The summer of strikes has extended into fall and is battering the U.S. economy with a ripple effect impacting productivity, spending and hiring while many economists fear a recession.

Strikes by the entertainment industry and the United Auto Workers have triggered an estimated $10 billion in economic losses. Some analysts say those numbers underestimate the damage because measuring the full impact of a work stoppage is nearly impossible.

Strikes have far-reaching consequences that hurt the nation’s total output, corporate sales, consumer spending, employment and businesses that depend on workers for sales, products and supplies.

“If you add up all these strikes, it’s enough workers and industries that you have to worry about how much product we are losing,” said Alex Salter, an economist at Texas Tech University. “All these individual strikes might be a small cut, but collectively, it could be death by a thousand cuts.”

President Biden’s aggressively pro-union policies have been blamed for emboldening labor leaders and fomenting the rash of strikes across the U.S. The White House insists Mr. Biden will never stop advocating for workers’ rights and collective bargaining.

The number of workers on strike this year is the highest since 1986, and it’s growing.

More than 75,000 Kaiser Permanente employees walked off the job Wednesday. Union representatives called it the largest strike of health care workers in U.S. history. The strike will affect hundreds of hospitals across several states as workers call for more staffing and wage increases.

Kaiser Permanente employees joined striking members of the United Auto Workers and the Screen Actors Guild, whose walkouts show no sign of ending.

The strikes have taken a toll on the economy.

In less than two weeks, the UAW strike has caused nearly $4 billion in damages to the automotive industry, according to a report released this week.

Economic consulting firm Anderson Economic Group estimates that the UAW strike has caused $1.2 billion in direct losses for Ford, General Motors and Stellantis, the Italian-American conglomerate that owns Fiat, Chrysler, Dodge, RAM, Jeep, Peugeot, Citroen and Alfa Romeo. The work stoppage also has led to $325 million in direct wages lost, $1.29 billion in supplier losses and $1.2 billion in automotive car dealers and customers.

Anderson’s evaluation did not include the expansion of the UAW strike on Sept. 29, when an additional 7,000 workers joined the picket lines at a Ford plant in Chicago and a General Motors plant in Lansing, Michigan. More than 25,000 autoworkers in 21 states are on strike, accounting for about 17% of the UAW’s 150,000 members.

“When the innocent bystanders begin to feel it, it will affect the generally supportive sentiment Americans have been expressing about the UAW’s demands thus far in the strike,” Anderson said in a statement accompanying its report.

A Moody’s Analytics report estimates that the nation’s gross domestic product likely will be reduced by 0.2% in the fourth quarter if the UAW strike lasts through October. At first blush, that doesn’t seem like much, but a 0.2% hit would result in the loss of $52 billion to the U.S. economy.

Pantheon Macroeconomics, an economics research company, says the hit will be much higher. It forecasts a 1.7% hit to the fourth-quarter GDP if the UAW strike continues.

Mr. Salter said the strike would harm the GDP through a loss in productivity.

In August, 4.1 million workdays were lost because of labor strikes, the most for a month since August 2000, according to Labor Department data. August and July combined for 6.4 million days lost from 20 work stoppages, including the Writers Guild of America, the Screen Actors Guild, workers at the University of Michigan and hotel employees in Los Angeles.

Through September, 7.4 million days have been lost to labor strikes, compared with 636 days for the same period in 2022, according to the Labor Department.

The entertainment industry strikes, which removed more than $6 billion from the U.S. economy, were particularly devastating for work time lost. In New York City, the strikes disrupted 11 major productions, which resulted in a loss of $1.3 billion and 17,000 hires in the state, according to state data.

The loss of productivity during a strike usually triggers layoffs, first in the affected industry before spreading to staffing cuts at restaurants, dry cleaners and other service companies.

Staffing in the motion picture and sound recording industries dropped by roughly 35,000 from May to September, according to the U.S. Bureau of Labor Statistics.

General Motors and Ford announced Tuesday that they would lay off a combined 500 additional workers because of the UAW strike. General Motors has laid off roughly 2,000 workers, and Ford has laid off about 930 workers since the strike began.

The three Detroit automakers aren’t the only ones laying off workers. An association of Michigan auto parts suppliers said it expects the companies to lay off half their workforce if the strike lingers. It estimates that suppliers have cut their workforces by 18% since the onset of the strike.

Creative Artists Agency of Los Angeles, one of the industry’s top talent agencies, laid off 60 people in the fallout from the entertainment strike. About 50 janitors who cleaned up at the studios also lost their jobs.

Striking workers don’t receive employer paychecks but receive pay from the union. UAW workers on the picket lines receive $500 a week, which accounts for about 40% of their lost wages. That means reduced spending on consumer goods.

The UAW’s strike fund totals $835 million, enough to last three months if all its workers join the picket line.

The economic impact may hit harder when the strikes are settled. UAW has demanded a 40% wage increase and 40 hours of pay for a 32-hour workweek.

That raises the specter of inflation, which has slowed recently after hitting 40-year highs last year. The lack of production in the auto industry could serve as a shock to the supply chain. Wage increases for union members could increase auto prices.

“If there is less product available, higher output costs, higher labor costs and higher wages, that is going to be passed on to the consumer through higher prices and less output,” Mr. Salter said. “We can be confident the direction of inflation is only headed one way.”

Link : https://www.washingtontimes.com/news/2023/oct/5/strikes-send-shock-waves-through-us-economy-tempt-/