The United Auto Workers union has gone on strike against General Motors Co., demanding much higher pay, more benefits, more job security and a greater share of profits. One analysis suggested that the work stoppage could cost the auto manufacturer $50 million a day in lost earnings. But there might be another, bigger cost for GM and its workers if the strike drags on.
On the positive side, the GM work stoppage, the first in 12 years, has the potential to help revitalize a moribund U.S. labor movement. In recent years there has been a spate of strikes in the country, but they look small in historical context:
The iconic nature of the current struggle makes it a potent symbol. It was a 1945 UAW strike against GM that resulted in the so-called Treaty of Detroit in 1950, which resulted in the generous packages of pay and benefits that defined good manufacturing jobs in the postwar U.S. The U.S. has largely shifted to service jobs, but a UAW victory against GM could inspire service workers to organize as well. That would be a step toward rebuilding the American middle class.
But there are several reasons why a strike against GM might not be the most effective way to kick off a reborn labor movement. The nature of the industry, the evolution of the global economy since 1950, and the pressures of climate change mean that even if the walkout ends in victory over GM's management, the UAW strike might end up backfiring.
Internationally competitive export industries are not ideal for the kind of aggressive bargaining the UAW is engaging in. When the U.S. was practically the entire market for GM's cars after World War II, management could accommodate labor's demands simply by lowering profits, raising prices and increasing wages and benefits without hurting sales. But now, even if Ford joins whatever deal GM eventually reaches with its union, U.S. manufacturers are facing a global market and a slew of overseas competitors.
Today, GM isn't even close to being the world's biggest auto manufacturer, producing fewer than 7 million vehicles in 2018 compared with more than 10 million at Toyota and Volkswagen. In terms of worldwide revenue, Ford and GM come in fourth and fifth, respectively.
At their U.S. factories, these foreign companies generally pay workers substantially less than GM and Ford. Autoworkers in Germany and South Korea earn more, but have higher productivity that more than makes up for it. Notably, German unions have often pursued a policy of wage restraint, agreeing to hold down pay increases so that their employers can gain market share. GM and Ford are thus facing an uphill battle against rivals that can produce and sell cars more cheaply.
Government policy could help shield GM and Ford from some of that competition. The U.S. could enact high tariffs to protect its markets, and it could mandate that foreign companies use unionized workers (though the latter is highly unlikely to happen unless Democrats win a lot of elections).