BUSINESS NEWS
UAW workers won’t see strike pay right away
Susan Tompor
Detroit Free Press
Published 1:44 PM EDT Sep 16, 2019
DETROIT – What does $250 a week in strike pay really add up to these days?
Not a lot. UAW strike pay is below the national poverty line, below the Michigan minimum wage and even below what the average retiree gets in Social Security. Even many part-time workers see bigger paychecks than that.
What’s more important: The strike pay isn’t even going to arrive Tuesday.
“Strike assistance pay is available after the 15th day of the strike,” according to a UAW post.
“They qualify from the beginning but have eight days to sign up for the first payment, which is distributed on the 15th,” said UAW spokesman Brian Rothenberg in an email.
A bonus check is paid the week prior to Thanksgiving and Christmas holidays, according to the UAW Strike FAQ.
The UAW notes online that the union currently offers strike assistance of $250 a week – or $50 a day Monday through Friday. On Jan. 1, strike pay is set to rise to $275 a week or $55 a day.
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Breaking down the numbers, a $250 weekly strike benefit isn’t a lot on many levels.
It’s $6.25 an hour, based on a 40-hour work week. And it would be below Michigan’s minimum wage of $9.45 an hour.
(Even many people working part-time hours would tend to make more than $250 a week. Median weekly earnings for part-time workers in the United States were $271 in 2018, according to the U.S. Bureau of Labor Statistics.)
It’s $1,083 a month. It would be below the average Social Security payment for retirees, which is around $1,461 a month based on the latest data.
It’s $13,000 a year. And it would be below the national poverty level for a family of four, which is defined as $25,750. (Even looking at just a one-person household, the national poverty level is defined as $12,490.)
Pay would barely cover rent
All those numbers give some perspective of just how tough it will be for strikers at General Motors to live on strike pay of $250 a week.
“Another way of looking at it is that the $250 a week would barely cover the fair market rent for a two-bedroom apartment in Detroit according to HUD’s Section 8 certificate program,” said Jonathan Smoke, chief economist for Cox Automotive.
“The strike will hurt these workers and the households they live in,” Smoke said. “Likely pushing them to cut back, use credit cards for necessities and possibly fall behind on some obligations.”
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On the plus side, GM workers walking the picket line continue to receive limited health insurance coverage.
“The UAW Strike and Defense Fund covers certain benefits such as medical and prescription drugs,” the union notes online.
“Benefits not covered include: dental, vision, hearing and sick and accident.”
“These benefits are either paid directly by the (strike) Fund according to the company’s current plan or by having the Strike and Defense Fund make COBRA payments to the company plan,” the union states online.
How much families get hurt, of course, will depend heavily on how long the strike lasts.
Some auto experts say this walkout could last more than a day or two.
“Duration is a huge question mark,” said David Whiston, automotive equity analyst for Morningstar.
Whiston says he wouldn’t be shocked if the strike lasts more than a few days or even a couple of weeks.
“I don’t think it goes as long as a 67-day GM strike in 1970 as GM is more global and needs to remain competitive, plus it will be hard for workers to go that long, too,” Whiston said.
He added that “$250 weekly strike pay doesn’t go far when you have housing, food, a car payment, kids.”
“The last UAW strike at GM during contract talks was a less than two day strike in 2007,” Whiston said.
“GM today is in much better financial health than Old GM was in 2007, so we think workers expect GM to be able to offer more … than it has in this summer’s talks,” Whiston said.
Longer strike would hurt workers, plus GM
The strike hits GM’s revenue nearly immediately because GM records wholesales to dealers. “We estimate lost daily revenue of $312.6 million,” Whiston said.
Workers would be losing millions in aggregate, too.
“Average weekly earnings of auto industry production and non-supervisory workers were a bit more than $1,000 in 2018, so in round numbers, striking GM workers are collectively seeing about $35 million less per week in income during the strike,” estimated Bill Adams, vice president and senior international economist for the PNC Financial Services Group.
That estimate is based on data from the U.S. Bureau of Labor Statistics for the entire automotive industry, which would include non-UAW workers.
Economists say the overall economic effect could be limited – again if a contract is reached between General Motors and the UAW.
“If the strike lasts just a few days, I wouldn’t expect to see an impact in economic data on aggregate consumer income or spending,” Adams said.
“If it lasts months, there would be an impact not just from reduced income of striking workers, but also spillover effects to companies in the GM supply chain and capital spending plans.”
Mark Zandi, chief economist for Moody’s Analytics, agreed.
“Regarding the broader economic impact of the strike, under most scenarios it should be marginal,” Zandi said.
“If it lasts no more than a couple of weeks, the impact on the economy will barely register,” Zandi said.
“If the strike lasts through the end of the year it will reduce real gross domestic product in the fourth quarter by 0.2 percentage points,” Zandi said.
Right now, of course, GM workers remain hopeful, as contract talks resumed Monday morning.
Follow Susan Tompor on Twitter: @tompor
