Blog Post 4: The Strike Goes On

As the UAW strike at General Motors plants headed into a second week, it is starting to negatively affect the Michigan economy. Although the impact is localized for now, if the strike continues, it could spell trouble. Kris Maher of the Wall Street Journal cites several economists who worry, “Michigan’s economy could be vulnerable to a prolonged strike because it has already been slowing.”  While in past years (2010-2017) an average of 75,000 nonfarm jobs per year, this year, only 3,500 jobs have been added through August. Charles Ballard, as quoted by Kris Maher, notes that the strike adds an, “additional headwind,” with, “the potential to put us [Michigan] into job losses,” (WSJ). This prediction comes with a caveat, “the strike probably would have to last at least a month for that to happen,” (WSJ).

Taken from a Wall Street Journal Article cited below

However, as the strike has already lasted two weeks, it is beginning to put some stress on towns surrounding the plants. The time and money put into, “policing the picket lines and plant entrances is,” detracting from, “patrolling streets,” (WSJ). The owner of a Latina Restaurant near the GM plant in Flint, Michigan has lost “10% to 20%” of the restaurant’s business since the beginning of the strike (WSJ). The owner, Ms. Jeanne Bonner, has had to cut her servers’ hours and says, “It’s affecting everybody … A lot of people’s business is from the shop,” (WSJ). Ms. Bonner is correct, the strike has cost workers “$9.3 million a day,” for both striking workers and others not working due to the strike. For Michigan as a whole, this translates to “about $400,00 in income-tax revenue a day,” (WSJ).

Nora Naughton and Ben Foldy of the Wall Street Journal also reported stories from striking workers who, “said they would miss their first paycheck from the company on Friday,” September 27. Striking workers receive only $250 a week in strike pay, whereas they could be earning roughly $600-1200 per 40 hour week, (WSJ). However, Naughton and Foldy also reported some good news: UAW Vice President Terry Dittes wrote a letter to members on Wednesday in which he gave, “a sign talks were moving into the latter stages of completing a deal that then could be brought to rank-and-file members.” The two sides had settled smaller matters and were turning their attention to the larger disputes, “such as wages, benefits and the use of temporary workers,” (WSJ). However, the Journal also quoted Arthur Schwartz, a former GM labor-relations executive, as saying, “There’s no formula for how long it can take … The tough issues could hang them up for a while.”

The negotiators seem to be entering a critical stage, but it is also likely to be the longest stage of negotiation. However, the strike has been going on long enough for both sides to feel the negative effects. These negative impacts could cause a quicker compromise, or they could cause both sides to dig their heels in, in an attempt to wait out the other side. Unfortunately, I cannot offer the readers of my blog any clarity on this situation. All I can say is that the strike is starting to hurt both sides, and the longer it goes on, the more it will hurt. Both sides will have to weigh their options. For GM, they will have to ask if paying their workers higher wages with more benefits will make up for the profit they are currently losing. For the UAW, they will have to ask if the promise of higher wages and more benefits in the future is worth missing their current wages.

Sources:

https://www.wsj.com/articles/gm-uaw-enter-final-stretch-of-labor-talks-11569536337

https://www.wsj.com/articles/gm-strike-starts-to-ripple-through-michigan-economy-11569490204 (Picture taken from this article as well)

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