Sunday, 1 October 2023

Business News

Striking unions impacting the economy at a level not seen in decades

Janet Yellen on the auto strikes: We want to see the two sides come to a win-win agreement

The auto workers’ strike is the latest in a series of labor-management conflicts that economists say could start having significant growth impacts if they persist.

So far, the United Auto Workers stoppage has impacted just a small portion of the workforce with limited implications for the broader economy.

But it is part of a pattern in labor-management conflicts that has resulted in the most missed hours of work in some 23 years, according to Labor Department statistics.

“The immediate impact of the auto workers strike will be limited, but that will change if the strike broadens and is prolonged,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a client note Monday.

United Auto Workers (UAW) members on a picket line outside the Stellantis NV Toledo Assembly Complex in Toldeo, Ohio, on Monday, Sept. 18, 2023.

Emily Elconin | Bloomberg | Getty Images

The UAW has taken a somewhat novel approach to this walkout, targeting just three factories and involving less than one-tenth of the workers at the Big Three automakers’ membership. However, if things heat up and it turns into an all-out strike, bringing into play the 146,000 union members at Ford, GM and Stellantis, that could change things.

In that case, Shepherdson sees a potential 1.7 percentage point quarterly hit to GDP at a time when many economists still fear the U.S. could tip into recession in the coming months. Auto production amounts to 2.9% of GDP.

A broader strike also would complicate policymaking for the Federal Reserve, which is trying to bring down inflation without tipping the economy into contraction.

“The problem for the Fed is that it would be impossible to know in real time how much of any slowing in economic growth could confidently be pinned on the strike, and how much could be due to other factors, notably the hit to consumption from the restart of student loan payments,” Shepherdson said.

Labor hours lost

American workplaces have taken a substantial hit from strikes this year.

August alone saw some 4.1 million labor hours lost this year, the most for a single month since August 2000, according to the Labor Department. Combined with July, there were nearly 6.4 million hours lost from 20 stoppages. Year to date, there have been 7.4 million hours lost, compared to just 636 hours total for the same period in 2022.

Those big numbers have been the result of 20 large stoppages that have included the Writers Guild of America and Screen Actors Guild, state workers at the University…

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