Strikes like UAW’s John Deere are the last thing America needs right now: Stephen Moore, E.J. Antoni


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Ten thousand United Auto Workers union members are now striking against John Deere for the first time in 35 years

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After nearly four decades of relative peace between Big Labor and employers, some unions are feeling their oats and re-flexing their muscles.

A key case is the 10,000 members of the United Auto Workers union who are now striking against John Deere for the first time in 35 years. The company offered employees a five percent pay increase, but the union declined.


With inflation running close to six percent, an increase of five percent could mean a decrease in purchasing power for rank-and-file workers. John Deere will almost certainly have to pay more and those higher costs for wages and salaries are likely to be passed on to consumers – which then makes prices higher and can create a snowball effect from vicious inflation.

In the 1970s, the UAW had a contractual agreement with eight percent growth annually over three years – but nine and ten percent inflation wiped out any gains in real income for workers.

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UAW’s John Deere threatens supply chain, food supply

Today’s inflation numbers are reminiscent of the mid-1970s, when volatile price changes caused labor market turmoil and even bone-crushing strikes that hurt entire economies. Real wages for working-class Americans fell in the late 1970s and we don’t want to play that vinyl record again.

History proves that mismanagement of the money supply and a dollar that loses value causes labor market turmoil. Annual inflation rose to 7.9 percent for 1951, and the following year saw a record 470 strikes. In the late 1960s, inflation rose to 5.4 percent and the number of strikes in a single year topped 400.

Supply chain bottlenecks wreak havoc

But just as prices began to fluctuate during the Reagan years, so did the onslaught. In the early 1980s, not only did inflation decline, but it also became more predictable. A stable dollar that maintained its value allowed labor and management to reach mutually agreed contracts on wage increases.

From 1947 to 1982, a period of several strikes, inflation rose and fell wildly, the annual rate changed by 8.7 percentage points a year, and 14.5 percentage points during that period ranged from a negative 1.0 percent to 13. was .5 percent. .

This is not the case in recent years as inflation is at or below 2 per cent.

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till now. Suddenly it’s like we’re in a “Back to the Future” sequel with Michael J. Granthshala. We have rising prices all over the map with economists predicting where this is all going. The Federal Reserve is sticking to its story of temporary inflation, but many market analysts worry about high inflation for at least another year.

It’s guesswork for unions and managers to negotiate a fair contract for two or three years. The Fed should focus on its primary task of keeping prices stable — or about two percent annual growth in its target rate.

We predict, as do others, including the Wall Street Journal, that there will be many more strikes in the coming months. Union owners realize they have leverage given the 11 million unfinished jobs and a booming stock market. Big Labor also learns that it has a president in the White House who will do its bidding.

We are for higher wages for workers when they can get them. But our concern is that as jobs become empty, factories and store shelves will look empty. A supply chain that was tuned for maximum efficiency is now gasping for air with bottlenecks at every turn.

Industrial production has fallen for the past two months to 2017 average levels – no better than four years ago. The latest forecast from the Atlanta Federal Reserve projects an anemic 1.2 percent growth in the third quarter of this year.

The best way for Washington to ensure long-term worker benefits — whether they’re members of unions or not — is to control inflation, which is a real wage tax. It would help if Congress would shut down and get away with spending and borrowing trillions of dollars that we don’t have because it could ignite even faster inflation.

Strikes can be a form of mutually assured destruction, and many times both sides lose in the end. With the economy finally coming out of the pandemic hole, and worsening supply shortages, this is the last thing America needs.

Stephen Moore is an economist at Freedom Works and the author of Trumponomics: Inside the America’s First Plan to Revive Our Economy. EJ Antoine is an economist at the Texas Public Policy Foundation.

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