The union’s very future is at stake, and its new president clearly understands that, even if our own president does not.
The union’s very future is at stake, and its new president clearly understands that, even if our own president does not.
T he United Autoworkers’ president, Shawn Fain, has made news with increasingly vitriolic threats to the automakers as the deadline for approval of a new contract approaches. At a Labor Day speech last weekend, he warned that the UAW would achieve its contract objectives “by any means necessary,” in a speech that made a strike almost certain. In the past, it has been typical for the UAW to target a single automaker for a strike, but interestingly, this time it appears set to strike against the Big Three.
While negotiations between unions and firms can often feature extreme rhetoric, it would be a mistake to think that Fain is just posturing. Indeed, the UAW clearly understands the reality that EVs pose the greatest threat to the UAW in its history. A few simple undisputed facts about auto manufacturing make the point obvious.
Currently, according to the Bureau of Labor Statistics, about 1 million workers are employed manufacturing motor vehicles and parts, with the vast majority of them currently producing cars with internal-combustion engines. That number is interesting, because it exposes President Biden’s promise to create a million jobs in the EV sector (a sector he defined broadly, by including “domestic auto supply chains, and auto infrastructure, from parts to materials to electric vehicle charging stations”) as a misleading sleight of hand. For that million is a gross, not the more meaningful net number. If the switch costs hundreds of thousands of jobs in the conventional car-manufacturing sector, then those should be deducted from the overall job-creation picture, and that’s before considering like-for-like comparisons. Is manning a charging station likely to pay as well as an auto-manufacturing job in Detroit?
The reality, according to Ford Motor Company CEO Jim Farley, is that it takes 40 percent fewer workers to make an electric vehicle than one with an internal-combustion engine. So, to use some back-of-the-envelope math, if baseline employment in the auto industry would, on average over the next ten years, have amounted to 1.2 million jobs, then the wholesale switch to EVs would cost 480,000 jobs.
While that number of jobs lost seems almost implausibly large, that dynamic is already visible in the data. One estimate suggests that the switch to EVs had by 2019 led worldwide to a loss of 80,000 jobs. Ford itself recently laid off 3,000 high-wage workers to free funds to invest in EV production.
While new EV factories will certainly create jobs, the productivity mathematics makes it virtually impossible for the net to be positive. Moreover, automakers are wisely locating their new EV-production facilities in right-to-work states such as Kentucky and Tennessee, putting those workers out of the immediate reach of the UAW. Ford’s new “Blue Oval” facility in Tennessee could potentially decide to join the UAW, but Farley notes without a hint of sarcasm that the decision to join or not would be up to workers.
The extent to which this dramatic change will disrupt and destroy careers and lives has been little remarked upon. But think of it this way: American Automakers, an industry association, estimates that about 7.5 million people in the U.S. have work that is related to cars. This is bigger than those just in manufacturing, because it includes people working at dealerships, repair shops, and gas stations. The Democrats’ policy objective is for two-thirds of new cars to be EVs by 2032. If they succeed at that, millions of lives will be disrupted.
It would be a profound mistake to underestimate the political impact of this dramatic change. Imagine the entrepreneur who left his country and put his life savings into a small gas station. How will he feel about the fact that his business has been destroyed by EVs? And what about the hundreds of thousands of workers making cars and parts, who will find themselves out of work? What might the climate agenda do to their politics? Not to mention those employed in the energy sector. If market forces were driving this, then the change would be gradual and give workers and small businesses a chance to adjust. But the massive subsidies virtually guarantee that we will see a short sharp shock.
It is positively inhumane not to recognize that the EV revolution will create massive winners and losers. The problem is, we know how that story goes. There is a large literature in economics about the impact on American workers of China’s entering the World Trade Organization. Factories shut all over the country, and the towns fell into chaos and despair. The pathbreaking work of Nobel Prize–winner Angus Deaton and Anne Case provides a guide to how bad it might be.
Against this backdrop, and perhaps fueled additionally by residual anger over Covid, one should not expect the UAW to accept modest contract improvements to avoid a strike. Its very future is at stake, and its new president clearly understands that, even if our own president does not.