We shouldn’t be too surprised that 13,000 United Auto Workers went on strike last week and thousands more may soon join them on the picket lines. Although strikes are still rare compared with the labor unrest in the 1960s and 1970s, the number of major work stoppages is up by more than 50% over recent trends. And 2023 has seen another upward spike, with the number of workdays lost to strikes last month reaching the highest level in 20 years.
A major reason for this labor turmoil is clear: Bidenflation. Union workers are agitated by the impact of inflation on their real take-home pay. The UAW complains the near-17% increase in prices since January 2021 is “hammering” its members. The union calculated that if autoworker wages had kept pace with the cost of living, workers would be earning $3.71 more per hour or $7,700 more each year. These real wage losses are in stark comparison with the Trump years, when real median household income rose by more than $6,000.
(Of course, UAW chief Shawn Fain’s complaints about the rise in the cost of living are a little hypocritical given that the union’s brass supported almost all President Joe Biden’s trillions of dollars of debt spending that triggered the inflation in the first place.)
To compensate for two years of real wage losses under Biden, the UAW is demanding a more than 30% pay raise over four years, a cost-of-living adjustment to protect against inflation, and a 32-hour work week. We haven’t seen these kinds of militant demands from unions since the Jimmy Carter years. Ironically, Biden has been running around the country boasting he is “the most pro-union president” in “American history.” True, the labor bosses love him. But rank-and-file blue-collar members? Biden has been their worst enemy. Most of these workers have made no gains, and most are poorer because of high gas, food, utility, travel, medical, housing, school tuition, and restaurant prices.
What we are seeing is a replay of what happened in the late 1960s, the 1970s, and through the early 1980s. Annual inflation rose under Lyndon Johnson, Richard Nixon, Gerald Ford, and Carter from 6% to 8% to even 11% over these years — and the number of union strikes soared. History proves that when inflation runs amok and the dollar loses value, there’s more labor unrest. Annual inflation spiked to 7.9% for 1951, and a record 470 strikes occurred the next year. In the late 1960s, inflation rose to 5.4%, and the number of strikes rose above 400. Strike levels remained that high throughout the 1970s and early 1980s as inflation hit a high of more than 10%. But almost magically, when inflation fell from 11% to 3.5% by 1983 in the Reagan/Volcker years and as real wages began to climb, the number of strikes fell. For the next several decades, as the dollar remained stable in value, strikes became rare. Studies have found a statistical basis for this assessment: High inflation is associated with more workers walking off the job.
The low-inflation era ended when Donald Trump left office with a tame 1.5% consumer price index. Eighteen months later, it spiked to 9.1%. These turbulent inflation numbers have only inflamed union-worker angst over the future. When prices are predictable, it is much easier for unions and corporate management to negotiate mutually agreeable contracts on wage increases. Given the wild swings in inflation of late, who knows where prices are headed over the next four years? The two sides are negotiating in the dark.
The recent spike in gas prices isn’t helping assure unions the inflation curse is behind us. The other day Biden referred to his predecessor as “Donald Hoover Trump.” But every day that goes by, the man in the White House is looking more and more like Joe Carter Biden.
Stephen Moore is a senior fellow in economics at the Heritage Foundation and a co-founder of the Committee to Unleash Prosperity.