NRPLUS MEMBER ARTICLE {P} ennsylvania senator John Fetterman has taken sides in what is set to become the most serious of the many ongoing labor disputes rippling across the country. On the eve of a promised strike United Auto Workers (UAW) prompted by stalled negotiations over a new contract, Fetterman is backing the union against the Big Three car manufacturers.
“It is time for the Big Three to come to the table in good faith and work with UAW to strike a fair deal,” Fetterman said following a condemnation of what he regards as excessive compensation for C-suite executives in the automotive sector. “UAW is ready, but these companies are being completely unserious,” he added. Indeed, the UAW has climbed down from its initial demands. The union is now seeking a 36 percent pay hike, down from 46 percent, over the next four years. It hasn’t budged from its other demands, including 40 hours of pay for a 32-hour workweek, more generous pension benefits, and an end to the tiered wage system in which newer and part-time employees earn less compensation. A strike would “send already-inflated vehicle prices higher,” the Associated Press reported. So, too, would a settlement along the lines sought by UAW leadership.
Fetterman’s position is at odds with the Biden White House’s. Joe Biden’s allies have been vocal in their criticism of UAW president Shawn Fain, calling Fain an “activist leader” with a penchant for saying “very inflammatory things.” The administration and the UAW have publicly feuded over the administration’s efforts to force automakers to overinvest in electric vehicles, increasing carmakers’ capital expenditures while robbing them of revenue. And atop all of it are the growing costs of living brought about by inflation, and workers’ demands for higher wages as compensation.
In short, largely Democratic labor unions are waging a crusade against the policies pursued by Democratic lawmakers in order to make a comfortable living in a Democratic economy. Republicans play no role in this dispute other than as spectators. This is an entirely intra-party dispute — one that threatens to thrust the internal contradictions roiling Democratic coalitional politics into the open. And it’s not the only one.
The ongoing Writers Guild of America (WGA) strike resulted from a variety of conditions affecting screenwriters, many of which involve technology’s impact on the industry and audiences’ demands. But underlying it all is the high cost of living. “The WGA last updated its contract minimums in 2020, just before inflation soared to its highest levels in 40 years,” Variety reported. “With inflation climbing as high as 9.1% in 2022, and still stuck at 6%, those nominal increases have turned out represent sharp cuts in terms of buying power.” Likewise, the Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists (AFTRA) are manning the picket lines because, according to their chief negotiator, “high inflation has further reduced our members’ ability to make ends meet.”
Once again, the Democratic administration and its allies in Congress are nominally on the side of the WGA and its members. Hollow sloganeering typifies their advocacy on behalf of workers. But their support for rising wages in theory conflicts with their foremost economic objective: forestalling a wage-price spiral.
In June, real weekly earnings grew on an annual basis for the first time in two years. The following month, however, consumer prices grew by 3.2 percent, the first time in 13 months that the pace of price hikes had accelerated. Inflation is still boosting prices, but the labor market is hot. Workers can and are naming their price in negotiations with employers — indeed, they feel they must do so to keep up with the cost of daily life. The theoretical effect of this cycle is a condition in which prices and wages continue to grow to keep pace with one another. The threat posed by the prospect of a vicious cycle like this has been summarily dismissed by partisan Democrats in the press, but the White House’s allies don’t seem nearly so confident.
Harvard economist Jason Furman won’t call it a “spiral,” preferring instead “wage price persistence,” but the euphemisms describe the same phenomenon. “Which is,” he told NPR last year, “once inflation gets high and once wage growth gets high, they both stay high for a while, and they feed into each other staying high for a while.” As his interlocutor explained, that condition would foreclose the “soft landing” scenario in which inflation is brought to heel without a recession. So far, two consecutive quarters of negative growth notwithstanding, we’ve had no recession — but only because we haven’t whipped inflation. The Atlanta Fed forecasts that substantial GDP growth occurred in the third quarter of 2023, but consumer prices are also expected to have risen overall once again in August. And all of this is happening as the White House celebrates and champions wage growth.
This precarious dynamic has compelled Democrats to perform some extraordinary interventions in the labor market to keep their constituents from boiling over.
“President Joe Biden called in personally to talk to negotiators,” CNN reported last year about Biden’s efforts to divert a potentially crippling strike by freight-railroad workers. But it wasn’t the president’s powers of persuasion that averted this threatened labor action. Rather, it was the intervention of the Democrat-led Congress, which awarded union members with an immediate 14 percent pay raise plus back pay dating back to 2020; individual cash bonuses; a freeze in the growth of deductibles for health insurance; and raises totaling 24 percent over the next five years.
In Seattle, lawmakers settled a strike by members of the teachers’ unions by agreeing to a contract that required funneling an additional $231 million to the district’s operating funds over its three-year term. But “district officials told the board earlier this month that those costs added to existing shortfalls means that the district will face possible gaps of $47.5 million in 2023-24 and $139 million in 2024-25,” Crosscut’s Venice Buhain reported. The unsustainable budget shortfalls have compelled Seattle lawmakers to think up new and exciting ways to raise residents’ taxes.
Fast-food and health-care maintenance professionals respectively are poised to win major concessions from Sacramento to mitigate the threat of possible labor action crippling those professions. Service Employees International Union (SEIU) president Mary Kay Henry called the settlement a victory against “corporate power and systemic racism.” But the victory could come at a steep cost for California’s families. “We can expect a very sharp increase in food costs from the affected restaurants, and that could push these families to the breaking point,” said University of California, Riverside, business professor Christopher Thornberg.
We are not bearing witness to an adversarial process, in which workers’ representatives negotiate against their employers’ fiduciary obligations. What we’re witnessing are Democratic activist groups negotiating with Democratic lawmakers. As one might expect, the outcomes these negotiations produce satisfy partisan Democrats. But they risk exacerbating the conditions that have led most Americans to sour on the fruits of “Bidenomics.” And at the very least, these spasms of intra-Democratic infighting expose the brittleness of the alliance between unions and their Democratic patrons — a rift widened by this administration’s heedless profligacy and the inflation it has produced.