Wage losses for threatened strike estimated at $859 million
EAST LANSING, Mich. – A new analysis by consulting firm Anderson Economic Group (AEG) estimates that a strike on all three automakers by 143,000 United Auto Workers (UAW) members could result in a total economic loss of more than $5 billion after 10 full days.
The UAW and Detroit’s Big Three automakers (Ford, General Motors, and Stellantis) continue negotiations to head off a strike. AEG has calculated the total economic loss by estimating potential losses to UAW workers, the manufacturers, and to the auto industry more broadly if those negotiations are not successful before the current contract expires in September.
Potential Scale of a 10-day UAW Strike
UAW leadership has repeatedly stated that it’s prepared to strike against all three automakers. If that were to happen, a 10-day strike would result in total wage losses of $859 million and manufacturer losses of $989 million. If only one automaker suffered a strike-related shutdown (Ford, for example), it could cause $665 million in losses during that period. In this scenario, AEG estimates a $341 million loss in direct wages and $325 million in company-wide losses.
According to Patrick Anderson, AEG’s principal and CEO, “When the UAW went on strike against GM in 2019, Michigan experienced a single quarter recession.” That strike, which involved 48,000 workers at more than 50 plants, lasted six weeks. In 2023, there is the potential that a strike could involve more manufacturers, more workers, and more plants. “If that happens, even a short strike would impact economies throughout Michigan and across the nation,” said Anderson.
Impact on Consumers
Vehicle inventory, which was at record lows during the pandemic, has been slowly trending upward to reach 162,000 units in June. However, it is still well below September 2019’s 649,000 units.
“Consumer and dealer losses are typically somewhat insulated in the event of a very short strike,” said Tyler Theile, vice president at AEG. “However, with current inventories hovering around only 55 days, the industry looks different than it did in during the last UAW strike.” She added that automakers now have “about one-fifth of the inventory that was on-hand in 2019, so a strike in current conditions would likely affect dealers and customers much sooner.”
Estimating Economic Losses
2023 Research Methodology
The firm’s consultants followed the same proven, accurate methodology used to estimate impacts from the 2019 UAW strike, the threatened 2022 rail union strike, the threatened 2023 UPS strike, two West Coast port shutdowns, the 2003 East Coast electrical blackout, the 2022 Türkiye-Syria Earthquake, and other significant events in the firm’s 27-year history.1
Categories of Loss
To determine the economic impact of a potential UAW strike, AEG estimated losses that include:
- Lost wages to workers, including striking workers and others who are temporarily laid off or forced to decrease work hours. AEG estimates cover both UAW and non-union auto workers, along with workers employed by impacted suppliers. Estimates were made based on the number of UAW workers in the U.S, average daily wages, and lost health care benefits. Because a strike would reduce demand for automotive parts and components, the firm included estimates for lost supplier wages.
- Lost earnings for the Big Three auto manufacturers. AEG estimates company losses, taking into account wages that would not be paid to striking workers.
- Auto industry losses. Automotive suppliers and auto dealers would both see losses in the short and long term.
Loss estimates do not include strike pay or assessments for strike pay; unemployment benefits or unemployment taxes; income taxes on wages; any settlement bonuses (which are transfers from shareholders to workers and do not represent U.S. income lost); or any reputational damage to the union or the employer(s).
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 – This methodology was calibrated by comparing recorded losses in GDP and earnings in affected states after major past events. For example, after the 2019 UAW strike, Anderson Economic Group compared their earlier estimates with later reported GDP in Michigan, Ohio, and the U.S. Further evidence of the firm’s accuracy showed up in accounting losses reported by General Motors in early 2020.