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Monday, May 27, 2024
The Observer

What does the UAW strike mean for the U.S. economy?

Almost 7,000 additional workers joined the latest wave of strikes last week by the United Auto Workers Union (UAW) against Ford and General Motors (GM). Over 18,000 workers are already on strike against Ford, GM and Stellantis.

While the large strikes target the “Big Three” American automakers, the economic impact may be moderate, according to Notre Dame economics professor Ruediger Bachmann. 

Dan Graff, the director of the Higgins Labor Program said the UAW is negotiating the removal of a two-tiered hiring system introduced during a recession. 

“They introduced a two-tiered hiring system where new hires would start out with lower pay than people who already worked there,” Graff said, “And over a long period of time, the newbies would finally get up to that.”

The reinstatement of the Cost of Living Adjustments (COLA),which was removed during the 2008 recession, is one of the UAW’s stipulations in their negotiation with the auto manufacturers. Ford has already reinstated COLA. Graff commented that the UAW pioneered the COLA initiative.

“The UAW pioneered back in the late 40s, early 50s, a cost of living adjustment, so they negotiated with General Motors what's called a COLA, so that if inflation went up during the life of the contract, workers wouldn't just get the bump and increase,” Graff said.

Graff explained that the cost of living adjustment was factored into the contract so in the case that inflation occurred, UAW wages would increase accordingly.

“The two sides have negotiated that you'll get a 2% raise in this year, and a 3% raise next year, whatever they negotiated,” Graff said. 

Bachmann said the economic impact of the UAW strike is going to be minimal. 

“The economic impact is going to be moderate ... I mean auto production for the United States as a whole is not so important anymore,” Bachmann said, “Manufacturing in general is not so important anymore.”

Bachmann said that the United States auto industry is a small subset of overall manufacturing at the end of the value chain in the U.S.

“It's one thing when you strike manufacturing that's at the beginning of the value chain, the sort of products that everyone else down the road needs. If you don't produce them and you can't import them, then you might actually damage production lines down the road,” Bachmann said.

Liberty Hunsberger, an economics major at Saint Mary’s, said the car market hasn’t hit the breaking point yet. 

“The car market is still pretty high,” Hunsberger said. “We haven't hit that breaking point where it's dropped yet and if it continues, it's only going to get higher because we're gonna have less new cars.”

Hunsberger said in her opinion, the government choosing to get involved is partially because of the upcoming election. 

“I think that part of this is that there's a huge election coming up so I think that they're definitely trying to play into that,” Hunsberger said. ”They want to look good.” 

Hunsberger said the government involvement was also influenced by the knowledge that the economies are in a very unstable place battling inflation.

“But also, they know that our economies are in a very unstable place right now, " Hunsberger said.

COLA was removed in the 2008 recession. Bachmann said in times of a recession inflation rates are typically low. 

“Often, a lot of recessions are characterized by not just economic downturns, but also low inflation,” he said. 

Hunsburger said the car industry has always been a huge market but that there’s always been issues. 

“I think that the car industry has always been a huge market and especially [in] Michigan, that's kind of where this whole thing started with Ford,” Hunsberger said. “There's always been issues but it seems like every so often we run into more and more.”

The Center for Social Concerns developed aJust Wage Framework consisting of seven criterions. Graff discussed the goals of this framework.  

“The point was to try to encourage discernment and dialogue on what makes a wage just or unjust,” Graff said. 

Claire Bosch, a junior at Notre Dame and a Just Wage Fellow, said the Just Wage Framework criterions are mostly positive and that a just wage should ensure a decent life.

“It should ensure a decent life and provide social security for a worker and the worker's family, and be non discriminatory,” Bosch said. 

Bosch said that collective UAW bargaining is reflective of the just wage framework criteria.

“And obviously part of their push for higher wages reflects the first criteria which is a wage that ensures a decent life and the presence of benefits like health care and retirement plans, which historically without the UAW’s presence probably wouldn't be existing in jobs in the auto sector," Bosch said.

Bosch said that inflation has been uncontrolled for several years, creating difficult situations for workers when wages remain unchanged but prices increase.

“Catholic social teaching explicitly states that workers should be able to and have the right to organize into unions,” Bosch said. “It's built around the idea that every person has inherent value and their value is not derived from what they do from work.”