Michael Hicks
The United Auto Workers strike against domestic automakers has some economists arguing that we are entering a new wave of labor union activism. I’m not yet convinced, but there are several interesting effects of this strike that might inspire more active labor movements. This is a potential trend worth watching.
For anyone not paying close attention, the UAW struck against Ford, GM and Stellantis on September 15. The strike began as a targeted stoppage in three plants. The choice of these plants was to disrupt the most profitable assembly lines. This was a clever innovation, because it put a great deal of pressure on these companies without affecting most workers.
In doing this, the UAW limited the economic damage to its members. Moreover, if the automakers were forced to lay off workers elsewhere, they’d be eligible for unemployment benefits. This would increase automakers’ long-term costs. This tactic won’t work for every union, but it signals a much smarter approach to strikes than we’ve seen in the past half century or longer.
The UAW was ultimately successful by incrementally expanding the strike until they reached a deal. The best of these deals involved a 25% wage hike over two years. These concessions were aided in part by longer-term trends in wages. The average automobile manufacturing worker makes less than they did almost 20 years ago. The only group of workers I know who have seen worse wage growth over the past two decades are Indiana’s schoolteachers. The UAW members were clearly ready for more active unions, and the companies had room to boost wages.
However, the UAW doesn’t represent most autoworkers. The major foreign firms, such as Honda, Toyota and Subaru, are not unionized. In part this is because so many of them chose to open their U.S. factories in places that had little history with unions. Of course, that isn’t true in Indiana, which has one of each, before the state passed Right to Work.
However, within a few days of the UAW reaching very favorable terms with the big three, several foreign automakers announced large pay and benefit increases. This is clearly in response to the success of the UAW strike. This is where union activism might become more successful.
To be clear, this strike won’t really grow the UAW. As I’ve written before, the US will have fewer auto workers in a decade than we have today. Automation will continue to eliminate factory jobs, and growth in electric vehicles will likely reduce employment in auto parts manufacturing. But, if unions are to be successful, they’ll do so by penetrating other industries. The age of the large, influential industrial union is behind us; however, we might be entering a time when boutique unions become more successful.
The UAW showed a way to strike that will benefit a number of unions. Imagine, for example, the effect of the Hollywood actors’ and writers’ unions stuck against one company rather than the whole industry. That strike would’ve been over very quickly. I’d expect pretty widespread adoption of the UAW strategy.
If this thesis is correct, and we are entering a new wave of union activism, it will look very differently from the past. Instead of large industrial unions, there’ll be many smaller labor organizations representing a very different set of workers. The new work environment would seem to enable easier union organizing. Very high rates of remote work in some sectors, combined with social media, would seem to make more industries susceptible to unions.
Of course, I could be wrong about this. Perhaps the legacy industrial unions, such as the UAW or AFL-CIO will act as umbrella organizations for smaller union movements. The UAW has had some success already in unionizing graduate students against universities. But organizing graduate students won’t affect long-term viability of unions. The same is likely true for retail or restaurant workers.
To grow, unions will need to find more members who are in careers. The industries that might seem most ripe for union activism are full of people looking for better jobs elsewhere. That’s a bad place to find permanent members. Moreover, nimble strategizing is not a characteristic of legacy unions in the United States.
The bigger effect of unions appears to be how they influence labor markets outside the firms in which they’ve organized. The rapid spread of pay raises after the UAW strike is the example. It could happen elsewhere, but we are also in a period of very strong labor markets, particularly for lower-wage workers. Market forces might be doing more than unions to improvement market conditions.
One recent paper by economists David Autor, Arindrajit Dube, and Annie McGrew reported that rising real wages for the lowest wage workers has reversed nearly 40 percent of the wage gap growth since 1980. The post-COVID period has also been accompanied by better working conditions. For example, far fewer fast-food restaurants are open 24 hours, and tighter labor markets have forced managers to more effectively schedule workers.
This also has a political dimension. Increasingly, businesses are calling for subsidized child daycare for workers. Though the labor force participation of women is back to its pre-recession levels, lower-wage employers find it very hard find workers. Though the availability of daycare affects many families, the loudest complaints are coming from low-wage employers. Expansion of subsidized daycare has never been as politically attractive as it is today.
The post-COVID remote work environment is here to stay, and the numbers of participants are staggering. More than 1 million Hoosiers are working remotely at least part time. But there’s a major educational and income gap — about half of workers with a college degree are at least partially remote, but only 11 percent of workers without a high school diploma have that option. Two-thirds of folks making over $200,000 per year are remote, while less than 10 percent earning under $35,000 are.
One possibility is that the reversal of wage inequality is really just changes in compensation that accompany remote work. So, higher-wage workers may see a temporary stagnation in take-home pay, but they are better off because they aren’t commuting. Lower-wage workers are experiencing a large pay bounce to work at the job site. These are the types of labor market adjustments that tend to make everyone better off.
I don’t think unions played nearly as large a role in these changes as market forces did in the wake of COVID. Yet, we seem to be entering a period where more active unions will help craft changes to workplaces, even if the efforts really just amplify workplace changes that markets are already causing.
Michael J. Hicks is the director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University. Send comments to [email protected].
