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The Cost of Strikes
Ask instead: What is the cost of not striking?
Whenever a major strike is looming, you are sure to hear a price tag attached to it. We may be just days away from a strike of nearly 150,000 UAW auto workers—a strike that would, in just ten days “reduce US gross domestic product by $5.6 billion and likely push the Michigan economy into a recession,” Bloomberg reports. The ongoing screenwriters strike, which has shut down Hollywood for months, could cost Los Angeles alone $3 billion, and the nation as a whole billions more. With each passing day, the strike costs the California economy another $30 million. Big numbers like these cause politicians to freak out, companies to warn of imminent doom, and the public to wonder whether unions are recklessly putting their own needs ahead of the economy that serves us all.
But the “cost” of a strike is a rather philosophical concept. Another way of saying that the UAW strike, for example, would cost the US $5.6 billion is to say “If this strike happens, $5.6 billion worth of economic activity will not occur that would have occurred had the status quo been maintained.” The “cost,” in other words, is the difference between the money being made (or not made) during a strike and money that would have been made in a fantasy world in which the strike did not happen and everything continued on as it had been before.
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To make any sense of the meaning of this, though, we have to ask ourselves another question: What would the cost be of not having a strike? Whenever a strike happens, the economic impacts hit not just the striking workers (in the form of lost wages) and the companies who are the targets of the strike (in the form of business shutdowns) but also the much broader world of people who are not on strike but whose incomes are affected by it. In the Hollywood strikes, for example, all of the janitors and costume warehouse workers and camera operators and deli clerks and others who lose work when the entertainment industry stops functioning experience an abrupt break with normality as a direct result of the strike. The fact that the economic pain happens so suddenly, and is spread so widely, makes it very easy to perceive. When a strike doesn’t happen, there is still economic pain—it is just hidden away in a place where it can be safely ignored by the wider world. In crude economic terms, a strike is just a way for workers to raise their pay to the current level that the market will bear. All of the pain that goes into a strike is what is necessary to achieve the pay rate that the workers deserve. Almost by definition, if there had been no strike at the times that there were (successful) strikes, the workers at those companies would have come away with lower wages than they did after winning their strikes. And since wages in union contracts persist for years, the cost to those workers of not undertaking a months-long strike would have been years of lower wages, which would have meant a lower starting place in the next contract as well, likely compounding the losses for many more years to come.
Instead of viewing a strike as something that workers choose to engage in, try thinking about a strike as something that an intransigent employer chooses to cause by refusing to pay workers a far wage. This is, in fact, a more accurate view. Always and everywhere, workers who choose to strike are gambling with their very livelihoods, risking ruinous economic consequences if it lasts longer than their savings. Employers are hurt by strikes too, but the risk to managers (who keep working during the strike) is far less severe than it is to workers. The company officials who refuse to make a deal and push workers to strike are making a far less personally risky choice than the workers are. There is a higher bar for workers to decide to strike than there is for management to try to play chicken with them and dare them to strike, just to see if they will fold. This is all to say: When workers go on strike, you know they have really been pushed to the wall. It is an arduous, dangerous tactic that no one in their right mind would undertake unless the alternative was intolerable.
Is it possible for a union to get greedy, demand wages that are unsustainable for a company, and go on an ill-advised strike when the company makes the reasonable choice to refuse? Yes. I can’t think of any examples of this happening offhand, but it is possible. I can, however, think of many examples of unions making economic concessions to companies when times are hard. This happens all the time! Business slows, a recession approaches, the company makes dire threats that layoffs will surely be necessary soon, and unions voluntarily agree to pay cuts, pension cuts, or other measures to save the company money. This is common. The workers at Warrior Met Coal in Alabama made concessions when times were hard, only to have the company refuse to return the favor when its financial position improved. They went on strike in 2021 for nearly two years, and the company didn’t budge. (Lest you think these things are easy.) Hell, the UAW strike that may happen this week is partly rooted in this dynamic: “UAW members previously gave concessions when the industry was weaker, including when GM and Chrysler, a predecessor to Stellantis, filed for bankruptcy in 2009. The top hourly wage for UAW production workers didn’t increase between 2006 and 2015.”
The idea—eagerly encouraged by business interests—that the primary cause of strikes is worker greed is simply a myth. Companies routinely pay higher costs for goods and services when their vendors and suppliers, who may be formidable businesses on their own with strong pricing power, demand it. But when it comes to labor, it’s a big fucking tantrum. The 90% of American workers who do not have a union are almost entirely at the mercy of the labor market and its oscillating waves of tightness and looseness, abundance and scarcity. Those who do have unions are able to negotiate the same way businesses negotiate with one another all the time. (Which should be utterly normal. You don’t see companies funding dark money astroturf groups to run stealth PR campaigns against the fact that the price of screws went up by 5%. But I digress.) Whenever someone says that workers negotiating for higher pay are being unreasonable, it is statistically likely that they are wrong. How do I know that? Oh dear—you are gonna make me bust out the famous wages vs. productivity chart:
That’s how I know. American workers have continually become more productive since WW2, but as soon as the Reagan era hit, wages stopped keeping pace with the rise in worker productivity. The gap between those two lines represents the fruits of productive labor that has been scraped into the pockets of investors instead of workers. It’s been happening everywhere, systematically, for the last 40 years. A strike is a way for workers to grab ahold of the lagging bottom line of that chart and begin to yank it back up to where it should be. Maybe the union on strike in your town is the one god damn group of workers in the whole god damn country who are getting more than they deserve, but I doubt it.
And when we speak of who deserves what, some perspective is necessary. I am going to make a highly technical point here, and I apologize in advance for using complex jargon, but there is just no other way to capture its intricacies. Here goes: Workers do the work. Contrast that with owners, managers, and investors, who do not do the work. Of those groups, who “deserves” the most money? Call me a radical, but I would suggest that the people who do the work have the overwhelming moral claim to the money, and the people who did nothing but issue instructions to the people doing the work—or, even less impressively, simply hand over some of their own money for a little while to get the work going—have a lesser, secondary claim to the money. Even if we generously grant the premise that “both sides” are equally greedy, when there is a dispute over the apportionment of the money, the people who do the work are always more justified in asking for a greater share than the people who don’t do the work, unless you can show me some really impressive extenuating circumstances. (Usually the extenuating circumstances we get in the real world are more like “John Deere workers go on strike and managers come in to run the plant themselves and immediately crash a tractor into something,” which kind of reinforces the broader point above.)
In modern corporate America the people who don’t do the work get paid many times more than the people who do the work, so picking sides in these disputes is generally not difficult.
Strikes are hard. Yes. They come with a cost. But their cost is temporary, and their benefits are tangible. Not striking also comes with a cost—one that lasts longer, and, in aggregate, creates an entire economy in which the people who do the work get less than they deserve. That is the economy we live in now. That is why we need more strikes. Restoring a semblance of balance is going to require a lot of fights.
If executives were really interested in settling or preventing strikes, the natural move would be to put their own pay on the table as a negotiating issue. They never do. Remember this if the UAW strike goes down. If you are interested in high quality granular reporting on UAW’s issues, you can’t go wrong reading Labor Notes.
How do we reset the balance between wages and productivity? More strikes. How do we get that? More unions. How do we get that? More organizing. How do we get that? For the answer, please preorder my book, which is about these very things.
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