Jack Rasmus

This past weekend, Sept. 23, the UAW strike entered its second week. Little movement on demands by the big 3 auto companies has prompted the union, UAW, to now broaden the strike to 38 plants. For the entire first week, Sept. 15-22, the union leadership struck only 3 plants to start off the strike. One each for the 3 companies: GM, Ford, Stellantis.

The mainstream media hyped striking all 3 companies at the same time as a big deal. It wasn’t. Historically the UAW always targeted one of the companies, but striking all its locations. A settlement at the one was then agreed to by the other two companies. The strategy of striking just one plant is each of the three companies, the UAW has called a ‘stand up’ strike–a play on words of the UAW’s historic 1937 ‘sit down’ strike that marked the birth of the union. After the UAW’s historic victory by ‘sitting down’ US courts quickly ruled ‘sit down’ striking was illegal. ‘Stand up’ is not in any sense historic or comparable to the great sit down strike.

The UAW has often been the leader in innovative strike and contract strategy. But it is doubtful if ‘stand up’ qualifies in that regard. As this writer predicted a week ago, targeting just one plant in each of the three most likely will lengthen the strike; it hardly impacts the companies’ bottom lines. That fact is now confirmed by the UAW leaders at the start of week two of the strike, who appear to be abandoning the 3 plant tactic and are expanding the walkout to 38 plants, as UAW president, Fain, has announced.

So why did the UAW introduce ‘stand up’ and striking only a minimum number of plants to start? A number of possible explanations exist, any one of which explains it. First, the Union’s strike fund amounts to only $850m or so. That exhausts quickly when 146,000 union workers in all the three companies are involved in a walkout; an almost as quickly if one of the three is targeted. GM and Ford have about 60,000 workers each under contract. The third company, Stellantis (formerly Chrysler) hardly matters and is economically the weakest.

Another explanation–more likely–is that the UAW union leadership doesn’t want to hit the companies hard to begin with. They are probably looking toward their ‘friends’ in the Biden administration to intervene and help out. But when push comes to shove the Democrat party will not intervene on behalf of the workers. Just ask the Railroad workers whose contract was forced on them in 2022 by the threat of the Biden administration, and Democrats in Congress, threatening the unions and workers with anti-strike legislation if they walked out. Biden likes to talk the talk that he’s the most pro-union president but his actions speak louder than his words.

Nevertheless, union leadership in general–and UAW today in particular–still believe Dem party intervention can help them. It could. Biden is sitting on tens of billions of dollars of grants and tax subsidies to the big 3 auto corporations to help pay for the companies’ building EV plants in the US. Biden could threaten to withhold the disbursement of those funds if the companies didn’t settle on at least some terms demanded by the UAW.

And what are the union’s terms (proposals): Auto workers made huge concessions back in 2019 contract negotiations. Their real wages have declined by -19% in just four years since. The union initially asked for a 40% pay hike in a 4 year contract. That 40% was just what the auto companies paid their CEOs since 2019. The companies are at 20% over a 4.5 year term. The UAW at walkout lowered its wage package to 36%. (Mainstream media keeps saying, however, it’s 40%). Other union demands include ending the 2-tier wage system that has divided workers now for decades. New workers get lower pay, take longer to reach top wage progressions, and get fewer benefits and rights to job security. The union also wants its Cost of Living Adjustment (COLA) clause returned to the contract. The UAW pioneered COLA in years past but lost it in concessions over the years since 1979.

1979 is the year that concession bargaining began in earnest throughout the union movement in general. UAW’s infamous 1979 strike against Chrysler that year inaugurated what has become four decades of concession bargaining. If the current UAW strike is historic, it’s because it’s a test case for ending concession bargaining–not because of some hyped media ‘stand up’ label.

Auto workers have four decades of concession bargaining to begin to reverse. Their current wages begin at $18/hour! Flipping burgers in California now pays $20 to start. Top wages in auto top out at $32/hour. That’s about $60,000 a year top pay. Try living on that with a family of four in California or most big cities anywhere.

The UAW is also demanding pension benefit improvements for retirees who, on fixed incomes, have been devastated by inflation. The UAW has demanded an end to the 2-tier system and a 4 day workweek. The media’s making a big deal about that, although it’s not a primary demand of the union as the union has publicly declared.

Can the auto companies afford 36%? Judge yourself: auto company profits have totaled $250 billion in the last 10 years. As noted, CEOs have been given a 40% pay hike in four years. Auto shareholders have been given $80 billion in stock buybacks and dividends payouts. During the 2008-09 great recession, the Obama administration bailed out the auto companies with a $80 billion freebe. Trump gave them tens of billions of dollars in tax cuts in 2018 as part of his $4.5 trillion 10 year tax cut, almost all of which went to corporations, investors and the wealthiest 1% households. During the recent Covid recession the government then gave them more tax cuts and wage subsidies. And now Biden’s allocated tens of billions of dollars more to pay for the companies’ construction of EV plants in the US.

If the auto companies paid 36% today, it would turn out to be much less after four years. Why? Because building EV plants means EV cars have fewer parts and many auto workers won’t be needed. The companies will thus ‘take back’ the wage costs they agree to in any forthcoming settlement. In addition, if the 2 tier wage system is retained, the companies will continue to hire new workers in the lower paid tier to replace older workers in the 1st tier as they retire.

Is 36% an outrageous demand? Not when compared to other unions’ recent settlements. For example, airline pilots got a 40% pay package this summer. West coast longshore dockworkers in the ILWU got 32%–on a base pay of $80-$100,000–compared to the auto worker’s average pay of well less than $50,000.

At the end of this past first week of the strike, Ford settled with its Canadian auto workers in a pay package it refuses to report publicly. That undoubtedly means well above 20%. How much above is yet to be determined.

Auto companies are complaining they need all the super profits they have in order to invest in EV plants in the USA. But, as noted, the US government is subsidizing much of that already. The government also subsidies EV sales with a minimum $7,000 tax credit that auto companies tack onto their prices for new cars. As a result auto prices are surging, thus ensuring profits.

Another interesting development of recent days is Donald Trump has indicated he intends to go to Detroit on Wednesday to address auto workers. Concerned he may be upstaged, Biden quickly said he’s going on Tuesday. It’s doubtful that without the Trump political move, Biden would even have bothered.

So now the politicians are in a ‘war of words’ to see which one can sound more pro-worker. But it’s all ‘talk the talk’ since neither will walk the walk on behalf of the UAW and its workers. It’s all political posturing in an election year.

The Teamsters recently had it right. Its new president, O’Brien, publicly toward Biden to stay away in the recent UPS negotiations. The Teamsters union consequently extracted a decent pay package from the UPS. More importantly, it made major progress in ending the big pay gap between 1st and 2nd tier workers. It didn’t end the Two-Tier but it took a big bite out of it. Teamsters-UPS was certainly no ‘concession bargaining’.

The question is whether the UAW can also begin the end of the 2 tier system and pay gap and get a decent settlement that brings auto workers paltry $18-$32/hr. pay into the 21st century? It remains to be seen. We may be witnessing the ‘beginning of the end’ of concession bargaining that has, for 40+ years, devastated American workers’ wages and contributed greatly to the growing income inequality afflicting American workers.

The UAW strike is in this sense historic at least. As is that other historic strike now approaching its third month: the strike of actors and writers to protect their very jobs from the destruction that’s coming from technology and Artifical Intelligence in general. The Goldman Sachs bank research arm has predicted 130 million jobs worldwide will be destroyed by Artificial Intelligence. The writers-actors union SAG-AFTRA deserves support from workers and unions everywhere, just as the UAW strike.

Can American workers stop concession bargaining that has devastated their incomes for more than four decades now? Can union labor come up with a strategy and effective response to protect their jobs from technology/AI in the decades to come? Those are the two most important challenges facing the American labor movement. And one thing is certain: relying on Democrat party politicians, or their no less anti-worker Republican political cousins, is a dead end. Either wing of the Corporate Party of America (Dems or Republicans) won’t lift a finger to help workers. But they’ll make promises and promises in this election year. And then give workers the ‘finger’ afterward, as they have for more than 40 years now.

Jack Rasmus
Sept. 24, 2023

NOTE: over the past week since the UAW strike began, I’ve posted on ‘X’ (formerly Twitter) daily commentary on the strike. What follows are some of the comments. Follow me at @drjackrasmus for continuing daily commentary as developments occur in the UAW, SAG-AFTRA, and other forthcoming important labor negotiations.

#UAWstrike My bet is auto corps will agree to more, providing UAW agrees to 5 yr deal, with COLA delayed until yr 3 or 4, with low pay for 2nd tier raised in stages over time (much like recent Teamsters-UPS contract).

#UAWstrike Reportedly Biden met by phone with UAW pres Fain and each of the big 3 auto corp CEOs. This is going to be a 3-way dance, key moves of which will take place ‘off stage’. Watch Biden offer more corp subsidies to corps, on condition Fain agrees to <36%. Final deal 30%?

#UAWstrike Management always ‘counts costs’ during a strike-i.e. how much they’re losing/day vs how much they’ll have to pay to meet union demands. When gap closes they negotiate again. But striking only 3 plants won’t impact profits much or close any gap=No new corp offers soon

#UAWstrike Mainstream media hyping the walkout as ‘historic’ since first time UAW struck all 3 auto corps at same time. But only 1 plant for each of the 3 corps walked out! And in each a low profit plant. Are union leaders just letting the ranks ‘let off steam’? Or something else

#UAWstrike UAW strike began 12am. But only 13,000 of UAW’s 143,000 members out so far. Only 1 plant for each of 3 auto companies. And not any of the big profit plants making trucks or SUVs. A ‘new strategy’? Or only a symbolic walkout that won’t economically hurt the corps at all. Union dropped its 40% wage demand to 36% before walking out. Auto corps did not counter from their 17%-20%.

#UAWstrike CEOs at GM, Ford, Stellantis (formerly Chrysler) gave themselves 40% pay increase since 2019. Auto workers demanding the same 40% pay raise. Full time auto workers now earn between $18/hr (start pay) and top out at no more than $32/hr. Don’t believe me? Then check out: Wall St. Journal, 9-14-23, p. B2)

#UAWstrike Autoworkers will get $500/wk strike benefits from their union UAW. That will just about cover the cost of picking up family health care benefits while on strike. They’ll have to pay for food and other bills out of pocket (providing they could save on $18/hr start pay)

#UAWstrike Can auto corps afford to pay workers more-after they got $80B in bailouts in 2008-9; $250B profits last 10 yrs (+ $34B more this year); $10B+ in Trump 2017 tax cuts; >$10B+ more in Biden EV subsidies. CEOs got 40% pay raise since 2019; workers real earnings fell -19%. ‘Real earnings’ is defined as hourly wage times total hours worked per week, adjusted for inflation.

#UAWstrike Why do auto corps like ‘2-tier’ wage system? Answer: when full time workers retire or leave, it allows them to hire new workers (often temps) at lower 2-tier rate, currently $18/hr. Thus, corps ‘take back’ some of the wage cost they initially negotiated for full timers

2-tier system also allows auto corps to substitute phony 401k private pensions for new hires, instead of allowing them eligibility to more generous ‘defined benefit pensions’ that autoworkers with more seniority get. Hence UAW wants all in the defined benefit system

#UAWStrike UAW pres Fain says union will strike selective plants first, not a general walk out. But that will only prolong the strike since shortages in strategic plants (engines, etc) take time to have effect on basic auto assembly. Fain wants more time to work deal with Biden

#UAWstrike union demands to end 2-tier temp workforce, restore COLA (cost of living raises), and defined benefit pensions for all are the key demands. Let’s see which & how much UAW wins back, which will determine if concession bargaining has ended finally after 43 yrs.

#UAWStrike Will UAW leaders end concession bargaining, which began in 1979 when Pres Carter and Union Pres Fraser colluded to end the Chrysler strike and impose major concessions on auto workers. More concessions followed, including onerous 2-tier wages & current $18/hr start pay

#UAWstrike Message to Fain: “believe in and rely on your own members. If they want to walk, let them. Not a guarantee of success but in the end the best policy. Maneuvering with Democrat politicians is a dead end. They want no strike at whatever cost to the union and its members”

#UAW asking 46% pay hike (+ restoring COLA & pensions)-i.e. what auto workers’ real wages & benefits fell in past contract concessions. Corps offer only 9-10%. With railroad workers bargaining busted by Biden & Teamsters/UPS a draw, UAW=latest test to end concession bargaining

#UAW auto corps think the era of concession bargaining with their union workers is still here. But new UAW leaders & workers’ anger suggest-as in recent Teamster-UPS negotiations-labor says its over. (Like Teamsters, demanding end to concession bargaining. Ditto writers/actors)

#UAW strike is increasingly likely this week. Like UPS, auto corps made $billions in recent years + Biden giving them $13B more in subsidies. But auto corps don’t want to share with workers but invest instead in EV tech & plants expansion. They offer a paltry 10% raise over 5yrs

#UAW also needs to prioritize restoring the COLA (cost of living wage adjustment) clause, in current era of continuing chronic inflation. UAW pioneered the idea and let it atrophy and be removed in decades-long era of concession bargaining, 1979-2023.

#UAW GM, Ford & other auto corps still negotiating as before in era of concession bargaining: no end to 2-tier wage system, pay raises in lump sum and ratification bonuses instead of wages, long term contracts where wages below inflation & mgmt takes back first year pay raises

In a recent commentary to a blogpost by Michael Roberts where he argues inflation has been, and remains, largely a supply side driven phenomenon–with which I’ve also argued for months–I provided the following comment to Roberts’ blog and point. I note, however, that Roberts misses discussing an important ‘supply’ factor–corporate price gouging.

I also agreed with him expressing doubts about a ‘soft landing’ for the US economy that’s become a mantra of sorts by mainstream economists and especially Biden administration politicians. In my comment below I describe why US growth–and a soft landing–is unlikely to be driven by household consumption starting 4th quarter 2023. And other elements of US GDP–business investment, net exports–show important elements of weakness. Only US government spending on war and defense appears a strong growth area and thus contributor to a ‘soft landing.

My Commentary to Michael Roberts’ blogpost:

I agree with your main point that inflation has been driven largely by supply forces. However, your analysis of Supply is missing a couple important elements. First, monopolistic corporate price gouging (a supply factor) has played an important role in recent inflation. Industries guilty of such pricing include not only the obvious energy corps (gasoline, fuel oil, diesel), but food processors (like baked goods, meat packing, etc), big pharma (generic drugs) gouging, regulated utilities (actually monopolies in their markets), insurance companies (esp. auto), food distributor companies with school meal contracts, and others.  Another ‘Supply’ factor has been the collapse of productivity. While you mentioned this, more might have been said about the role of productivity decline in escalating unit labor costs (the other joint factor being nominal wages). Productivity collapse pushes up unit labor costs which, to the extent a given company can, it passes it on into higher prices. There’s no analysis or data on this in the US stats but it plays a role in recent price inflation.

The major takeaway that describes inflation in the US, is that services prices are chronically stuck at around 6% despite the fasted Fed rate hike runup ever.  Fed chair Powell a year ago targeted services prices as the key remaining area that needed to come down, since goods prices, including energy, was declining in 2022. Services inflation was and remains the inflation bogeyman, which the Fed’s plan to create services unemployment and therefore a decline in households’ disposable income, and therefore Demand has almost completely failed. In short, rate hikes can’t and aren’t resulting in  services demand contraction of any meaningful dimension.

As for the latest mainstream pundit mantra of ‘soft landing’: It’s very doubtful. Why? nominal wage income is slowing. Student debt payments of hundreds of dollars on average are set to begin again in October. Credit card debt for households is at a record $1.27 trillion and delinquencies rising. So called excess savings from Covid era social stimulus are now only .2T and down from $2.1T, according to Chase bank CEO Jamie Dimon. A government shutdown in 4th quarter looks more likely than ever before in recent years as the capitalist politicians struggle with how to deal with another $1.7T budget deficit this year, a $33T national debt, and interest payments annually on that debt at $644B (compared to <$300B in 2019) due to chronic high Fed rates. More austerity in social program spending in 2024 is almost guaranteed. That too will negatively impact GDP. Then there’s the current auto strike that looks likely to continue well into 4th quarter that even mainstream economists predict will take 0.4% off of 4th quarter GDP. In short, consumer spending is nearly 70% of the US GDP and it’s difficult to see how that spending this winter, due to the factors noted, can keep the US economy from avoiding a recession (a hard landing).

Adding to the pressure on GDP, with a chronic high dollar (due to chronic high Fed rates) will mean less US exports (also due to a slowing global economy) and in turn a further negative ‘net exports’ impact on US GDP. Finally, there’s the rapidly slowing bank lending  in Commercial & Industrial loans which suggests a slowing in net real business investment for small and medium businesses.

The only factor clearly raising the possibility of a ‘soft landing’ is federal government defense spending as US neocon run foreign policy continues to spend on the Ukraine proxy war and simultaneous preparations longer term for war with China.

Dr. Jack Rasmus,

September 23, 2023

1. ‘CRITICAL HOUR’ Radio (19 min.)

Topics: UAW Strike Begins: First Take, Latest Inflation CPI Report

https://drive.google.com/file/d/1GyQwwtT8Eg_7ZxKiGm7Qud0QvbZXb-cd/view

2. ‘BY ANY MEANS NECESSARY’ Radio (20 min.)

Topics: Latest Poverty Rate Rise, Causes of Inflation, Low Paying Jobs

https://drive.google.com/file/d/1i0AvEKtqvt4kZ9xoYL_jykOjZIGnjwx0/view

3. ‘POLITICAL MISFITS’ Radio (24 min.)

Topics: Bidenomics, UAW Strike, Pentagon Spending & US Runaway National Debt

https://drive.google.com/file/d/1kZA4I7VIJWnyVeaaZoajRzqdZNrlIRjf/view

Listen to my Sept. 15 Alternative Visions show analyzing the UAW”s historic strike that began Sept. 15. Will the union’s new strategy prove effective (i.e. striking all 3 auto companies but with a minimal walkout of one plant per company)? What are the union’s demands, clearly intended to reverse the disastrous 2019 strike and major concessions made 4 years ago? How the companies have done since 2019 ($250B profits past decade & $80B payouts to shareholders), its CEO’s (40% pay hike since 2019) and auto workers’ wages (real wage decline of -19% since 2019). Dr. Rasmus puts the current strike in historic perspective, starting with the 1979 UAW-Chrysler strike that initiated 4 decades of concession bargaining for the UAW and much of the rest of union labor in the US. Rasmus raises the key question behind the current strike: will the current strike finally mark the beginning of the end of concession bargaining?

To Listen GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-uaw-strike-latest-inflation-reports/

Want to know some of the questionable methods & assumptions that go into US official job and inflation statistics? Listen to my September 8 Alternative Visions radio show.

GO TO:
https://alternativevisions.podbean.com/e/alternative-visions-how-reliable-is-us-economic-data/

Watch my latest (Sept 6) extended interview with the FreeThinkers Forum on the Ukraine War latest developments and where US Strategy is headed + the BRICS expansion and what it means for the future of the US global economic empire + impact on US 2024 Elections. Go to Youtube or Spotify to watch:

YouTube link:

https://youtu.be/DRnOqLJp-fo?si=rjqqj4O6vSyLleHz

Spotify link:

Listen to 2 of my radio interviews this past week with Critical Hour radio, on latest US economic indicators and why US economic empire is being increasingly challenged by the expanding BRICS economies (i.e. China, Russia, Brazil and the 47 new countries now applying to join the BRICS and the new global trading currency they will soon announce. What happens to the US dollar, the lynchpin of the US global economic empire, once the ‘global south’ breaks away from the empire?

Critical Hour Radio August 11, 2023

https://drive.google.com/file/d/1H3GUJ1BDoX9_dSEVx-JkeyOaNDeu0yv5/view

Critical Hour Radio August 9, 2023

https://drive.google.com/file/d/1jxKxlSctW82VKZsL0xspG5CTSqUGeDb-/view

Three short radio interviews on key economic topics: Jobs report, dollar decline, continuing services inflation, the real facts about Biden’s rout touting ‘Bidenomics’ and US jobs, inflation, wages, GDP, and Biden’s 3 corporate subsidy Acts (Infrastructure, Chip & Manufacturing, Inflation Reduction) worth $1.65T redistribution of spending from households’ Covid relief to corporate subsidies & tax cuts. Why US monetary policy faces growing contradictions (Fed rate hikes to dampen inflation potentially exacerbating interest rate risk and destabilizes regional banks)

1. Critical Hour Radio

https://drive.google.com/file/d/1GFsUJa45OLR74mmIAsxxsGKEj98gzgzE/view

2. Critical Hour Radio

https://drive.google.com/file/d/1Gr-5OXx-YXLhZcUpa9tByfwweuHcGXHy/view

3. Political Misfits Radio

https://rumble.com/v32i332-interest-rate-hikes-hunter-biden-plea-deal-niger-coup-attempt.html

Fitch Corp debt rating agency this past week down graded US $34T debt in historic decision, from AAA to AA+, meaning the Federal Reserve will now have to raise rates even further to cover US accelerating deficits and national debt level. US annual interest on its debt payments now exceeds $600B and soon $900B/yr. as Fed now has to raise rates not just to slow inflation but to pay higher interest on growing deficit & debt. Higher rates need also in order to attract more global buyers of US Treasuries, as China and other countries continue to reduce their purchases of US debt. What this means is the crisis is US fiscal policy is now deepening, along with the intensification of contradictions in US monetary policy (Fed must rate hikes higher to significantly dampen inflation but risks exacerbating the regional banking instability as higher rates create more interest rate risk. (The show concludes with comments on latest US jobs report, showing virtually no change in the July report from June)

Listen to my analysis of the growing crises & contradictions in US fiscal and monetary policy in my August 4 Alternative Visions radio show.

GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-fitch-downgrades-the-us-government-causes-consequences/

The Biden administration has recently launched a new pre-election effort to tout its economic policies as effective and benefiting workers and mainstream America. That’s the ‘spin’, but the reality is quite different.

In his Friday, July 7 Alternative Visions radio show Dr. Rasmus shows that Bidenomics is just a continuation of Neoliberal Economic policies launched more than 4 decades ago. However, unlike earlier years, when neoliberal policies expanded, since 2008 neoliberal policies have been experiencing serious contradictions and becoming less effective at stabilizing the economy, creating economic growth, and have been instead generating greater income and wealth inequality.

In the show today, Dr. Rasmus defines and explains the four main areas of Neoliberal economic policy: fiscal policy, monetary policy, industrial policy, and ‘external’ (trade, money flows, currency) policy. He then argues that in 3 of the 4 areas neoliberal economic policies under Biden are facing growing contradictions and decline.

Dr. Rasmus explains in the policy area experiencing immediate and most intense contradictions is neoliberal monetary policy. External policy also faces growing contradictions, albeit in the intermediate term. Fiscal policy contradictions are also intermediate to longer term. Only neoliberal industrial policy continues ‘working’ as intended–i.e. succeeding in keeping unions and strikes under control, wages compressed, benefit costs shifting to workers, and financial and industry deregulation continuing and privatization expanding under the Biden administration.

Dr. Rasmus argues the expansionary phase of neoliberal economic policy entered a period of growing contradictions and declining effectiveness as the capitalist economy was destabilized with the 2008-10 great recession and financial crisis, followed by chronic slow growth for years in the wake of that recession, and then the Covid shutdowns and the US Ukraine proxy war and sanctions on Russia, all of which have further exacerbated the contradictions. Under Bidenomics the contradictions have been maturing, and are now at their worse (but still early phase). Contrary to Democrat party ‘spin’, Bidenomics is failing to deliver–not only for the US working class and majority of US citizens but poses growing problems for US capitalists’ economic control abroad

TO LISTEN GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-bidenomics-as-neoliberal-policy-in-crisis/