During a historic auto strike scaring Wall Street, Biden’s economic advisor says workers want a ‘fair slice’

Chloe Berger
Thu, September 21, 2023



Summer is (debatably) over but ‘tis still the season for striking as workers keep the streaking strike going into the fall. Labor unrest is seen by many people as a sign of a sour economy, when struggling workers push for higher pay to better cope with a downturn. But Council of Economic Advisers Chair Jared Bernstein claims the highest profile labor fight at the moment—a walkout by auto workers for better pay, the return of pensions, and a shortened work week—is actually a sign the economy is doing well.

“There’s this mythology that you can’t have a strong macro economy and have striking workers, I think that’s demonstrably wrong,” Bernstein said this past Tuesday at a conference hosted by Politico, adding that it’s because the economy is so strong that workers are able to push for a “fair slice.”

After a period of high inflation and recession fears, the nation is relatively on track, according to Bernstein. Unemployment is near a historic low and the rising cost of living is starting to ebb. That being said, many Americans still feel financially unstable and anxious, as younger generations especially struggle to build wealth while grappling with student debt and a housing market that is like a horror movie. And many people are dipping into their pandemic-era savings in order to stay afloat.

For Bernstein, Bidenomics is working. “We’re in a good place. We have low unemployment. We have great job growth. We have strong consumer spending. We have real wage gains,” Bernstein asserts.

Biden recently claimed to be the ‘most pro-union president’ in U.S. history, and now he seemingly must put his money where his mouth is as auto workers for the Big Three car makers strike at certain factories until their demands are met. The strike doesn’t change Biden’s pro-union sentiment or his agenda, nor does it erode the economy’s strength, according to Bernstein. “The idea that anyone would throw any size wrench … into that equation is political malpractice,” he said.

Still, others are sweating a bit. While many experts don’t foresee a recession if the UAW’s demands are not met, a strain is still likely to occur. The Big Three employees striking for 10 days could cost the nation $5 billion, per Anderson Economic Group’s analysis. There will also likely be a ripple effect that hits other related industries, as already seen in the General Motors and Stellantis layoffs of 2,000 employees. Of course, that’s the point of the strike, to demonstrate how much the economy relies on the labor of a group and how they, to not mince words, should pay up. It’s still too early to tell the true impact of this strike to the economy, according to Secretary of the Treasury Janet Yellen.
Employees are looking to close the wage gap. Biden says this is part of the plan

During the pandemic, rising inequality was put in the spotlight as the ever present economic divide became more stark. Lower-paid workers were asked to continue to work during lockdowns, in often worsening conditions, while mostly white collar workers were able to stay at home with their cushy ergonomic chairs and salaries. Many essential employees became burned out, quit, or demanded better pay and a better quality of life. Even if the Great Resignation is now over, the existential crisis among workers that the pandemic fueled remains.
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Amid all this, working class households saw economic gains during a time of pandemic-era assistance as wages grew for lower-income employees. Biden and his Bidenomics is all about building from the bottom up and middle out, as seen in his push to invest in domestic manufacturing jobs. “There’s a linkage there between workers getting their fair share of the growth they themselves are helping to create and helping to fuel macroeconomic growth in an economy that is 70% consumer spending,” adds Bernstein.

That being said, the middle class isn’t getting nearly as much wage growth as the executives are, which is partly what’s pushing the United Auto Workers and other labor unions to act. During the early pandemic, CEO pay skyrocketed to the point where the average CEO earned 272 times as much as the average worker. While annual pay for CEOs has recently stagnated a bit, the gap is still huge. UAW president Shawn Fain put the disparity in the spotlight on CBS’s Face the Nation by saying that employees of private companies “are scraping to get by so that greedy CEOs and greedy people like Elon Musk can build more rocket ships.”

Fain points out that CEO pay among the Big Three automakers has increased 40% in just four years. Initially, Fain demanded the same 40% raises for workers, though he has since reduced his offer to 36%. Even so, the gap between the median employee pay at GM and executive salaries is so high it would take a worker 362 years to match one year of pay for GM CEO Mary Barra, as the Associated Press points out.

With a strong union backing, and what Biden’s advisor says is a favorable economy, some employees have recently closed this gap between the 1% and workers. UPS’ Teamsters, after threatening to strike, recently succeeded in changing the game by winning a $170,000 contract for drivers after a five-year contract, plus benefits.

Still, the Biden administration isn’t exactly encouraging the autoworkers strike to continue for long. Despite Bernstein’s assertions that everything is peachy keen and that strikes are a good sign, the White House was about to rush a team to Detroit to help expedite the discussions. They have since backtracked, as White House press secretary Karine Jean-Pierre called the choice to not head to the midwest a “mutual decision” to give space for the two parties to negotiate. It appears as if Biden and his team are putting in the effort to make it look like he’s all cool as a cucumber and continue to uphold his pro-union platform as the strike plunges onward.

 Fortune.co THE RADICAL VOICE OF LABOR

Anti-Union Elon Musk Helped Push The UAW Toward Historic Strikes

Bradley Brownell
Thu, September 21, 2023 

Image: UAW

Tesla boss and richest man in the world Elon Musk has a long history of opposing unionization and paying lower total compensation. The electric car company in Texas is non-union, and Musk would like to keep it that way. The pioneering EV maker has caused the rest of the American auto industry (and indeed globally) to change their own practices. It’s had a ripple effect that helped lead to the current UAW strike.

In order to remain competitive with Tesla, legacy automakers are using this transition as an excuse to build new EV-specific plants in union-hostile states like Kentucky, Tennessee, and Alabama. These factories are not subject to union rules because the automakers are partnering with foreign battery company entities. Tesla spends $45 per hour for its non-union labor, including benefits, while Ford, GM, and Stellantis are paying $63 per hour for similar work.

For many employees, Tesla’s “performance expectations” can be considered abuse, with reports of 12-hour work days, workers fainting from dehydration, wading through sewage, and other serious safety concerns. That’s before you get to the actual abuse of rampant racism, sexual misconduct, and worse. Reports indicate that some Tesla plants have some thirty times as many OSHA safety violations as other U.S. car factories, and that doesn’t count all of the misclassified and underreported injuries within the company.

Tesla has gotten away with over a decade of labor abuses and underpaid workers to gain its EV advantage over the rest of the American automotive industry. In the rush to catch up, the Big Three have seen huge profit growth and gained efficiencies. Rather than pass these boons on to their employees, they’re taking the Tesla route and taking advantage of their workforce. That’s perhaps the root cause of this UAW strike. While Musk himself didn’t cause the vote to strike against GM, Ford, and Stellantis, he’s a big part of the reason it got this bad.

Meanwhile, Tesla is trying to use the strike to recruit union workers away from Big Three companies. The promise of Tesla’s slightly higher wages come with the hidden backhand of longer hours, harder work, dangerous conditions, and unhealthy workplace practices. It sure seems like Tesla workers need to find a way to unionize themselves and negotiate not only for better working conditions but a larger portion of the Tesla profit pie. I can think of a union president who might be happy to fight for them.

Jalopnik