight years to reach the salary of a veteran employee, and top tiers feel threatened as their company has an incentive to fire them and replace them with low-tiered employees. It also pits the employees against each other as competitors, allowing the company to get away scot-free.
Risks:
While the union has made a great step to curb the injustice faced by these autoworkers, the strike itself holds great risks and could potentially backfire. Prominent union official Gene Bruskin expresses his concern that the Big Three may pivot to find an alternative source of labor, leaving the aforementioned 150,000 workers out of a job. One option for the Big Three is to move their operations to Mexico, where labor is generally cheaper and their presence has already been firmly established. Another option that is looming on the horizon for most industries is automation, replacing workers with robots and machinery. Of course, these systems will take time to establish, requiring the Big Three to maintain their workers for a little while, but if job security is not established in these negotiations, it is likely that most– if not all– auto workersautoworkers will be removed in the near future. GM, Ford, and Stellantis can also attempt to circumvent the union altogether by moving their operations into Southern states, where unions are not as powerful or common.
The automotive industry comprises 3-3.5% of the US gross domestic product (GDP). If this strike is prolonged any further, it has the potential to send the MidWest into a recession, spelling disaster for the US economy. This diminishes the view of the US in the eyes of potential trade partners and investors, making it uncompetitive with foreign economies. Ignoring the fate of the United States as a whole, if the public blames the union for the recession, it can very well turn the public against the workers and give the Big Three an upper hand, forcing Fain to comply with an inadequate deal.
The impact of these strikes on the industry is far from negligible. “One [strike at an] engine or transmission location per company might be enough to shut down nearly three-quarters of the US assembly plants,” said Jeff Schuster, global head of automotive for GlobalData, an industry consultant. If main plants are rendered incapacitated by the strike, the responsibility of the automotive industry falls into the hands of nonunion workers and smaller plants. These tens of thousands of workers would have to face the added burden and suffer the consequences of wage prospects, despite having no input in the situation.
The potential outcome of this strike is incredibly variable; it could either improve worker conditions for generations to come, or it could fall short and do little except provide businesses with more incentive to replace them. However, as negotiations continue to press forward, and as Fain maintains an unchanging position, hope remains for the best possible outcome. The effects could impact other industries as well, forging a new path for equitable treatment and lower pay gaps across the country– even the world.
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