What to Know in Washington: UAW Strike Threatens Economic Damage

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Just when US automakers and the broader economy were shaking off the effects of the pandemic and semiconductor shortages, a long strike by the United Auto Workers union could bring higher inflation and economic damage.

A strike against General Motors, Ford, and Stellantis of just 10 days would reduce US GDP by $5.6 billion and likely push the Michigan economy into a recession, according to Anderson Economic Group. It could also make some car models scarce and push prices up after they started coming down from record levels.

If UAW President Shawn Fain makes good on threats to strike all three companies on Thursday, it would have far-reaching effects. A long walkout would hit suppliers and their workers and soften prices of key commodities, especially steel. Damage to the economies in Michigan, Ohio, and Wisconsin could make swing states a tougher sell in the 2024 election for President Joe Biden.

Photographer: Jeff Kowalsky/Bloomberg via Getty Images
Demonstrators during a United Auto Workers (UAW) practice picket outside the Stellantis Mack Assembly Plant in Detroit, Michigan, US, on Wednesday, Aug. 23, 2023.

The Biden administration is on edge about the strike. The auto industry accounts for about 3% of US GDP but plays a much bigger role in the Great Lakes economies, and Democrats will rely on winning Michigan and Wisconsin to retain the White House. Biden has tapped Gene Sperling, former economic adviser to presidents Barack Obama and Bill Clinton and a Michigan native, to act as a liaison between the automakers and the union.

Michigan Gov. Gretchen Whitmer (D) told Bloomberg News in an interview last week that she is concerned about where the negotiations are headed. She is talking to leaders of each company and the union to try and head off a strike, but added that it is “unclear” what more she and her state can do.

If the workers wind up seeing strong wage gains, with or without a strike, it will push up labor costs nationwide after a summer of impressive pay gains won by Teamsters at UPS and pilots at American Airlines. Higher pay could also result from the ongoing strikes by Hollywood actors and writers. Read more on the conflict from David Welch and Michael Sasso.


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To contact the reporters on this story: Giuseppe Macri in Washington at gmacri@bgov.com; Brandon Lee in Washington at blee@bgov.com

To contact the editor responsible for this story: Kayla Sharpe at ksharpe@bloombergindustry.com

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