There’s a groundswell of energy pushing labor leaders into our feeds. We almost know their faces, their positions and their most recent tiffs with management. Unions represent less than 6% of the workforce now — which doesn’t provide the salutary effects for other workers that they did when 30% of the labor force was unionized in the 1950s. Despite union marginalization, labor is having a moment.
The Biden Administration is running the gauntlet between corporate incentives for electrification embedded in the “Inflation Reduction Act” and autoworkers agitation for a wage and benefit reset. In the 2024 election, the incumbent will need the UAW vote AND the legacy automakers to be at the vanguard of the electrification initiative, but what do the 146,000 (of a total membership of 400,000) UAW workers representing the Big 3 need? Do they need a Biden Victory? Do they need to help their employers compete against non-union transplants and new market entrants? For UAW members, the question is will they accept anything less than an end to two-tier wage structures, an increase in health benefits, the resumption of pension contributions and a 32 hour work week?
UAW President Shawn Fain is the embattled hero in this drama because he stands, figuratively, alone against a group of global CEOs and their North American Operations Leads. He also has the Biden Administration going to great lengths to bolster its Pro-Union bona fides — the President is, in effect, at the table in support of the Union. There’s no greater distortion in a negotiation than a third party with and outsized influence in both the strategic direction of the industry in question as well as its workers. The union should play its bad hand to the hilt because structural changes in how electric vehicles are produced and maintained will result in fewer workers— different types of workers but less of them. There’s an element within the Union that is working against this inexorable reality, and it was on display at Monday’s Labor Day rally in Roosevelt Park.
Over the next few days, the rhetoric supporting management’s position will reach histrionic levels — threats that a strike against the legacy automakers could tip the US into recession if the workers don’t ‘get real’ about the stakes will become more frequent and strident. Former Ford CEO, Mark Fields, issued this tacit admonition on CNBC:
To reduce the potential for damage to the ‘Biden economy,’ I suspect that the Secretary of Energy (and former two-term Governor of Michigan, Jennifer Granholm) as well as our current Governor, Gretchen Whitmer, are jawboning automotive stakeholders and the UAW to cut a deal. As evidence of how badly Washington wants a deal, the administration recently announced 12 billion in loans and grants to the automakers and their suppliers to facilitate re-tooling for electric vehicle production … and possibly wages on par with UAW rates for workers in those joint-venture battery plants. Democrats have incentivized electric transformation as part of the climate agenda, and they are desperate to secure the endorsement of the UAW — which Mr. Fain has thus far withheld. The restive labor union is not a guaranteed Democratic vote. Ever the opportunist, Donald Trump just announced his intention to address striking workers coincident with the 2nd Republican debate on September 27th. The “forgotten man and woman” still play a pivotal role in Republican politics.
Yellow Trucking’s fractious negotiations with Teamsters Boss, Sean O’Brien, resulted in accusations of Union intransigence precipitating the hauler’s collapse and counter accusations of Yellow’s failure to fix structural problems that had been brewing for years. As Yellow was conking out, Mr. O’brien successfully landed a deal with UPS benefiting those drivers who ferry goods in ubiquitous brown trucks. By some accounts, Yellow had been cutting freight rates in order to maintain market share through their various acquisitions adding more capacity and territory: the margin squeeze on Yellow wasn’t only due to labor rates — their pricing model may deserve some of the blame too. The Teamsters victory for UPS drivers may be seen as Pyrrhic given Yellow’s demise and 20,000 or so truckers temporarily without a job, but a win is a win.
“The Nanny” star, Fran Drescher, is the public face of the protracted strike by the WGA and SAG against the AMPTP. We don’t know a lot about the WGA President, Meredith Stiehm or her negotiation team, but that stands to reason. A writer’s anonymity is the reciprocal of an actor’s visibility. The negotiating committee’s co-chair, Chris Keyser, posted a Labor Day solidarity message on YouTube outlining the existential stakes of the walk out — measured, resolute and wistful (hyperlinked below):
“this strike will end and we will go back to work, and it will be better when it’s over ….”
The SAG Union began issuing interim agreements with various independent productions allowing SAG members to audition, negotiate for roles on pending theatricals or streaming series and promote upcoming releases in an attempt to show the AMPTP that their terms were not that onerous. SAG notes that the agreements preclude actual production — i.e. rehearsals.
Apple TV secured an exemption for the streaming series “Tehran” and A24 has them for “Mother Mary” and “Death of a Unicorn.” Studio A24 has a market cap over 2.5 billion … minuscule in comparison to Apple’s market cap south of 3 Trillion, but hardly small. The Michael Mann biopic “Ferrari” featuring Adam Driver also secured an exemption. Neon, a smaller independent distributor, will bring the film to market in North America. With over 250 theatrical titles and 13 streaming series receiving exemptions, some SAG & WGA members have been openly critical of the exemptions strategy. Union members are a restive bunch, and maintaining consensus demands a labor leader’s political skill as much as their negotiation tactics. Despite some public sniping at the SAG leadership, unity prevails. Striking actors and writers are not as sympathetic as truck drivers, auto workers, hotel workers, etc. but all benefit from the common cause of seeking more equitable remuneration.
Actors want to get more transparent viewership data from streaming series to buttress their demand for higher residuals and guarantees protecting their likenesses & voices given the ability of AI-based technology to create avatars that are ageless and infinitely scriptable without compensation. Writers want agreed upon guardrails regarding AI content generation, guaranteed minimums for length of employment and staffing and increased residuals tied to viewing data for streaming shows. The AMPTP disclosed their most recent offer to the WGA to entice members to push back on their negotiators. The writers — principled to the point of intransigence - begged to differ.
New unionization efforts are sprouting like mushrooms in a field of discontent. At Detroit’s Labor Day Event, the skilled trades are traditionally the focus, but this year film workers, actors, musicians, AFL-CIO, hospital workers, teachers, even the Methodist Church showed up. Gen Z is more inclined to Democratic Socialism than older generations. In film & television, producers — line producers, production managers, unit production managers, production coordinators — are trying to unionize for better working conditions and health benefits. VFX artists are trying to do the same because machine learning is an existential threat to human mediated VFX work.
Graduate Student Instructors voted to strike the University of Michigan in March of this year and remain at odds with the University. The Grad Students want upwards of $50 an hour and the University is targeting $37. Didn’t the Big Ten sign a seven billion dollar seven year media contract? Isn’t that why the Pac 12 collapsed? Surely, a graduate TA could make thirteen dollars more per hour. The Los Angeles Hotel Workers, part of Unite Here Local 11, went on strike scrambling cleaning & staffing necessities at upwards of 30 hotels. Everybody wants more money.
The Teachers Union Boss, Randi Weingarten, hasn’t benefited much from the swell of support for workers rights. The Teacher’s Union got caught up in pandemic politics and curriculum distractions. Fighting about cultural issues makes compromise a repudiation of principle for both sides. Negotiation is ill-advised. Compromise is impossible. Students don’t win. Teachers don’t win. Parents don’t win. That exception aside, the weltanschauung of US Labor is a repudiation of profit at scale without commensurate benefit brought about by the confluence of pandemic supply chain disruptions, excessive stimulus spending, media re-alignment and the flight of capital from humans to computer-based processes.
Irrelevancy (after redundancy) is a legitimate human fear. Efficiencies drive firms’ decisions and once machines replace human tasks, there’s no point in having as many humans. In the machine age, applied knowledge will be a key differentiator as humans compete for fewer productive roles. The looming skills mis-alignment in certain sectors of the knowledge/service economy could end up making Preppers more right than crazy. Automation will depress some wages and reduce the overall human component of the workforce, people will move across states (or countries) to find work at whatever rate is offered. Economic disparity is adding new fuel to the Neo-Socialist movement that began as a cultural revolt in the aftermath of the Summer of Rage that produced the revisionism of the 1619 Project and the omnipresence of DEI mandates.
Economic disparity was always a tacit part of the ‘Revolt for Racial Equity,’ but the ontology of restorative justice now includes a broadened appeal (if not an imperative) for economic justice across racial, ethnic, generational and even political lines. This is where Labor’s story gets its teeth. In the New Gilded Age, where are the benefits for those absent from the managerial/technocratic class? On the 60th anniversary of MLK’s “I have a dream” speech, his amalgamation of the fight for racial justice with economic justice for all Americans still resonates. There’s vicarious support for those whose precarity stands in contrast to the market power and profit margins of market leaders in technology, transportation, health insurance, media & entertainment companies.
Strikes & negotiations attempt to reset the terms between labor and management, but what’s missing from Labor’s script is the fact that management isn’t simply trying to keep labor costs down and profit up. Economic theory stipulates that
“a firm striving to maximize profits will set price and output at the same point where marginal cost equals marginal revenue. The same theory analysis applies to hiring workers. Keep hiring workers until the cost of the last worker equals the increase in revenue that the worker produces (Thaler, “Misbehaving,” p. 44).”
During the pandemic re-bound, this wasn’t necessarily the operating principle. OEMs, Tech Companies, Streaming Platforms and global retailers (Amazon, Walmart, Target, etc.) prioritized maximizing sales and staffing to meet demand. Demand was stoked by National lock downs and pandemic stimulus funding. Companies adapted, scaled and made a lot of money. Now, comes the re-set after the over-rotation. The tech & media sectors shed workers, employment demand is softening, historically high interest rates are a burden for companies and consumers alike and there are technological and structural shifts occurring that will force companies to change how they invest and operate. OEMs are diverting mountains of capital to electrification. Technology companies are diverting capital to fund next gen AI. Media Companies are trying to right size their subscription models with ad supported options to pay for the glut of content need to keep people watching. The logistics sector is at capacity in ports and trucking to move goods at ‘post-pandemic’ pace and volume at the same time as businesses are selectively decoupling supply chains from China to reduce our dependency on the ‘world’s factory’ for everything from home goods to consumer and component electronics. While these sectors have differences, they are all behaving more in accordance with the operative mode that equalizes marginal cost (of workers) with marginal return.
Without malice towards workers, firms will inexorably adopt AI-based technologies reducing labor’s prominence even further. Panglossian AI advocates point to the fact that we will just transfer workers’ skill sets into AI-based mediation avoiding the likelihood of a net reduction in the overall number of human roles required. It’s delusional to believe that metrics of machine mediated processes — beyond generative AI into synthetic AI— will allow for a ‘lossless’ transition. The architects, mediators and application specialists of AI will have jobs, but what about the spread sheet rockers? The photo retouchers and the VFX artists? The animators and junior copywriters and paralegals and HR people screening candidates for the ‘right fit?’ What about the tax preparers, paralegals and the radiologists, MRI techs, dental hygienists? Doubt that a robot could clean your teeth? With an x-ray for spatial position, a sensor for the gum line, a fixed patient head position and a talk back feature to ask “would you like to rinse?” I think it could. Many cognitive process or repetitive dexterity jobs will be things of the past.
Ray Dalio predicts that the New American Civil War could commence after the 2024 election cycle. The fungibility of truth, distrust of election results, the rejection of judicial outcomes and unsustainable debt will result in open rebellion. He’s not alone — Peter Turchins “End Times” and Neil Howe’s “4th Turning is Here” are enough to make you want to liquidate your 401K and build a bug out shelter in beyond any known zip code.
Despite these cheery prognostications, I don’t believe the End Times are upon us quite yet; so, while negotiation is still possible, allow me to dissimulate in support of Labor’s short term goals: let’s get the writers & actors more scratch, let’s get the UAW some headroom on salaries and benefits. The Teamsters got a win, and may they yet prevail in their current strike against an Amazon distributor in California’s Central Valley and elsewhere. Pay the hotel workers and graduate student teachers a bit more — inflation is a kick in the pants. Let’s chalk up some wins before we come back to Candide’s realization that optimism “is the obstinacy of maintaining that everything is best when it is worst.”
