Earlier this month, The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) President Shawn Fain announced a strike against the “Big Three” automakers, General Motors (GM), Ford, and Stellantis, the parent company of Chrysler. Using a new tactic, the “Stand Up Strike,” the UAW will phase in and out strikes at individual workplaces across the country in order to apply pressure in a flexible way on the Big Three as contract negotiations either progress or slow.
The 2008 Financial Crisis
During the 2008 financial crisis, the auto industry faced potential collapse. To prop up the employers against disaster and protect autoworkers, the UAW voluntarily agreed to significant concessions. Not only did they agree to freeze their own wages for the next four years, but they also gave up the Cost Of Living Adjustment, the automatic wage increase that protected them from inflation. A “two-tier” pay-rate system was established in which future hires would receive less benefits, including being denied access to the pension system in favor of individual 401(k) retirement plans.
It has been 15 years. The dollar has inflated 42.60 percent since then.
NPR reports, “The average hourly wage for workers manufacturing motor vehicles and parts, adjusted for inflation, has dropped by more than 20 percent in the past two decades, according to data from the U.S. Bureau of Labor Statistics.”
Meanwhile, CEO pay at the Big Three has increased 40 percent just in the last four years.
The workers’ demands
So, what do the workers want? To begin with, a 36 percent wage increase to match what the CEOs were given. This is to be augmented by the return of the Cost Of Living Adjustment. They also demand an end to the two-tier wage system, meaning all current and future employees will see the same pay increase in the next four year contract. The UAW is not only seeking a better deal for current and future workers, but current and future retirees by calling for a return of the pension system and healthcare for retired workers. Additionally, they want the implementation of a four-day workweek, the right to strike in protest of plant closures, and limitations on the Big Three’s ability to hire temporary workers who do not receive full benefits.
If the UAW’s demands are met, it would be a dramatic reversal of the fallout of 2008.
Why Labor Organizing is Necessary for a Free Market
When the economy is doing poorly and jobs are scarce, it is easier to accept employers’ increased bargaining power as simply the free-market at work. That’s because it is. Too many forget though, that the demand for labor is just one side of the market. Labor supply is its equal and opposite partner. Pushback by labor in demand of better compensation is also a crucial part of the market, and the economy could not function without it.
To achieve a balance between supply and demand, employers and employees rely on market signals to show them which way they have to adjust to get what they need out of the economy. If an employer receives many job applications, they can be pickier in who they hire. If there are many open jobs, workers can be pickier about what pay and working conditions they will accept.
However, in real life, employers and employees do not always have equal ability to send market signals. Large businesses with tens of thousands of employees and cash reserves can afford to leave some positions unfilled if it means keeping their labor costs low. Individuals looking for work though, usually don’t have those resources. They are far more dependent on an employer for their income than the employer is on their labor.
The only way for big businesses to feel a market signal that reflects the true value of the labor they employ is if individual employees band together. That is the point of organized labor, to make the free-market function. When either side of the equation falls out of balance, the system becomes inefficient and the fallout affects real people’s lives.
A UAW protest in Bedford, Indiana
Some of those people are Hoosiers.
On Wednesday, UAW Region 2B (Indiana and Ohio) Director David Green told The Collegiate Commons that he expects the assembly workers at Stellantis’ plant in Kokomo, IN and the metal stamping workers at GM’s plant in Marion, IN to walk-off in the next week. The Marion plant supplies the Wentzville Assembly Center, which has already been on strike since last week.
As of the time of publishing, it is unknown which locations will actually be next to join the strike. Part of the UAW’s strategy of the Stand Up Strike has been to cause unpredictability and confusion for the leadership of the Big Three. By not announcing which plants will join the strike next, the UAW disrupts the automakers ability to transfer materials between locations to mitigate the damage of the strike. The two Indiana locations mentioned by Mr. Green appeared on a previous list obtained by CNBC of locations that were supposedly going to strike during the last round of closures.
On Sunday, UAW Local 440 in Bedford, IN (about a half hour south of Bloomington) held a rally in solidarity with the wider union. Auto workers and their families gathered together in red Local 440 shirts. Some of the shirts read “Will Strike If Provoked” with an image of a rattlesnake on them. Current workers, retirees, and their children carried signs with messages such as “United For A Strong Contract,” “End Tiers: No Second Class Workers,” and, most commonly, “UAW Stand Up: Record Profits Record Contracts.”
As Local 440 President Derek Cronin said at the rally, “men and women who work for twelve hours a day six days a week deserve dignity.”
The current battle with the Big Three is not just about the union’s contract for the next four years, but protecting the dignity of all working people.
Unions bring about independence, which brings about freedom
Working hard for your living and being able to enjoy the fruit of your labor is at the core of how many view the American Dream. If your living is secure, you become more independent, and more free.
Some political narratives obscure it, but participating in a union can be a pro-small government act. Rather than relying on the government for handouts or ham-handed market intervention, a group of individuals join together to form a private organization capable of representing their interests and defending their ability to be financially independent. If Big Business can’t pay poverty wages, then the need for Big Government is eliminated.
Small government, free markets, and solidarity just might be the path to restoring the American Dream.
Marcus Bridgeman is the Opinion Editor at The Collegiate Commons. In his own columns, he focuses on issues of public policy and political philosophy. Bridgeman is a native Hoosier and a law student.