Since the beginning of this year, the United States has launched a massive wave of strikes, spanning multiple industries and geographical regions. Under the influence of high inflation and high interest rates in the past two years, increasing income, improving treatment, and ensuring employment have become the main demands of workers in this round of strikes. As of now, some strike activities have ended with an agreement reached between labor and management, while others are still ongoing. This round of strikes has caused certain losses to the US economy, and the final impact will depend on the duration and form of the strike actions.
1、 The strike wave in the United States has swept across multiple industries
In the past six months, strikes have become a frequent topic in the US economy, involving various industries such as entertainment/film and television, transportation, automobiles, healthcare, etc. The core demands of workers participating in strikes are mainly focused on improving salary levels, improving treatment, and ensuring employment. The emergence of this round of strikes is not only related to the tense US labor market, but also to the slow growth of real wages in an environment of high inflation and high interest rates.
1. The Writers Guild and Actors Guild of the United States have successively gone on strike
In early May of this year, the Writers Guild of America (WGA) launched a strike, demanding major film and television companies to increase their screenwriting salaries and distribute surplus revenue on streaming platforms. The association also called on the American Federation of Film and Television Producers (AMPTP) to take relevant protective measures to ensure that the application of artificial intelligence technology in film and television creation does not replace the creative work of screenwriters.
On July 13th, the American Actors Guild (SAG-AFTRA), which has over 160000 members, announced its joining the writers' strike. This led to the first simultaneous strike of screenwriters and actors in Hollywood since 1960, and resulted in the interruption of most film and television production.
Like the Writers' Association, members of the Actors' Union are also dissatisfied with their labor rights and treatment. Although Hollywood's film and television industries have flourished for many years, the treatment of screenwriters and actors has not been correspondingly improved. They believe that their creations and performances are the core of the entire industry, but their efforts and efforts have not received the expected rewards.
The strike by the Writers Guild of America lasted for nearly five months and reached a new three-year contract with the Alliance of American Film and Television Producers, which represents major film and television production companies, earlier this month, with 99% of members voting in favor. This new contract covers salary increases, several guarantees for the use of artificial intelligence technology, and other benefits.
But at the same time, the strike by the American Actors Guild has not yet ended. The American Actors Guild announced on October 19th that it will launch a strike on the multi million dollar television entertainment production industry at noon on October 20th. According to informal discussions held in recent days, representatives from both parties believe that there is no reason to resume formal contract negotiations that were interrupted on July 13th. It is reported that the Actors Guild of America hopes to receive a $500 million share from streaming profits, but the Alliance of American Film and Television Producers, representing the film industry, is only willing to pay $20 million. Coupled with differences between the two sides in artificial intelligence, minimum income, and other areas, the latest negotiations have ended in disarray, and the Actors Guild's strike will continue.
Economists believe that the Hollywood strike is prolonged and costly, and is expected to cause over $5 billion in losses to the US economy. The film and television industry has also been affected by a chain reaction and forced to lay off employees. According to data from the New York State Department of Economic Development, in New York alone, 11 blockbuster production interruptions caused $1.3 billion in losses and resulted in 17000 job losses. According to reports, due to strikes by American screenwriters and actors, Hollywood's film and television production almost came to a halt in the third quarter of this year, with total production in the Los Angeles area plummeting by 41%.
In addition, members of the Actors Guild of America have previously voted in favor of authorizing electronic game actors and performers to strike. This means that once the union believes that negotiations with the game company have broken down, the actors' union's strike activities may spread to the game company.
2. United Parcel Service and the American Trucker Union Sign a New Contract to Avoid the Largest Strike in 60 Years
In July, labor negotiations between UPS. US and the American Trucker Union, which represented 340000 truck drivers, reached a deadlock, and UPS truck drivers narrowly missed a collective strike. However, after negotiations, the two sides reached a new five-year contract in early August. During the contract period, the wages and benefits of truck drivers will increase at a compound annual growth rate of 3.3%, with approximately 86% of union members voting to approve the new contract.
According to the original plan of the union, if no agreement can be reached within the specified time, the union will organize a general strike, which will be the largest strike in 60 years in the United States. A study by consulting firm Anderson Economic Group shows that if the strike by UPS truck drivers lasts for 10 days, this potential strike could cause over $7 billion in losses to the US economy, and such strikes could also cause "significant and lasting harm" to related businesses and workers.
3. The American Automobile Industry Strike
Due to the breakdown of negotiations between labor and management, the United Auto Workers (UAW) strike against Detroit's three major automakers, General Motors (GM.US), Ford Motor (F.US), and Stellantis (STLA. US), officially began on September 15th local time.
UAW has been proposing a wide range of demands, including increasing wages (initially requiring a 40% increase), increasing paid vacation days, increasing workers' cost of living allowances, and pensions. According to reports, if the trade union's demands are fully met, the labor costs of these three major car companies will increase by $45 billion to $80 billion, with an average hourly labor cost of over $150, a 134% increase from the current $64.
Given that these three car companies are investing a total of over $100 billion in electrification transformation and reducing costs elsewhere to ensure tram production, it may be difficult to meet UAW's requirements. In the absence of progress in the negotiations, UAW gradually expanded the scope of the strike, and the three car companies responded with layoffs.
Currently, the US automotive industry has entered its fifth week of strikes, with over 34000 union members from the three major automakers participating in the strike. Anderson Economic Group (AEG) stated that as of October 12th, the economic losses caused by UAW's historic strikes against the three major automakers had reached $7.7 billion. AEG stated, "Many suppliers have entered hazardous areas and have more than one production line. If a settlement is not reached soon, the cost of restarting business will be higher, which may lead to some permanent production losses. Suppliers need financial assistance to resume operations
According to data, the automotive industry accounts for approximately 3% of the US gross domestic product and is an important component of the US economy, with approximately 1 million employees in the industry, including component suppliers. If the automobile industry strike cannot be properly resolved, it is likely to become a drag on the fourth quarter economic growth of the United States.
UAW Chairman Shawn Fain met with General Motors and Stellantis at the negotiation table on October 19th. Despite multiple negotiations between UAW and the three major automakers, the two sides still seem to be in a stalemate. UAW also put pressure on the three major automakers last Friday, stating that unless wages and benefits are increased, there will be more strikes.
According to the latest report on October 21st, UAW Chairman Shawn Fain stated that UAW has received new contract offers from General Motors and Stellantis within the past 24 hours, and Ford submitted the latest offer two weeks ago. Shawn Fain confirmed that the three major car companies have reached an agreement on a 23% salary increase proposal and have made progress on other issues.
However, Shawn Fain still warns that unless the three major automakers raise wages and benefits, there will be more strikes at American truck and SUV factories. He insists that these companies can afford higher costs than record breaking benefits. He said, "We are cracking down on the Big Three in an unprecedented way. These highly profitable companies can make more contributions
After five weeks of strikes, Shawn Fain stated that UAW "has more to do" and "has more to win" in contract negotiations with these companies. He said that the latest contract quotes from the three major automakers are already record breaking, but "when the treatment of automotive workers has significantly declined in the past two decades, this most generous contract in history is not enough.
However, while warning of the possibility of expanding the strike, Shawn Fain also told UAW members that negotiations are coming to an end, "this is the most difficult part of the strike. Just before reaching an agreement, the last mile of progress is the most positive. The report points out that the salary increase sought by UAW is 25%, which is very close to the 23% salary increase proposed by the three major car companies.
4. The largest medical strike in the United States! Over 75000 people on strike for 3 days
Just as the American auto workers' strike was raging, Caesar Medical Group, the largest private managed healthcare organization in the United States, also faced a strike by healthcare workers. At the end of September, after the contract between Caesar Medical Group and the Caesar Medical Group Union expired and the two parties failed to reach a new labor agreement, over 75000 medical staff members of the Caesar Medical Group Union Union went on strike from October 4th to 6th.
This is one of the largest strikes in the US healthcare industry. It is reported that the medical staff participating in this strike mainly come from hundreds of positions such as professional nurses, emergency department technicians, radiology technicians, medical assistants, pharmacists, etc.
In recent years, due to issues such as excessive work pressure, high inflation, and a shortage of medical staff, the labor relations in the US healthcare system have been in a tense state. As of now, over 5 million healthcare workers in the United States have resigned, and their job burnout has reached an unprecedented level. As time passed, dissatisfaction among medical staff with working conditions and salary gradually accumulated, ultimately leading to this unprecedented strike.
One of the core issues of the strike is the salary and benefits of medical staff. According to the trade union alliance, the salary level of medical staff is not commensurate with their responsibilities and work pressure. They demand that Caesar Medical Group provide more competitive salary packages to attract and retain high-quality healthcare personnel, ensuring that patients can receive better medical care.
In addition, medical staff have also expressed many dissatisfaction with working conditions and human resource management policies. They complain about the lack of sufficient manpower and resources, leading to excessive work stress and fatigue, which has a negative impact on the quality of patient care. Medical staff hope that Caesar Medical Group can improve the working environment, provide better training and development opportunities, and improve the overall quality of the medical team.
On October 7th, the Kaiser Medical Group Union Alliance stated that a new round of labor management negotiations will take place from the 12th to the 13th. The union alliance stated in a statement that if "the executives of Caesar Medical Group continue to engage in unfair labor practices and engage in malicious negotiations," they will hold a larger strike in November.
5. Thousands of casino employees in Detroit hold a general strike
On October 17th, the MGM Grand Hotel, Motown Casino Hotel, and Greek City Casino Hotel in Detroit were unable to reach an agreement with the union on raising welfare benefits before the noon deadline of the same day, leading to a strike by 3700 employees of these three casinos. This is the first strike encountered by these three casinos in over 20 years of operation.
According to data from the Detroit Casino Board, since 2020, Detroit casino staff have only received a 3% salary increase, while the local inflation rate has increased by 20%. The Unite Here Local 24 union, which represents casino employees, stated in a statement: "After helping Detroit's gambling industry recover, casino business is thriving, but employees' lives are still difficult
2、 Multiple factors driving the strike wave
According to data from the School of Industry and Labor Relations at Cornell University, the number of large-scale strikes that lasted for more than a week in the first nine months of this year has surged to 56, an increase of 65% compared to the same period in 2022. In addition, data from the United States Bureau of Labor Statistics (BLS) shows that there have been 23 large-scale strikes in the United States since 2022, compared to an average of 16 large-scale strikes per year in the past decade.
The environment of high inflation and high interest rates in the United States is one of the main driving factors for this wave of strikes. The two-year high inflation has significantly increased the cost of living for Americans, coupled with the aggressive interest rate hikes implemented by the Federal Reserve to combat inflation. High interest rates have further increased Americans' consumption and borrowing costs, leading to a rapid decline in disposable income.
Although American wages have indeed increased in recent years, inflation has offset most of the increase. Data shows that in 2022, the median household income adjusted for inflation decreased by 8.8%. In 2023, household income rebounded, but due to the wage agreement reached by union workers before the sharp rise in inflation, their income was severely impacted.
The tense US labor market is also a major driving factor. Under the influence of the COVID-19 epidemic, some elderly people and women with children chose to permanently withdraw from the labor market, and the number of job vacancies in the United States increased significantly, exceeding 12 million at the peak. The insufficient labor supply provides a great opportunity for employees who are dissatisfied with the current situation. Even if they are replaced or dismissed due to participating in strikes, it is not difficult to find a suitable job again.
In addition, the Biden administration's "worker centered" trade policy has also played a certain role in promoting this round of strikes. Since Biden took office, he has taken a series of measures to strengthen the union's strength. In a series of strike activities, Biden has basically taken a stance of supporting workers, calling on both labor and management to negotiate and reach an agreement. Biden has repeatedly claimed to be a "pro union" president, emphasizing that unions are beneficial and harmless to the US economy. He also called on Congress to pass the Protection of Organizational Rights Act, which includes lifting the ban on secondary strikes and allowing the use of intermittent strikes to expand the scope of strikes, and strengthening workers' strike capabilities by prohibiting employers from permanently replacing striking workers.
3、 What will be the impact on the US economy?
The impact of this strike wave is expected to depend on the scope and duration of the strike. If labor negotiations break down and the strike continues to expand, the negative impact will intensify with the expansion of the geographical area and industry sectors covered by the strike activities.
The strike may also accelerate inflation again. On the one hand, strikes cause damage to enterprise production, which in turn affects the operation of the entire supply chain. The resulting bottleneck in the supply chain may drive product prices back up and cause inflation to return. On the other hand, the main demand of workers participating in strike activities is to increase salary benefits. Rising wages will increase the cost of employment for enterprises - which will ultimately be reflected in the prices of products or services for enterprises. At the same time, it will increase the actual income of workers, drive consumer demand forward, and further increase inflation levels.
Once inflation shows signs of entrenchment or resurgence, the Federal Reserve may have to maintain high interest rates for a longer period of time or even further raise them, which may further put pressure on the US economy. Although the Federal Reserve holds a positive attitude towards the prospect of a soft landing for the US economy, Federal Reserve Chairman Powell pointed out last month that the success or failure of a soft landing "may depend on factors beyond our control", one of which is the automobile industry strike.
The third quarter GDP data of the United States will be released on October 26th. The market currently expects that, driven by strong consumer spending, the real GDP annualized quarterly rate in the third quarter of the United States will reach 4.1%, higher than the previous value of 2.1%. Investors will then learn about the impact of strike activities on the economy from relevant data.
As the pace of the Federal Reserve's current interest rate hike comes to an end, the market's focus on Fed policy is shifting from peak interest rates to the duration of high interest rates. Some economists say that in a high interest rate environment, the challenges that the US economy may face this autumn include a broader strike by car workers, a shutdown of the US government, the resumption of student loan repayments, and a rise in oil prices. Although the negative impact caused by each dragging factor may be limited, the combination of these factors may be more destructive.
It is worth noting that if the unions achieve their expected negotiation goals and receive significant salary increases and other benefits during this round of strikes, it may stimulate employees in other industries who are dissatisfied with the current situation and lead to more strike activities in the future, which will have a more profound impact on the US economy. Erica Groshen, Senior Economic Advisor at the Cornell University School of Labor Relations, said, "If the final agreement is beneficial to workers, it may actually encourage other unions to negotiate more aggressively
Analysts have pointed out that as the 2024 US presidential election approaches, Biden, who portrays himself as a "pro union", finds it difficult to make political statements that are not conducive to unions. He may have to rely more on calling on both labor and management to reach an agreement as soon as possible to end the strike. If the Biden administration continues to uphold its "pro union" image, unless there is a significant reversal in the labor market and a significant increase in unemployment, the wave of strikes will be difficult to stop, and the US economy will also bear a series of pains that come with it.
In addition, although data shows that the unemployment rate in the United States is still hovering at historical lows and economic growth remains strong, in the longer term, the frequent strikes may face a more painful problem for the US economy, which is that the hope of "re industrialization" at home may become even more remote.