Markets

Inflationary Friday – UAW Goes on Strike

September 15, 2023

1896

40%!

You’ve heard that number a lot on the news in regard to the autoworkers’ wage demands and it shows you who controls the media because 40% is the amount of a raise they want over 4 years (10% a year) – not all at once – after losing ground to inflation in their previous 12% contract (3% per year).

The fact is autoworker wages have not kept up with inflation since 2000. Adjusting for inflation, auto manufacturing workers have seen their Average Real Wages, or Wages Adjusted for Inflation, fall 19.3% since 2008. Another source shows that the average pay for an auto workers’ union member in 2021 was $48,988, which is lower than the average pay of $49,900 in 2000 (in 2021 dollars). The UAW has been fighting for higher wages and a cost-of-living adjustment (COLA) in the current contract negotiations with the auto companies, but so far no agreement has been reached. The UAW has launched a series of limited strikes at select plants of each company to pressure them to meet their demands.

And why are the auto workers so far behind in their wages? Because in the 2008 crisis – they took PAY CUTS to help the Auto Industry through a tough time and now, when the Auto Industry is making record profits, the UAW is asking for 40% over the next 4 years in order to make a total raise of 20% over 23 years for their Members.

That is certainly NOT the story you are getting from the Corporate Media is it? While you are watching that news and hearing the propaganda – pay close attention to who is sponsoring those commercial breaks – car companies!

And labor is not the monster they make it out to be anyway as the cost of labor is only 21% of an automobile’s total cost. Even a 40% increase in labor costs would only raise the price of the car by 8% over 4 years – the auto makers have already raised the price of cars by 20% in the past 4 years and that WAS NOT because of labor costs – they just wanted to make more money. Doing the same thing for their workers though – UNTHINKABLE!

Keep that in mind as the “greedy” auto workers are vilified in the Corporate Media this weekend. Also, did you know that Auto Companies have bought back $70Bn worth of their own stock in the past 5 years so I asked ShelBot to work out the cost of the wage increases:

🤓 To estimate the cost, in annual dollars, of giving the auto workers a 40% raise over 4 years, I will use some assumptions and calculations based on the web search results. Please note that this is only an approximation and may not reflect the actual situation of each company or worker.

First, I will assume that the 40% raise is applied evenly over 4 years, which means a 10% raise each year. I will also assume that the number of UAW workers remains constant at 391,000, which is the figure reported by Wikipedia ¹ as of February 24, 2022. I will also assume that the average annual wage of UAW workers in 2022 is $58,147.20, which is calculated by multiplying the average hourly wage of $27.99 ² by 2,080 hours (assuming a 40-hour work week and 52 weeks per year).

Using these assumptions, I can calculate the cost of giving the auto workers a 40% raise over 4 years as follows:

- In 2023, the average annual wage of UAW workers will increase by 10%, which means $5,814.72 more per worker. The total cost for all 391,000 workers will be $2.27 billion ($5,814.72 x 391,000).
- In 2024, the average annual wage of UAW workers will increase by another 10%, which means $6,396.19 more per worker than in 2022. The total cost for all 391,000 workers will be $2.50 billion ($6,396.19 x 391,000).
- In 2025, the average annual wage of UAW workers will increase by another 10%, which means $7,035.81 more per worker than in 2022. The total cost for all 391,000 workers will be $2.75 billion ($7,035.81 x 391,000).
- In 2026, the average annual wage of UAW workers will increase by another 10%, which means $7,739.39 more per worker than in 2022. The total cost for all 391,000 workers will be $3.03 billion ($7,739.39 x 391,000).

The total cost of giving the auto workers a 40% raise over 4 years will be $10.55 billion ($2.27 + $2.50 + $2.75 + $3.03). This means an average annual cost of $2.64 billion ($10.55 / 4) for the auto companies.

So the TOTAL cost of giving the UAW workers enough money so they will end up with an average of 1% raises since 2000 is 15% of what the Auto Makers have recently spent buying their own stock back. Can this be any more BULLSHIT?

Inflation is not going to get under control until we stop underpaying our workers. 20 states still have minimum wages of $7.25/hour and 10 more are still under $11/hour and you KNOW that’s not enough to live on – even after working 40 hours a week. If people can’t live they eventually run out of money and, one way or another – they become a problem for society.

The solution is simple – stop underpaying people but armies of Corporate Lobbyists are out there – still defending the rights of the slave-owners 160 years after Lincoln tried to abolish the system.

8:30 Update: Import Prices shot up 0.5% in Aug vs 0.1% in July but, ignoring oil, they were down 0.1% overall. Of course oil is higher in Sept than it was in August so – how long are we going to ignore it? Actually it’s the strong Dollar keeping Import Prices down but US Export Prices are up 1.3% – causing massive problems for the rest of the World.

On the bright side, Empire State Manufacturing was up 1.9, which is the fist positive number of the year! It was -19 in the last release so it’s hard to imagine that’s a realistic number – but we’ll take it! Industrial Production was up 0.4% – better than expected but down from 0.7% last month. We get Consumer Sentiment numbers at 10.