## Historic Auto Workers’ Strike: The Impact on the US Economy
New York, CNN – The historic strike by the United Auto Workers (UAW) is officially underway. While it is already causing some damage to the US economy, experts suggest it is unlikely to push the country into a recession.
“The unionized part of the industry, while still large, is not as big a piece of the national economy as it once was,” commented Gabriel Ehrlich, an economic forecaster at the University of Michigan. However, the ultimate impact of the strike will depend on factors such as its duration, potential layoffs at other plants, the number of workers who strike, and the time taken to negotiate a resolution.
## The Union’s Perspective and Potential Economic Impact
UAW president Shawn Fain clarified that the intention is not to wreck the economy, but rather the billionaire economy. Although this strike may not “wreck the economy,” it could cause significant damage. For instance, if all UAW workers at Ford, General Motors, and Stellantis strike for 10 days, it could cost the US economy $5 billion, according to estimates by the Anderson Economic Group.
Ehrlich provided a different estimate, assuming a smaller immediate spillover effect. He estimated a loss of $440 million in national income if all UAW members strike for two weeks. If the strike lasts eight weeks, he predicts a hit of $9.1 billion to national incomes.
## Consequences for Local Businesses and Workers
Striking UAW members will receive $500 a week in strike pay, but this may not be sufficient to maintain their usual spending. This could lead to a loss of revenue for local businesses near strike sites. Tyler Theile, vice president and director of public policy at Anderson Economic Group, added that a prolonged strike could lead to layoffs at businesses near the affected auto plants.
## The Impact on the Automotive Supply Chain
Ehrlich suggests that the Big Three automakers will be eager to resume production as soon as the strike ends, due to the national car inventories still being below pre-pandemic levels. These companies may delay cancelling orders with suppliers for necessary parts as long as possible, fearing a ripple effect throughout the parts supplier network. However, a prolonged strike could force suppliers to lay off workers.
## Government Tax Revenue and Car Prices
The government will collect less tax revenue due to fewer people working during the strike. Fewer funds will be available for programs as a result. Ehrlich estimated that Michigan, the epicenter of many of the strikes, will see a decline of $10.6 million in tax revenue if the strike lasts two weeks.
The Anderson Economic Group estimated that 25,000 vehicles won’t be produced if the strike lasts 10 days, leading to higher car prices. Despite the strike, its impact will not be as significant as the Covid pandemic and the computer chip shortages that largely shut down the entire US auto industry in recent years, commented Jonathan Smoke, chief economist for Cox Automotive. Presently, prices for new vehicles are up almost 3% from last year, as per the August Consumer Price Index.
Contributions by CNN’s Peter Valdes-Dapena.
Original Story at www.cnn.com – 2023-09-16 09:19:00
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