Detroit Today: The economic impact of the UAW strikes

The spillover effects of the strike will continue to accumulate over time – both in Michigan and beyond – as the labor stoppage continues.

UAW union members march outside the Stellantis North American Headquarters in Auburn Hills, Wednesday, Sept. 20, 2023.

As the United Auto Workers strike against the Big Three automakers nears a full week today, many are wondering how long it will last and how the labor shortage will effect both parties, as well as the economy at large.

The UAW is currently in the midst of a “Stand Up Strike,” where they have chosen specific, strategic plants to withhold labor, while other members continue work as negotiations continue.

On Wednesday, Stellantis delivered the first new proposal to the UAW from one of the Big Three since the strike began, the Detroit Free Press reported. Meanwhile, the automakers have also responded by announcing layoffs at some locations, citing the strike as a factor. 

UAW President Shawn Fain has announced plans to lay out additional strike targets on Friday if “substantial progress” toward a “fair agreement” is not made.

Today on Detroit Today, we explore the short term and long term ripple effects the strike could have across the economy.

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Gabriel Ehrlich, director of Research Seminar in Quantitative Economics (RSQE) at the University of Michigan, where he forecasts the US and Michigan economies. Ehrlich says while the labor stoppage is not likely to send the national economy into a recession on its own, the spillover effects will continue to accumulate over time – both in Michigan and beyond – as the strike goes on.

“It will take some time for suppliers to really get in a position where they have to lay off workers, and it’s still a tight labor market, so we think that suppliers are going to do what they can to avoid layoffs, but over time it becomes tougher and tougher,” he said. “And especially if there are additional strike targets announced, it will become tougher and we would expect to see more effects along the supply chain.”

Editor’s note: Some employees of WDET are members of UAW Local 1979 — a different bargaining group that’s unaffected by these negotiations.

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