Anderson Economic Group, LLC
Oct. 16, 2023
Michigan economic consultancy Anderson Economic Group, LLC reports total economic losses from the UAW strike have now reached $7.7 billion. Losses are calculated through the fourth full week, which ended at midnight on Oct. 12.
AEG estimates the following cumulative losses through week four:
- OEM Direct Wages – $359 million
- Detroit 3 Manufacturers – $3.45 billion
- Supplier Wages and Earnings – $2.67 billion
- Dealers, Customers, Other – $1.21 billion
These figures do not include plant closures, additional strike targets, or layoffs that took effect on or after Oct. 12. These will be included in our loss calculations in the fifth and any successive weeks.
Week Five is Danger Zone
“We’ve entered the danger zone for many suppliers, and more than one production line. Without a settlement soon, a plausible restart with higher costs will likely lead to some permanent losses of production, and suppliers that will need financial assistance to return to operation.”
Anderson noted that the magnitude of losses the firm previously estimated were now being corroborated from other sources. “We’re already seeing retail sales, airline travel, and income tax collections dropping in the State of Michigan. There are also increasing layoffs among vulnerable suppliers.”
“Most of these costs” he added, “are being borne by workers and by small- and medium-sized businesses, not by the Detroit 3.”
Estimating Economic Losses
To determine the ongoing economic impact of the UAW “stand-up” strikes, AEG estimates aggregate losses that include:
- Lost wages to workers, including striking workers and others temporarily laid off or forced to decrease work hours. AEG estimates cover both UAW and non-union auto workers, along with workers employed by impacted suppliers. Estimates were made based on the number of UAW workers in the U.S, average daily wages, and lost health care benefits.
- Lost earnings for the Big Three auto manufacturers. AEG estimates company losses, noting wages that would not be paid to striking workers.
- Supplier losses. Because a strike reduces demand for automotive parts and components, AEG estimates lost supplier wages and earnings.
- Dealer, customer, and other auto industry losses. Automotive dealers and customers needing repairs both experience strike-related losses.
Loss estimates do not include unemployment benefits or unemployment taxes; income taxes on wages; any settlement bonuses (which are transfers from shareholders to workers and do not represent U.S. income lost); or any reputational damage to the union or the employer(s). We count strike pay as a loss to the union and a gain to striking employees.