The Economic Impact of the UAW-GM Strike

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The UAW-GM strike that began on September 15 and ended on October 25 was their longest since the 1970 strike, which lasted 67 days. Despite its length, the strike had minimal impact on the national economy. There were 128,000 new jobs created in September, which is similar to the 2019 average of 167,000 new jobs per month. September’s job creation exceeded that of February and May of this year, months when the UAW was not on strike.

Gross Domestic Product (GDP), which is the value of all final goods and services produced in the economy, grew by 1.9 percent in third quarter 2019, which is on par with the 2.0 percent growth experienced during the second quarter. New vehicle sales may have suffered slightly in October, falling by 630,000 units after increasing by 200,000 units in September. However, this is not necessarily an abnormal fluctuation in the typical pattern of month-to-month vehicle sales. Any decline in October sales due to the strike will likely be made-up for in November, if the strike prevented consumers from purchasing their preferred vehicle.

Business investment in transportation equipment fell by $7.5 billion in the third quarter, which may include reduced spending on new capital by GM as a consequence of the strike shutting down production. However, this also likely includes reduced spending by Boeing as a consequence of issues surrounding the 737-MAX. At any rate, a $7.5 billion reduction in business investment is barely a rounding error in the $21.5 trillion of economic output produced in the U.S. economy in 2019.

The economic impact of the strike is likely to be larger in Michigan, given General Motor’s large footprint in the state. There are 17,000 UAW workers in Michigan. Michigan did lose 5,300 jobs in September, though this may be indicative of more troubling long-term trends than the result of a strike. Job creation in Michigan has largely been flat in 2019. Michigan has seen an average of only 1,300 new jobs created each month this year, which is less than a third of the monthly job creation of the 2016-18 period. Michigan also lost jobs in April, May and July of 2019, months when the UAW was not on strike. Estimates for Michigan’s GDP in 2019 will not be available until next year, though these other indicators suggest that Michigan’s economy was slowing compared to the national economy even before the strike.

GM also had troubling long-term trends before the strike, seeing a decline in market share from 17.11 percent in 2017 to 16.69 percent in 2018. GM has steadily lost market share since emerging from bankruptcy, as the company had a 20.93 percent market share in 2008. General Motors sold about 150,000 fewer vehicles in 2018 than in 2017, and sold about 40,000 fewer vehicles in 2017 than in 2016. These long-term trends for GM and Michigan are more troubling than whatever minimal, short-term impact the strike had.

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