If UAW strike happens, it could be a test for Biden

President Joe Biden's streak of avoiding big, economically disruptive labor disputes faces a big test on Thursday night with the UAW threatening to strike the Detroit Three automakers, an action that — if it comes to pass — could lay bare a political fault line running through Democratic Party politics ahead of the 2024 elections.

Nowhere is that more true than in Michigan, where even a relatively short strike, if taken against all three companies, could result in a regional recession and threaten smaller suppliers with bankruptcy, given the predominance of the industry in the state.

"The auto industry is still a very big, extremely high-value and high-wage industry," said Patrick Anderson, founder and CEO of Anderson Economic Group, a research and consulting firm based in East Lansing. "Putting your foot on the garden hose is going to affect lawns all over the country but especially in the Midwest."

That alone carries political peril for the president and his party, considering the importance of Midwestern states in recent elections.

But given that the UAW's demands that the auto companies provide better wages and benefits and more job security are driven, in part, by the unease caused by the automakers' transition to electric vehicles — a Democratic Party priority funded in part by government subsidies and encouraged by White House policies− a prolonged, industry-wide strike could put Biden in a tough-to-win situation between workers and the companies, with Republicans, and former President Donald Trump, looking to take advantage.

"There's no doubt," said Marick Masters, management professor at the Mike Ilitch School of Business at Wayne State University, "that this is a political football."

Biden has let his support for union workers, including the UAW, be well known, and, from a policy perspective, he is probably the most pro-union president ever.

But he has also been a cheerleader for the transition to electric vehicles, embracing a plan that, in theory, could force two-thirds of all new vehicles sold to be EVs. And while he has argued vociferously that union workers should make those cars and trucks, there's no question that EVs generally require fewer workers and that the UAW will still be left to try to organize plants springing up across the U.S. to produce batteries for the new models with no guarantees.

Biden and pro-labor Democrats failed in an attempt to award additional subsidies to UAW-made electric vehicles; the union has also called out the Biden administration for awarding funds to joint ventures to make batteries for new vehicles without making wage and work condition requirements upfront.

The White House has made some key moves. Late last month, it announced $12 billion in grants and loans to develop electric vehicle facilities, with those having union workers or opening in places with existing plants getting a better shot at the funding — a change praised by the UAW. But the union remains the only major labor group in the U.S. not to endorse Biden ahead of next year's election, with UAW President Shawn Fain saying its concerns and its insistence that automakers share their recent profits with workers need to be addressed.

Speaking to CNBC last week, Fain said a strike will force politicians to pick a side and make it known who they support. "Either you stand for a billionaire class where everybody else gets left behind, or you stand for the working class, the working-class people vote," he said.

Biden almost certain to stay out of negotiations

Fain's rhetoric aside, Biden has already voiced support for workers, saying automakers need to provide good-paying jobs, avoid plant closings and treat workers fairly as the industry moves to electric vehicles. "The UAW deserves a contract that sustains the middle class," he said last month.

But the president has kept — and is expected to continue keeping — the negotiations at arm's length, even in the event of a strike, since any effort on his part to make demands of automakers on behalf of workers demanding a contract would be seized on as improper meddling.

Instead, he has tapped Gene Sperling, a senior adviser and Ann Arbor native with a long history of working with Democratic presidents, to monitor the negotiations. His role, more than any other, will probably be more about trying to keep the parties talking if a strike happens at 11:59 p.m. Thursday when the current contract expires.

So far, Biden's luck has held in terms of widespread labor disputes threatening to rock the country: Last year, his White House helped broker a deal that avoided a rail strike; this year, UPS and the Teamsters reached a deal to avoid a strike after the union asked the president not to intervene. Last week, West Coast ports signed a contract with workers after rounds of fractious negotiations.

In each case, the economic impact of a strike could have been dire. Whether that's true of a UAW strike will depend on the circumstances.

Anderson Economic Group has estimated that a 10-day strike of all three automakers by the UAW's 146,000 members would cost the nation $5 billion, though Anderson said that would only be the direct cost to automakers and suppliers and doesn't take into account the indirect costs to surrounding communities and businesses.

Economist Joseph Brusuelas, writing Monday on the Real Economy Blog, said a strike wouldn't be enough by itself to cause a national recession but that it could still hit a variety of other industries, including petrochemicals, steel, glass and electronics. "Such a threat should provide the impetus for an equitable solution between both labor and the auto producers," he wrote.

If, as with some other auto strikes, the UAW instead focused on one automaker first, the fallout would be more limited, both economically and politically. But as of now, there's no reason to believe that Fain is bluffing about striking all three unless the automakers settle. When Biden recently said he didn't think there would be a strike, Fain responded that the president "must know something we don't."

"The president of the UAW has been very clear," said U.S. Rep. Debbie Dingell, D-Ann Arbor, who is close to both the union and Biden, "that if they haven't reached an agreement, he's targeting all three companies."

Strike talk has already led to political involvement

If they chose to do so, the White House and Congress could get involved in an auto strike: Even without the authorities granted to intervene in rail and airline disputes written into federal law, a president can — if he or she feels a strike threatens national health or safety — order a board of inquiry, setting into a motion a process that could ostensibly lead to a court ordering a strike to end.

That's extremely unlikely to happen in the event of this strike, if it occurs, given how it would be perceived by workers. Neither is a politically divided Congress going to get directly involved, even if, strictly speaking, the U.S. House and Senate can take action if they find something is impeding interstate commerce.

But the fact that no direct action is likely to be taken, barring an extreme economic outcome, that's not to say there won't be other kinds of involvement.

In fact, it's already begun.

Some Democratic politicians have already loudly voiced their support for workers, saying the car companies have made billions in recent years and that the EV transition shouldn't be "a blank check" on lowering worker conditions. On Monday, U.S. Sen. John Fetterman, D-Pa., said, "If the Big 3 can find money in the couch cushions to bump executive pay by 40% over the past few years, they sure as hell can find the money to give hard-earned raises to the people who actually build the cars and trucks Pennsylvanians drive."

On Tuesday, U.S. Sen. Bernie Sanders, I-Vermont, blasted coverage of the dispute by what he called the corporate media, saying it has been too focused on the potentially negative effects of a strike instead of average starting wages for workers that he said were around $17 an hour and have decreased in recent decades after adjusting for inflation.

Meanwhile, Trump — running for re-election next year — has loudly decried the transition to electric vehicles and Biden administration policies furthering it, saying any mandate "will murder the U.S. auto industry and kill countless union autoworker jobs forever, especially in Michigan and the Midwest." This week, with a strike looming, the U.S. House is set to approve legislation that would effectively block California and other states from receiving federal waivers to require electric vehicles, even though it's going nowhere in the Senate.

Expect the drumbeat to get louder if and when a strike happens.

John Austin, a Democratic former State Board of Education president and now head of the Michigan Economic Center, said he doesn't expect there to be a long, widespread strike because it's not in the interest of the union or the automakers. The Detroit Three are profitable, after all, and no one wants to give business away.

"Better to work in an industry that is big and growing," he said. "Their biggest interest is not to wreck that."

Contact Todd Spangler: tspangler@freepress.com. Follow him on Twitter@tsspangler.

This article originally appeared on Detroit Free Press: Potential UAW may be test for Biden as GOP, Trump could take advantage