December 11, 2023

On Sept. 15, approximately 13,000 United Auto Workers (UAW) members — roughly 10 percent of the union’s members at Ford, General Motors, and Stellantis factories in the U.S. — went on strike. 

The UAW is demanding wage increases of 36 percent over the next four years, “along with full pay for 32-hour workweeks, better retirement pensions and improved health care,” NBC News reports. The auto companies are offering raises in the range of 17.5 to 20 percent over the same time period. The union is making two primary economic arguments: “fair pay” and a share of the Big Three’s profits, which have risen in the last four years.

Virtually all labor unions strikes are accompanied by calls for “fair compensation.” The ideal of fairness is dear to Americans. We consider ourselves a fair-minded people. The problem, as always, is how to define fairness.

What Is the ‘Fair Price’?

The quest to define “a fair price” has been around for centuries. It was a favorite topic of the 13th-century scholar Thomas Aquinas. No consensus on what constitutes a fair price, however, has ever formed. In my humble opinion, the answer lies in the Bible, specifically in 1 Chronicles 21

There we read that King David had brought a deadly plague on his people by disobeying the Lord’s command not to number his people. The king needed to atone for his sin with an offering. A man named Ornan, who owned a threshing floor, offered to give the king everything he needed — oxen, tools, wheat, altar; even the threshing floor itself. The man was ready to give his most valued possessions if only to stay alive. David, however, knowing that the sin had been his, not Ornan’s, insisted on paying Ornan “the full price” (1 Chron. 21:24) for all that he needed. He did, and the plague was stayed. The ”full price” must have been the fair price in order to be consistent with divine justice. And what could the full price have been, other than the prevailing market price — the going rate? (RELATED: The Latest Union Strike Might Turn Workers Red)

So, what is the market price of an hour of labor in the auto-manufacturing business? To find the market price, you have to have a free market. This means that any UAW worker who thinks his or her pay is too low can leave the job; the car companies are free to replace them with anyone willing to work for the compensation package they offer. The problem is, the market solution was outlawed by the National Labor Relations Act of 1935, which makes it almost impossible for companies to hire permanent replacement workers.

One relevant economic fact is that the men and women who assemble Teslas currently earn about 38 percent less than their UAW counterparts. Would it be “fair” for that discrepancy to widen? And is it in the economic self-interest of the UAW workers to widen that gap? If I were in the UAW today (actually, I was in UAW — over 50 years ago), I would be concerned about not giving an even greater economic advantage to a direct competitor whose growing success could someday cost me my job.

Biden’s Hypocrisy in UAW Strike

While I disagree with the legal monopoly privilege that UAW workers have, I sympathize with their predicament. Due to the inflation of the last few years, UAW workers have lost purchasing power in spite of having received nominally higher wages. Of course they want to gain lost ground; who can blame them?

This is where politics becomes enmeshed with the economics of the dispute. It is more than a little ironic that the president whose policies unleashed the recent wave of inflation, thereby reducing UAW workers’ real standard of living, is siding with the union in this dispute. In fact, President Joe Biden even announced that he will stand on a picket line in solidarity with the UAW.

With the Biden administration having recently announced another $12 billion in subsidies to the Big Three to facilitate their transition to making electric vehicles (EVs), the Big Three are learning an old, painful lesson: Government money comes with strings attached. Although the Big Three have been nicely profitable over the past few years — in part due to federal money giving them a short-term boost — how are they going to remain profitable in future years? They lose money on virtually every EV they manufacture, and the Biden administration’s regulations are designed to force the Big Three to manufacture ever-more EVs over the next decade. Although the phrase is overused and misused these days, the Big Three are literally facing an existential threat. We could be teetering on the brink of a federal government takeover of the auto industry — not an explicitly socialistic nationalization, but a fascist takeover by which the company remains nominally private, but its operations are controlled by the government.

One more observation about the current strike: UAW President Shawn Fain filed a complaint with the National Labor Relations Board against U.S. Sen. and presidential aspirant Tim Scott (R-S.C.). Fain objected to Scott publicly saying that he would fire striking workers. Whether you agree with Scott or not (millions do, millions don’t), Fain’s official complaint is clearly another direct assault on the First Amendment.

Similar to how the Left has censored, canceled, vilified, defunded, etc., many intelligent, learned Americans for bucking the official government line about issues like COVID or climate change, we see here yet another manifestation of the totalitarian spirit of the left. To them, it’s OK for a president to publicly side with the union, but it’s unacceptable for another elected official to oppose UAW. This is dismaying, but, at this stage, who can be surprised? 

To the UAW workers, I would caution: Be careful what you wish for; you might get it — short-term gain, long-term pain.