At Financial Times Rana Foroohar ruminates on the broader implications of the ongoing UAW strike:
The unions are not just fighting for a few more bucks. This battle may determine not only the future of the clean energy transition in the US, but potentially the outcome of the 2024 presidential election, and the future of the Democratic party. It’s a worthy battle, but also a very, very risky one.
This is in some ways a life-or-death battle for the union. The EV transition is already predicted to significantly lower the number of jobs in the automotive sector in the short term, since you simply don’t need the same number of components and thus workers on an assembly line as you do to manufacture cars with internal combustion engines. Ford chief executive Jim Farley told the Financial Times back in 2022 that the EV transition might require 40 per cent fewer workers.
While some would argue that China flooding Europe with EVs in violation of World Trade Organization rules matters less than getting more cheap EVs on the road, the tough political truth is that if western countries are perceived as selling out their own workers, we’ll see a harder and broader swing towards Trump-style autocratic populism.
A better idea would be for the US and Europe to come together and set joint labour and environmental standards on how EVs are made. This would help avoid a race to the bottom with either China, or each other, and put tariffs on vehicles that don’t adhere to them.
Briefly stated the implications are not just economic but environmental and political. The economic implications are pretty obvious. Will the union succeed in wresting concessions not only on pay but on benefits and the present tiered workforce from the companies? I sympathize with the union in its argument that CEOs compensation has grown enormously while theirs has declined cf. here:
Furthermore, how much of the increase in CEOs’ compensation is actually warranted? Are they doing good jobs or just benefiting from a general bull market?
The sad reality is that if the CEOs’ compensation were reduced to zero, it would provide just about $500 per worker. Not only wouldn’t that offset the pay increase the UAW is demanding, it wouldn’t pay for retirees’ healthcare insurance, another demand. Where is the money supposed to come from? It won’t come from raising prices. That would just drive more market share to non-union competitors.
In this day of activist media I can’t tell whether we’re comparing apples with apples. What I can tell you is that the market shares of the formerly Big Three have declined, the number of workers they employ, both hourly and salaried has declined, and Toyota and Honda employ non-UAW hourly workers.
The environmental implications extend beyond whether EVs will be built to where they were built. Building EVs in Germany (or the United States) produces fewer carbon emissions than building them in China so it makes a difference.
And the political implications for President Biden are serious, too. This strike will be a test of his bona fides as a defender of workers. If the strike is resolved in the union’s favor, it will help him. If the opposite is true it will be another nail in his political coffin.