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The UAW fights against bidenomics and bideflation

Which side are you on?

The impending United Auto Workers strike is just as a protest against bidenomics as are the policies of General Motors, Ford Motor Company and Stellantis.

More than a decade ago, when America’s automakers were on the brink of collapse and two were in the throes of bankruptcy amid the Great Recession, unions and auto workers they represent have made numerous concessions to keep the big three afloat. One of the major issues was the agreement on accept contracts that no longer tie workers’ pay to inflation.

The pressure on the unions at the time was enormous. The Obama administration relentlessly insisted that its program pass, largely because it wanted to take credit for saving the auto industry. THE workers were threatened with economic ruin if they did not make sacrifices to support their failing employers. Politically, unions have been left adrift, abandoned by Democrats who were their longtime allies and unappreciated by a Republican Party still dominated by establishment types captivated by the agenda of big business and Wall Street.

At the time, the concession on automatically adjusting wages to inflation did not seem too costly. The Federal Reserve had hard-earned credibility on its promise to keep inflation low. Since the early 1990s, annual inflation has generally rebounded to around 3%. Over time, prices continued to rise, but there were no sudden jolts that threatened to bury negotiated wage increases under unmanageable cost-of-living increases.

In the years since, the promise of low inflation has been delivered – and then some. The Federal Reserve officially aimed for 2% inflation, and its biggest challenge during these years was often raising inflation to that goal. Losing an automatic inflation adjustment didn’t hurt because inflation appears to have been brought under control.

The great betrayal

All that changed shortly after Joe Biden took control of the White House and pressured a Democratic-controlled Congress to enact the law. the $1.9 trillion American Rescue Plan Act. Inflation rose from 1.8% in 2019 to 7% in 2021. (It had fallen to 0.3% amid the 2020 lockdowns.) Despite assurances from the Biden administration and the Fed that inflation While inflation was a passing phenomenon – transitory, they said – inflation persisted. , with growth of 6.5% for the whole of 2022.

The situation was even worse in the Detroit area, the heart of American auto manufacturing. While inflation peaked at 8.9% year-over-year in June 2022 for the United States as a whole, in the Department of Labor’s Detroit-Warren-Dearborn district it reached 9.7%. Over the past 12 months, as national 12-month inflation fell to 3.7 percent, in Michigan it reaches 5.9 percent.

While all Americans have been hit hard by the surge in inflation linked to Biden’s deficit spending, Detroit’s autoworkers have had it far worse than most of their fellow Americans.. The place we once called Arsenal of democracy was ground zero for the destructive explosion of Bidenflation.

Workers at Detroit’s Plymouth plant roll the last automobile off the assembly line as the auto industry responds to the nation’s call to become “the arsenal of democracy” and turns its attention to military production for World War II on January 31, 1942. (Getty Images)

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American auto workers assemble a Jeep at the Ford River Rouge plant in Detroit, Michigan, during World War II. (Charles Phelps Cushing/ClassicStock/Getty Images)

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Auto workers assemble Dodge Army trucks for World War II in January 1942. (Universal History Archive/Universal Images Group via Getty Images)

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American auto workers work day and night to build tanks for World War II in Detroit, Michigan, at the Chrysler plant converted for tank production on June 18, 1942. (Underwood Archives/Getty Images)

The promise of low inflation was broken by the Biden administration’s bloated fiscal policies and the Federal Reserve’s accommodative monetary policies.

This only made things worse as the Democrats have repeatedly sought to downplay inflation or blame it on corporate greed or Putin’s invasion of Ukraine. Just this month, stalwart left-wing Democratic Rep. Alexandria Ocasio-Cortez of New York was circulating the idea that inflation was just “propaganda”. Even when Democrats admit that inflation is problematic and linked to excessive fiscal and monetary expansion, they act as if it is a necessary sacrifice due to the pandemic. They never mentioned that the sacrifice was borne more heavily by some than by others, and even less by others. recognized the prices paid by our auto workers.

What has become of the party that once stood with auto workers? Where were the excuses for breaking the promise to keep inflation low? Where was the gratitude for the added burden of inflation imposed on them in the name of “rescuing” America from a pandemic-induced economic crisis already past?


President Joe Biden and Governor Gretchen Whitmer (D-MI) listen as GM CEO Mary Barra gives a tour of GM electric vehicles at the Detroit Auto Show, September 14, 2022, in Detroit. (AP Photo/Evan Vucci)


General Motors CEO Mary Barra drives President Joe Biden during a tour of the Detroit Auto Show September 14, 2022, in Detroit. (AP Photo/Evan Vucci)

Meanwhile, it’s a boom time for the Big Three. “The North American operations of Ford Motor Co., General Motors Co. and Stellantis NV have had a bumper few years, as pandemic-driven factory shutdowns, quickly followed by a rebound in demand, have equipped Detroit with “price-setting power,” Bloomberg’s Liam Denning wrote in a recent article. Stellantis saw its adjusted operating margin increase from 11.9% in 2021 to 13% in 2022. North American operating margin increased to 16.4%.

GM CEO Mary Barra saw her salary increase to 362 times the median worker’s salary in 2022up from 203 times in 2019. Inflation probably hasn’t hurt its purchasing power much.

There is power in the Union

It’s no wonder that one of the UAW’s main demands is the return of cost-of-living adjustments. Companies have proposed paying inflation bonuses to help repair the damage inflation has done to workers’ earning capacity. But to accept this, unions would have to oppose confidence in controlling inflation. Since the betrayal of the last promise constitutes yet another wound, this is a very great ask.

The Biden Administration’s Betrayal of Auto Workers goes beyond inflation, of course. The Biden administration has pushed policies aimed at electrifying most new vehicles within a decade. This rush toward electric vehicles will lead to a rapid decline in auto worker payrolls.– even if car manufacturers appreciate Inflation Reduction Act subsidies. Although the Biden administration claims there will be many new “clean and green” jobs, no plausible estimate projects a net increase in employment for autoworkers following the transition. You don’t need as many people on the electric vehicle assembly line as you do to build a gasoline car. It’s also not lost on unions that many of the proposed new green manufacturing plants are in anti-union, right-to-work states.

Even if you firmly believe in the idea that climate change is an existential threat that requires transformation and sacrifice, how can we justify demanding disproportionate sacrifice from autoworkers? If we all want to benefit from accelerating the process towards electric vehicles, why auto workers pay the price?

Very little threat to economic growth, no real threat of inflation

Despite what you may have heard in the establishment economic press or in the media allied to the Big Three, a strike would not be ruinous for the American economy. Bank of America analysts estimate that an all-out UAW strike at all three manufacturers would dampen GDP growth by 0.1 to 0.2 annualized percentage points per week due to lost production. A strike that lasts a full quarter at all three manufacturers – a highly unlikely event – ​​could lower GDP growth by 1.6 to 2.2 percentage points, according to Bank of America analysts. In an economy growing at over three percent, this is not a disaster.

It is also likely that there is little upward pressure on inflation…even if unions win their fight for higher wages. The new contract will directly affect about 150,000 workers, or 0.1 percent of the U.S. workforce. It is very likely that much of the increase in costs would be absorbed by manufacturers’ margins rather than by automotive customers.

“This means that even a one-time 30% increase would only boost wage growth by a few basis points. Therefore, it will not contribute significantly to wage inflation per se, meaning limited upward pressure on price inflation from wages,” Bank of America analysts conclude.

The fight against Bidenflation and Bidenomics is reminiscent of much older struggles for workers. As a centuries-old union song says:

We are the ones who plowed the meadows and built the towns where they trade.
I dug the mines and built the workshops, miles of endless railway tracks were laid.
Now we are excluded and starving amidst the wonders we have done
But the union makes us strong.

Solidarity forever!


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