As the UAW Strike Deadline Approaches, These States Could Face the Greatest Job Losses

If the United Auto Workers (UAW) union were to engage in an extended strike against the major automakers, including Ford, General Motors, and Stellantis, it could have a substantial economic impact, primarily affecting ten states.

A recent report from economists at the University of Michigan has highlighted the potential for severe job losses in Michigan, with over 300,000 people at risk of losing their source of income. The repercussions of such a strike could extend as far as Texas and New York.

The economic risks associated with these contract negotiations are significant and complicated. Key issues include the UAW’s push for job security as automakers transition to producing more technologically advanced, but less labor-intensive, electric vehicles. Other concerns involve demands for higher wages to combat rising inflation, the elimination of wage systems resulting in substantial pay disparities among workers, and improved retirement benefits for UAW members without pension coverage.

The potential job losses in Michigan, in the event of a prolonged strike, would not be as severe as those experienced at the outset of the COVID-19 pandemic in early 2020. However, they would still be substantial, accounting for nearly one-third of the jobs lost in the state during the pandemic-related economic shutdowns.

During a strike, lost wages not only affect individual families but also lead to reduced tax revenue. Some of these financial losses may be recovered once the strike concludes, as workers benefit from wage increases and potential lump-sum payments. However, the duration of the strike, the specific automakers affected, and the terms of any agreements reached will play a crucial role in determining the extent of the recovery.

While strikes in the auto industry have become less common in recent years, a potential UAW strike in 2023 could be unlike any other in history. UAW leadership has hinted at the possibility of unconventional rolling strikes, targeting specific operations at all automakers intermittently. The duration and impact of these labor disruptions remain uncertain.

The U-M report underscores the unprecedented nature of this potential strike, as the UAW has never led a strike at multiple companies during a contract year. The report also presents hypothetical strike scenarios, highlighting the sobering reality that the repercussions would extend beyond those directly employed by automakers or their suppliers.

In these challenging times, the automotive supply chain would also feel the pinch, especially if a strike persisted. According to Gabriel M. Ehrlich, director of the U-M Research Seminar in Quantitative Economics, suppliers and other affected businesses might attempt to delay layoffs for as long as possible due to a tight labor market. There could even be instances where the target company continues to pay suppliers to maintain production during the strike, facilitating a quicker recovery once the strike concludes.

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