The United Auto Workers union is on strike — and some are afraid it could cause a major Midwest recession. On Monday, September 16th, 50,000 GM workers walked out of a total 31 factories, as well as another 21 facilities. This is a strike the size of which hasn’t been seen for over a decade — when the last GM strike occurred.
But what do the employees of GM want, and will they get it?
At the time of writing, the strike is entering its second week with “no end in sight” according to the Associated Press. Let’s take a deeper look at the dispute — and what workers want from one of America’s most-recognized international brands.
What Do the Workers Want?
Negotiations are ongoing between UAW and GM, but neither have been able to reach a compromise. On the employee side, they’re asking for higher wages and better profit sharing — as well as the opportunity for temporary employees to move into permanent positions.
However, GM has offered higher wages and better profit sharing to employees, but negotiations have continued. According to GM, the average wage for an hourly GM employee is $90,000 a year, and that there are considerable benefits on top of this amount.
In addition to increased wages, the UAW has promised 5,400 jobs to be either created or retained, and $7 billion to be invested in the United States. GM already conducts much of its operations in the United States compared to other auto manufacturers, but there are concerns that automation could eventually lead to jobs being lost. GM’s hourly jobs have been going down due to increased automation.
Temporary Workers Increasing
Despite the high wages paid to hourly GM employees, much of the work is actually being done by temps. GM has been increasing the number of temp workers that it employees, and in so doing reducing its benefit costs.
Some temporary employees have worked for as much as three years, without any benefits such as significant vacation or healthcare. UAW would like to see these employees hired on as permanent employees.
Temporary employees are performing the same labor, but they can only take three vacation days a year. However, temporary employees also don’t have a lot of room to negotiate, because they’re at the mercy of their employers.
For permanent employees, temporary employees make it easier to devalue the hourly work. Since temporary employees are much cheaper for a company, a company can switch entirely to temporary employees to dodge benefits payments.
The Potential for a Recession
GM notes that it purchases and sells to a great deal of other companies, and this strike could be felt across the nation. Meanwhile, striking employees are reportedly making $250 a week, and those payments only kick in after the 15th day of the strike.
It’s a serious concern that the GM strike could have consequences for everyone in the Midwest area. Strikers might not be able to make their rent, which could have the impact of slowing down the rental and real estate market. Strikers won’t be putting money into the economy because they will be cutting back on their spending.
Companies that rely upon GM aren’t going to be able to operate, and consequently may not be able to pay their employees. There’s a potential domino effect involved, given that a major employer has now ground to a halt.
A Strike for the Middle Class
The UAW believes that this strike is a strike for the middle class. Companies have been increasingly shifting to outsourced and temporary labor as a way to avoid benefits, and temporary workers, automation, and outsourced facilities all potentially threaten their livelihood.
At this point, GM may be waiting out its employees. If its employees are unable to pay for their basic needs, such as rent, there may be pressure on the UAW to end the strike early. However, UAW employees also have a lot to gain by continuing this strike: GM is already feeling the strain of its operations being shut down.
Whether the surrounding area is going to see significant decreases in economic activity remains to be seen. It does seem that the UAW is serious about keeping the strike going until its demands are met. By the same token, GM has been attempting to negotiate and offering UAW some concessions.