"Forget what you've heard about the downfall of organized labor. A spate of strikes across the country is highlighting the power of unions amid today's national worker shortage, with potentially damaging consequences for the continuing nationwide supply problems.
The biggest strike came after midnight Thursday when more than 10,000 Deere & Co. employees walked off the job. Workers on Oct. 10 overwhelmingly rejected a deal for wage and benefit increases negotiated by their United Auto Workers reps.
In a different year employees might have leapt at the terms they turned down. By 2027 the deal would have lifted the typical production worker's annual wages to $72,000 from $60,000, according to the company. Employees also stood to gain one-time bonuses and better retirement benefits.
But several factors are strengthening worker demands. Inflation has climbed to 5.4% in the past year, eating up current wages and driving employees to hold out for bigger raises. This is likely to spread to other companies and industries as inflation persists. A shortage of labor has also increased wage demands and union leverage, as employers are discovering.
These circumstances have spurred thousands of other workers to the picket line in recent months. Frito-Lay employees in July won a steeper raise and an end to certain tight shift schedules. Carpenters in Washington state accelerated their proposed 21% pay raise this month after holding out for three weeks. More than 1,400 Kellogg employees left their posts last week at four plants across the country.
Unions planned these strikes at a tense moment in the economy. Supply chains are squeezed between restored demand and scarce labor, creating output shortages in countless industries. In retail alone, Salesforce estimates that roughly 350,000 missing workers will cost companies $223 billion by the holiday season.
Work stoppages are compounding that pain for businesses and consumers. The Des Moines Register reports that farmers fear delayed repairs and deliveries as Deere manages its strike. Kellogg, whose CEO said in May that he was holding back price increases, saw its share price drop when workers walked out.
This display of labor muscle upends the victim narrative of unions and their political allies. Union membership as a share of the private workforce has dropped through the years for a variety of reasons, not least the example of auto and steel companies burdened by bad union contracts and legacy costs. Thousands of union auto workers lost jobs while non-union workers prospered at auto makers in right-to-work states in the South.
Yet unions still hold significant leverage in organized industries. The self-portrayal as victims is convenient for unions in their pursuit of bargaining advantages from their political allies. The AFL-CIO, Big Labor's leading lobby, has led the campaign to pass the PRO Act, which would give unions the upper hand against management. Despite workers' demonstrated success at the picket line, union advocates and Democrats want to ban right-to-work laws in the states and limit how employers can make a case against union bargaining demands.
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The recent strikes aren't without irony for President Biden, a professed labor advocate now facing political damage from rising inflation and severe supply shortages. The President on Wednesday announced deals with retailers to speed up deliveries and unclog busy ports. We wonder what he promised the longshoremen at the Port of Long Beach in return.
Our view is that unions and managers can work out their own problems, and wage gains in a tight labor market are welcome when they reflect gains in productivity. The problem arises when wage demands undermine a business's ability to compete in the marketplace, which ultimately hurts the workers who will lose their jobs in the future.
Meantime, the reality in today's economy is that the more workers go on strike, the longer it will take for supply to catch up with demand.” [1]
1. Big Labor and the Supply Shortage
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 18 Oct 2021: A.16.
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