Strikes and Inflation
Beginning early in the summer, major labor strikes across auto manufacturing, airlines, and Hollywood began to arise, with hundreds of thousands of American workers demanding pay rises from their superiors. Recently, an ongoing walkout from the United Auto Workers union caught the attention of President Biden, where the big three Detroit automakers hope to find a resolution in a win-win deal. This year alone, there have been a recorded 396 labor strikes, with the majority focused on compensation and wage increases. Between the years 1979 and 2022, the annual wages of the top 1% of workers rose by 145%, while the average annual wages of the bottom 90% rose by just 16%. The pressing issue, however, is not just one of social relevance, but also economic.
In the month of August alone, American companies lost 4.1 million labor hours, the most of any recorded month in the last 23 years. Throughout the year, there have been a total of 7.4 million hours lost, resulting from 20 major stoppages across a myriad of industries. If the entirety of the UAW’s 140,000 members performs a walkout, there is an estimated 1.7 percentage point decrease in quarterly GDP. If wage increase requests are met from the UAW and several other unions on strike, there is also a chance the Fed’s attempt to curb inflation could become more problematic. As of now, unions only occupy nearly 10.1% of the American workforce, hopefully muting any effects that could seep into the overall macro economy.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
