Estimated Costs of 2019 UAW-GM Strike Revealed
Oct. 14, 2019—The Center for Automotive Research’s (CAR’s) estimates the cost of the UAW-GM strike to the company at roughly $450 million a week and the strike pay costs to the UAW strike fund at as much as $12 million a week.
CAR used a dynamic input-output model of the U.S. economy to estimate the impact of the UAW-GM strike. CAR adjusted UAW-GM workers’ compensation to reflect the $250 per week strike benefits and modified the effects of GM purchasing to take into account only the reduction in production parts, materials, and services that are not needed while GM’s U.S. plants are not producing a product.
CAR estimates the U.S. employment multiplier for UAW-GM jobs is 11.5, which means that when UAW-GM workers are at work producing vehicles, engines, transmissions, stampings, parts, and components, every UAW-GM job supports 10.5 other jobs in the U.S. economy, with 3.2 of those jobs in the production-focused U.S. supplier sector.
CAR’s results show that overall weekly worker compensation is $857 million lower for each week that the strike lasts. That lower compensation is associated with a $108 million reduction in tax payments to support government social insurance programs—unemployment insurance, Medicare, Medicaid, and workers’ compensation insurance—and a $114 million reduction in personal income taxes paid to state and federal treasuries.
The costs of an automaker strike can be small if the work stoppage is short-lived. If the automaker has sufficient inventory, sales revenue impacts should be relatively minor, and the workers can both makeup for lost production and partially replace lost wages with overtime once they return to work. When a strike lasts beyond a week, it becomes more challenging to make up lost production and costs begin to mount for both the company and the union. The longer a strike lasts, the more it impacts companies and workers in the supply chain as well as the broader economy.