How would an auto worker strike affect the economy? Here’s what the experts say

As of 11:59 p.m. ET Thursday, 150,000 members of the United Auto Workers union could walk off the job unless a deal is reached with three major Detroit-based automakers over wages and working conditions.

The union is negotiating with General Motors ( GM ), Ford ( F ), and Stellantis ( STLA ) management for a new four-year contract, with a deadline of midnight Friday morning. The workers’ demands include higher wages, higher wages and health care for retirees. Union members voted to authorize the strike earlier this month. If the strike goes ahead, it would be the first major auto strike since 2019 when 49,000 UAW workers went on a 40-day walkout at GM.

How would such a strike affect the economy? Here’s what experts and public figures have to say:

Michael Pearce and Nancy Vanden Houten, American economists at Oxford Economics.

„As union participation and strike activity are still historically low, we do not think this represents a turning point in the labor force, nor does it suggest the risk of a prolonged price-wage spiral increasing in the coming years. A strike covering all workers would result in a 30% drop in motor vehicle production for the duration of the strike, resulting in US GDP of 0.2 We estimate a direct decrease of %-0.3%.

James Knightley, ING’s Chief International Economist

„Assuming a deal is settled within two weeks, it shouldn’t have much of an impact on auto pricing. However, it could be painful for economic activity, especially in the Mid-West. Suppliers will be affected. Consumer spending will be hit hard as household finances are already being squeezed.”

Bernie Sanders, an independent progressive senator from Vermont

„What the UAW is fighting for is not serious. It’s a completely legitimate demand that auto workers, who have made enormous financial sacrifices over the last 40 years, finally receive a fair share of the record-shattering profits their labor has created.”

Kelly Walker, Moody’s Analytics Economist

„Auto production is up significantly this year, but a potential strike by the United Auto Workers could derail progress as production ends in 2019.

Union leaders have threatened to strike for the first time in its history against the big three automakers — Ford, General Motors and Stellandis. A potential supply disruption could reintroduce upward pressure on vehicle prices, making it harder for consumers to afford new vehicles.”

Patrick Anderson, principal and CEO of Anderson Economic Group, predicted the 10-day strike would cost $5.6 billion in economic losses.

„When the UAW went on strike against GM in 2019, Michigan went through a quarter of a recession. That strike involved 48,000 workers at more than 50 plants and lasted six weeks. In 2023, a strike has the potential to involve more manufacturers, more workers and more plants. If that happens, Even a short strike can affect economies in Michigan and across the country.

S&P Global Market Intelligence

„The economic impact of a strike depends on which manufacturers are hit, for how long, and how their competitors and suppliers react.

Any deal would raise costs, but productivity gains over the past 20 years provide a buffer against the need to raise vehicle prices. Labor costs are just 5% of production costs, so a 46% settlement would increase costs by only 2% over four years. However, this may be enough to provide a price disadvantage to US-made vehicles.”

JD Vance, Republican Senator from Ohio

„A UAW strike would devastate our economy and harm many who depend on the auto industry. I hope labor and industry leaders can avoid such a decision, but this strike occurs because American auto workers have a short term. The end of the stick.”