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Washington Examiner
Restoring America
19 Jul 2023


NextImg:Unions present new threats on inflation and the economy

It is laughable that the Biden administration is celebrating the defeat of inflation when inflation remains two full percentage points above the Federal Reserve’s 2% inflation target.

Unions care little for the public interest in reducing inflation. An inflationary 40% pay increase in labor contracts waits for United Airlines pilots. Moreover, in the longshoremen’s sector of the economy, where members of the union already make over $100,000 a year plus full healthcare benefits, further wage increases of 10% are being extracted.

HOUSE MUST SAVE MILITARY FROM BIDEN'S CLIMATE OBSESSION

Households must also anxiously await the outcome of negotiations between the Teamsters Union and United Parcel Service, UPS, which is the country’s largest package delivery service. The current contract expires on July 31. If the Teamsters strike UPS, the e-commerce sector of the economy will be severely disrupted. Importantly, the head of the Teamsters has asked President Joe Biden not to intervene in the labor dispute. The typical Teamsters driver for UPS makes $96,000 a year plus healthcare and further benefits with an economic value of another $50,000 a year. Members of the Teamsters employed by UPS want wage increases approaching 8% per year when actual core inflation is running at 4%.

Under the expiring labor agreement, Teamsters drivers already received cost of living adjustments for inflation. Productivity growth in the UPS organization is negative . UPS is absorbing a $600 million annual increase in contractually mandated labor costs which it is partially offsetting with only $300 million in cost reductions. The public will pay for the difference in higher package delivery costs. Any new labor agreement will be inflationary.

To further illustrate the problems of labor unrest and inflation busting union contracts, on September 14, 2023, the current collective bargaining agreement expires between the United Auto Workers (UAW) Union and the Big Three automotive companies — General Motors (GM), Ford, and Stellantis. A strike could have disastrous consequences for the economy and for households. The UAW wants a new contract with the auto companies which would match the labor contract that the UAW signed with Deere, the farm equipment company.

That agreement included an $8,500 signing bonus; a 20% increase in wages over the lifetime of the contract with 10% in the first year; and cost of living adjustments with no change in healthcare benefits. The average UAW member working for one of the three major auto companies makes over $90,000 a year plus very generous healthcare benefits with a value of about $15,000 a year.

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Vehicle inflation has been an important contributor to the overall level of inflation, with prices up 30% since the beginning of the pandemic. Households will pay for the inflationary aspects of any new labor agreement between the UAW and the auto companies. Both the Teamsters union and the UAW are cartels that reduce employment and raise the national inflation rate.

President Biden says he is the most pro-union president in history. Biden’s pro-union stance is contributing to inflation and harming the welfare of American households.

James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes  a daily note  on finance and the economy, politics, sociology, and criminal justice.