How the Current Pro-Worker Policy Environment Could Bolster the UAW Strike and the American Labor Movement

Last week, President Biden became the first sitting president ever to walk alongside striking workers as he joined members of the United Auto Workers (UAW) picketing in Van Buren Township, MI, in their 11th day on strike. These workers were among nearly 20,000 on strike against the auto industry’s “Big 3”—General Motors, Ford, and Stellantis—across 21 states.

Both the strike and the president’s visit to the picket line are a sign that we are in a new era for worker power, one characterized by a stark improvement in the state of the labor movement after the pandemic, and driven by a pro-worker economic and policy environment.

The UAW was last at the bargaining table in 2019, with vastly different demands—and the contrast between its current demands and those of four years ago shows a tectonic shift in bargaining power. In 2019, the UAW negotiated a contract agreement with the Big 3 that provided workers with 3 and 4 percent wage increases and a signing bonus greater than $8,000. However, during the current strike, the UAW has already turned down automakers’ proposed wage increases of about 20 percent and is demanding a more ambitious wage increase of 40 percent, as well as cost-of-living protections, elimination of a two-tiered wage system, and job security in the transition toward vehicle electrification.

The current economic conditions, which are a backdrop to the UAW strike and others that have occurred this summer and fall, are considerably better than they were in 2019. Unlike after the Great Recession, the recovery from the pandemic recession was swift and more effective in improving worker power. Over nine years, between 2010 and 2019, the annual unemployment rate declined from 9.6 to 3.7 percent, and the three-month moving average of median wage growth rose from 1.6 percent in January 2010 to 3.7 percent in September 2019. During the recent recovery from the pandemic recession, on the other hand, the annual unemployment rate fell from 8.1 to 3.7 percent in just two years, and the three-month moving average of median wage growth peaked at 7.1 percent in June 2022 and has remained above 5 percent through 2023.

The contrast between the current economic conditions and those in 2019 is made most clear by the labor leverage ratio, which refers to the ratio of quits initiated by workers to layoffs and discharges initiated by employers. The labor leverage ratio captures the ability of workers to improve their terms of employment by exercising the credible threat of quitting when job security is high. Data shows that the labor leverage ratio is 2.28 as of July 2023—more than two quits for every layoff or discharge. While lower than the April 2022 peak of 3.35, the current labor leverage ratio is still higher than the 1.76 observed in September 2019. This ratio reveals that economic conditions after the pandemic have translated into more worker power than after the recovery from the Great Recession.

Worker power has also increased due to changes in the policy landscape during the past four years. In 2019, the Trump administration had finalized rules that lowered access to overtime pay, narrowed the joint employer standard that determines shared liability for wage and hour violations, and weakened worker protections associated with misclassification and fair union elections. Together, the Trump administration labor policies created a policy environment that undermined worker power and union bargaining leverage.

In contrast, the current labor movement benefits from a policy environment that empowers workers and unions. The Biden administration has pursued a two-pronged approach to promoting worker power, by: 1) supporting the creation of quality jobs that are union-friendly, and 2) strengthening compensation rules and the right to unionize. Industrial policy investments in clean energy and semiconductor manufacturing through the Inflation Reduction Act and the CHIPS and Science Act have stimulated the creation of about 1.5 million middle-class jobs over the next decade while also supporting training for workers to access jobs related to these investments. Additionally, in direct contrast to the Trump administration, the Biden administration has extended overtime compensation protections, raised compensation for construction workers through updates to the Davis-Bacon Act’s prevailing wage standards, enacted rulemaking to ban noncompete clauses, and strengthened unionization and collective bargaining rights through greater enforcement of labor law.

While it’s unclear how long the UAW strike will last and what the negotiated contract will look like, the current economic and policy conditions are bolstering the bargaining leverage of the UAW and workers across the country. This year, the Teamsters at UPS, the Writers Guild of America, and thousands of unionized nurses and health-care professionals have all fought successfully to drastically improve their terms of employment. Sustaining and building upon the hot labor market and pro-worker policy environment will be critical to deliver better pay and stronger labor protections for more American workers into the next year and beyond.