September 14, 2023
I’m sure you’re hearing all about the United Auto Workers union strike that could start as soon as tonight.
So the question is – how would a strike of this scale impact you if you aren’t one of the 140-thousand people who are part of the union or if you don’t work for one of these American car makers.
This video is not about who’s right and who’s wrong. It’s not about what the union is asking for or what the big three car companies want to give. This video is going to explain what would happen to the US economy – so all of us – if or when a strike does move forward.
If the UAW goes on strike it would be the first against an American auto company since 2019 and would be the first against the Big Three automakers all at once. The union has said there would be—initially– limited, target strikes at strategic manufacturing plants. But that move could be enough to grind production to a halt at General Motors, Ford and Stellantis, which builds vehicles under the Jeep, Ram, Dodge and Chrysler brands for North America.
Economists estimate a six-week strike could cost the United States billions of dollars and could cost the US economy an important chunk of financial growth in the gross domestic product report for the fourth quarter – especially if the strike goes on for a few months. This could also impact inflation. We just saw in yesterday’s consumer price index report that in august the cost of new cars was up over July and up 2.9% over August of last year. So if those costs are going up without a strike, what’s going to happen to the costs if there is a strike and no new cars are rolling off the production line? That would dry up the already low supply and drive up car and truck prices.
And a strike wouldn’t just generally impact the US economy as a whole – it would also impact the local economies where those manufacturing plants are located. Specifically in Michigan, Ohio and Indiana. Not only would the striking workers lose an estimated $860 billion in wages in just the first 10-days of a strike! That means they won’t be spending money in their communities – so other businesses not related to cars at all would also suffer. And it gets worse – because if the strike continues to drag on other workers at these vehicle manufacturing plants who aren’t union members may be furloughed or fired because the plant would have to close. That then pushes all those people onto unemployment rolls which is of course funded by taxpayers. According to an analysis from the University of Michigan a four week strike against the big three automakers would result in 161,000 jobs lost in Michigan and a long-term strike would cause about 300,000 jobs lost in the state.
But the problems aren’t limited to Michigan, Ohio and Indiana — what about all the companies that build components for cars like sound systems? If there are no new cars to put those sound systems in then those workers may lose their jobs too.
See – this is how our supply chain works. It’s snowball effect. And some economists fear if the strike last long enough it could disrupt the delicate balance the Federal Reserve is trying to keep in their fight against inflation. Most experts say a strike won’t cause a full blown nationwide recession – but it’ll probably will hurt.
Read the strike analysis from Anderson Economic Group here.
Read the strike analysis from the University of Michigan here.
