The Auto Strike: A World Anew or Déjà Vu for Labor?

Amid a resurgence of public and government support for unions, the automotive strike could eventually be a bellwether for organized labor, or it could repeat historic downward cycles caused by factors similar to those currently in play. Meanwhile, the strike is becoming a factor in presidential politics, with Biden becoming the first sitting POTUS to walk a picket line, and Trump skipping the Republican candidates debate this week to court rank-and-file union members.

In the latter half of the 20^th century, U.S. union membership declined precipitously due to a variety of factors, including non-union competition. After significant growth prior to the 1950s, unions began a steady, accelerating decline in membership. Labor’s proponents typically claim weak labor laws are to blame. Yet, many economists attribute it to increased competition from overseas rivals with lower labor costs as well as non-union competitors within the United States. This led to major declines in market share in several heavily unionized U.S. industries, including steel, copper, transportation and, yes, automotives.  

The current battle eventually comes down to market share. Echoing the pitched battles of a previous era, the UAW, under its populist new president Shawn Fain, is tying demands to the profitability of the Big Three and their executive compensation packages. Yet, his arguments disregard what the companies are up against, particularly as they try to remain competitive in an electric vehicle market boosted by the Biden administration. Even before any bargained increases, their strongest competitors often pay less than half of their current labor costs, with many of those workers employed overseas. As noted this week in a Wall Street Journal editorial: “That’s the reality corporate CEOs have to consider, even if Mr. Fain ignores it.”

Notably, “union busting” is not a factor. Many of the recent highly publicized labor battles involve companies opposing unionization efforts. This has led to vehement allegations of “union busting.” This one is different. Indeed, most of the large companies that have been involved in contentious bargaining and work stoppages this year have been those who have no intent of getting rid of their existing unions. Instead, they have tried to work with them to address competitive pressures caused by overseas and non-union competitors, technology, evolution of the workplace and others. They realize that failure to address these challenges threatens not only growth and profitability, but even survival as a business.

Even labor’s supporters are wary. While employers are closely watching the automotive strike, others who would normally be strong supporters are concerned about whether the union is overplaying its hand. Each of the automakers has offered very generous increases (20%) in pay packages that even now exceed those of their strongest competitors. Yet, the UAW is demanding 36%. Relationships with the White House are frayed, as the President seeks to foster electric vehicle growth while trying to retain his support from labor, even as Trump and some other prominent Republicans woo its rank-and-file. And, while criticism of the union from the Wall Street Journal is no surprise, at least one normally pro-union commentator in the Washington Post, noting “competitors are eating their lunch,” concludes:

Right now, labor and management are fighting over how to divide what looks like a huge and growing pie. The problem is that the pie might grow modestly, or even shrink, in the years ahead. And the unions would be wise to leave employers at least a little room to maneuver in this fast-changing market.

Striking autoworkers gain new political friends.  The strike occurs at a time when many longstanding political alliances are shifting. The Democratic Party has always had to deal with friction between labor and environmentalists—two key players in the Democratic coalition. Now, the UAW is understandably leery of the Biden administration’s backing of less labor-intensive electric vehicles. Notably, UAW President Fain has thus far abstained from endorsing Biden for the 2024 nomination. This rift plays into the hands of Republicans who are critical of the EV push for a number of economic, practical and environmental reasons. Trump and some other Republicans may not actually join Biden on the picket line. But they view auto and other blue-collar workers as potential additions to their base, even as their relationship with those workers’ employers becomes more frayed.

Probably a game-changer for labor but in which direction? A recent Gallup poll conducted August 1-23, 2023 reflects that 75% of Americans side with UAW workers. As this is being written, there are few signs of a quick resolution, with the union pointedly increasing the number of targeted strikes beyond the initial three facilities. With strong public support, the American labor movement is at a critical juncture. One must ask whether the populism represented by Mr. Fain poses a threat to workable solutions similar to the perils in today’s political theater. If so, the sugar rush the movement is seeing now could flip to the kind of existential threat to the movement that many of their targets are facing in their rapidly evolving industries.