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How a UAW strike would impact the economy

AILSA CHANG, HOST:

We are just hours away from a deadline when the contract covering 150,000 autoworkers is set to expire. Here's union president Shawn Fain.

(SOUNDBITE OF ARCHIVED RECORDING)

SHAWN FAIN: Our message to the companies was clear. If we don't have a fair contract by midnight on Thursday night, we will strike.

CHANG: Well, what would a strike mean for the autoworkers, the car companies and the broader economy? We're going to lift up the hood and talk about that for a few minutes now with NPR's Scott Horsley. Hey, Scott.

SCOTT HORSLEY, BYLINE: Hi, Ailsa.

CHANG: OK, so 150,000 workers sounds pretty massive to me. What would a strike like that look like, you think?

HORSLEY: We don't know exactly. This is an unusual situation because the union says it's planning to strike all three of the Detroit automakers but not all of their plants - at least at the outset.

CHANG: OK.

HORSLEY: Instead, Shawn Fain, the UAW leader, says they initially plan to target a small number of factories at each of the three companies - Ford, General Motors and Chrysler's parent, Stellantis - and then, if necessary, ratchet up the walkout over time.

(SOUNDBITE OF ARCHIVED RECORDING)

FAIN: We are maintaining maximum flexibility. This is going to create confusion for the companies. It's going to keep them guessing on what might happen next.

HORSLEY: So the initial economic impact of this strike could be fairly limited. Obviously, if it goes on for a long time and if more plants are targeted, then the bigger the fallout would be.

CHANG: Right. Well, where would those effects be felt first, do you think?

HORSLEY: Well, at the plants where the workers do strike, production would come to an immediate stop. And if we're talking about, say, an engine or a transmission plant, then there could be ripple effects at assembly plants down the line. Of course, the striking workers will not be getting paychecks. They will be getting $500 a week in strike pay from their union. On average, though, that would only make up for about 40% of what they would've been paid. So economist Gabe Ehrlich of the University of Michigan says you would expect to see some reduced spending in the communities where those autoworkers live.

GABE EHRLICH: You hear, anecdotally, people say, you know, I prepared for a strike, but there's only so much you can do to save up for a strike. You know, obviously, the $500 a week helps, but it's not making up for a full paycheck. You know, maybe you skip going out to lunch. Maybe you skip going out to dinner.

HORSLEY: Eventually, you could also see fallout at the companies that supply parts to the automakers, potentially involving many more workers, although that probably would not happen right away. You know, the automakers have now lived through several years of parts shortages, so Ehrlich thinks they're going to be slow to cancel their orders. And even if those orders do slow down, the parts-makers might be wary about laying off their workers given the tight labor market. So it's not as if the whistle blows at midnight tonight and the whole supply chain hits the brakes.

CHANG: So to speak.

HORSLEY: But if a strike goes on for 8 or 10 weeks, then it could be a different story.

CHANG: All right. Well, I mean, Scott, the Detroit automakers - they're not as dominant as they once were. So how big of an impact would a strike like this have on the broader U.S. economy, you think?

HORSLEY: You're right. These three companies are not as big as they used to be, and neither is the UAW. Economists say even if all 150,000 workers were to go on strike, say, through the end of October, that would probably shave about two-tenths of 1% off the country's GDP in the final months of the year. That is noticeable, but it's not earthshaking. This is also a more contained industry than, say, UPS or the railroads, where we had a recent threat of strikes that would have had more far-reaching effects. Obviously, in communities where carmakers are concentrated, the impact is significant. But even in Michigan, Gabe Ehrlich says, a reasonably short strike would probably not do lasting damage.

EHRLICH: What I worry about is, you know, if we had a substantially more intense strike that was more acrimonious, that drags on substantially longer, does that start to lead the automakers to rethink where they invest?

HORSLEY: After a protracted machinist strike in 2008, for example, Boeing shifted some production to a new plant in South Carolina, which is a fiercely anti-union state. On the other hand, if a strike produces a much-improved contract, that could give fresh momentum to union-organizing efforts.

CHANG: Well, what if I'm in the market for a new car? Is there going to be less for me to choose from?

HORSLEY: You know, if you want a specific model from one of these companies, it could be harder to find. Ford has about a two-month supply of vehicles on hand, GM a little less, Stellantis a little more. So there is a cushion, but it won't last indefinitely. Obviously, Toyota, Honda, Volkswagen, and other carmakers will still be churning out vehicles.

CHANG: That is NPR's Scott Horsley. Thank you, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.