What the UAW Strike Could Mean in Terms of Economic Fallout, Political Alignments

(KNSI) — As the United Auto Workers union expands its strike, some distribution centers in Minnesota are now included.

St. Cloud State University economics professor and interim dean of the College of Education and Learning Design King Banaian explains to KNSI News that for the average person, it will be harder to find parts for repairs and maintenance. If the strike lasts long enough, some vehicles may be hard to come by. From an economic perspective, the strike could be more significant.

“The impact of an auto strike will show up in production numbers, GDP numbers for quite some time and the longer this runs, of course, the bigger the impact on third quarter and fourth quarter GDP.”

Banaian notes that there is historical precedence for a strike to drive the quarterly GDP figure negative. Usually, negotiations between the UAW and the automakers are staggered, affecting only one or two of the “Big Three” at a time. That’s not the case this year.

Banaian says the strike could also be inflationary. The UAW is asking for wage gains of 40% phased in over five years. If automakers agree to something close to that, the Federal Reserve would factor that into future interest rate hike decisions.

The strike is testing political coalitions, on top of its economic impacts. Banaian says electric vehicles require fewer steps to assemble compared to traditional gas powered cars and trucks. That means fewer jobs at industrial plants for line workers. Banaian says automakers are being pushed to transition at warp speed.

“I think the issue in short is there has been public policy toward moving the auto fleet toward electrification at a rate that did not allow the collective bargaining agreements and the relationships between labor and management to really adjust to reality.”

Banaian says the impacts on blue-collar workers are creating a realignment.

Banaian points to West Virginia as an example of how a party’s policies can lose the working class in a state. He says Republicans have seen stronger performances in industry heavy states over the past several cycles, widening advantages in places like Indiana, Missouri, and Ohio. Michigan, Pennsylvania, and Wisconsin are other examples where union votes are beginning to shift from blue to red.

The UAW says it is waiting to endorse President Joe Biden in the 2024 election until it gets assurances that workers won’t be left behind in the transition to EVs. President Biden walked the picket line with workers in Michigan Tuesday. Former President Donald Trump is in Michigan on Wednesday.

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