On November 20, the United Auto Workers (UAW) union announced it had reached a deal with the big three American automakers — Stellantis, Ford, and General Motors — ending a six-week stoppage that cost the firms, their suppliers, and workers an estimated $10.4bn loss. US automotive manufacturers have not been dealt such a massive blow by the UAW since the Flint sit-down strike at General Motors in 1936–1937.
The new gains are substantial, including a 25% increase in pay, annual cost-of-living adjustments and the ability to strike over future plant closures. Not long after declaring victory, UAW leadership announced that its sights were set on Tesla and Japanese automakers, including in southern states where unions are widely viewed with suspicion or even hostility.
Simultaneously, strikes across the US have resulted in new deals for the Screen Actors Guild, Writers Guild of America, Teamsters, and Airlines Pilot Association, among others. To the casual observer, these victories may seem to have been achieved through tough negotiations and skilled leadership. I believe they’re actually a result of the changing supply-and-demand dynamics in the US and other rich countries around the world. Simply put, labor demand is high and the labor supply is shrinking due to economic growth, demographics, and technological changes.
Apart from the brief Covid-19 pandemic recession, the US economy has been running hot for years, creating more jobs every month. At the same time, baby boomers are retiring leaving fewer Gen Xers and millennials to fill their shoes. This creates greater leverage for the blue-collar worker. The salary premium for a college education has been shrinking since around 2015, with significant repercussions for employers. Low unemployment rates mean employers must pay more to attract and retain the workers they need.
Union victories mean that manufacturers everywhere face higher union avoidance costs. Workers are flexing their muscles in all types of ways that increase costs for employers through higher wages, better benefits, and shorter work weeks. While this will be a struggle for US-based companies, they can take some solace in the fact that they are not alone.
Yet, while this seems like a bonanza for blue-collar workers, inflation caused in part by higher wages means that much of their winnings will be consumed by higher prices.
This article was written by Didi Caldwell and first appeared in the February/March 2024 print edition of fDi Intelligence.