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Hi Taylor
- I feel like I'm hearing about a lot more strikes this year than
any other time I can remember. Is that true? And with all these different
industries disrupted, is that bringing down the overall economy?
Hi Preston - You're not wrong, there have been a lot of labor
stoppages this year—somewhere around half a million workers have
gone on strike in 2023. These strikes have natural economic consequences,
but it's usually a blip in the grand scheme of things. Still, strikes
matter and make a difference; if they didn't, it wouldn't be worth
it for the unions to organize them. Here are the three main ways strikes
affect economic output. |
1. Workers'
wages. I read that the autoworkers strike cost about four
billion dollars. Included in that number are the lost wages of
the striking employees. While it looks like money saved by an
employer from one angle, it still gets tracked as a loss caused
by the strike. The workers who forgo a paycheck for the duration
of the strike typically reel in spending and put less money back
into the economy, but they still have to eat and pay mortgages,
etc. Going without pay is definitely felt on a personal level,
but we don't see that creating too much of a drag on the greater
economy.
2. Lost production. If a strike goes long enough, this
is where the impact is felt the most. When the film and television
writers were striking for multiple months, a lot of projects got
shelved or put on pause. Workers who weren't part of the strike
had to stop working because things were getting canceled. With
the autoworkers, there was a brief break in the supply chain that
had a small but notable effect on sales. When teachers strike,
it's noticed almost immediately as parents have to adapt their
work schedules to take care of their kids. Most strikes don't
last long enough to really feel the hurt of halted production,
but the ones that do can be a real economic gut punch.
3. Disruption. On top of not going to work, a striking
labor force can cause a lot of turmoil with picket lines. They
shut down streets and job sites and do their best to make sure
no one else enjoys business as usual while they try to negotiate
a better deal. The picketing typically causes more of a disturbance
than an economic catastrophe, but it's not for nothing. More time
and money spent working around masses of workers just adds to
the overall impact of the strike.
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| For the most
part, each strike is felt more locally than across the broader economy.
The bigger the industry and the striking group, the more people will
notice. And, as you pointed out when lots of strikes are happening
around the same time, it becomes a lot harder to ignore. Thanks for
the question, Preston! |
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securities, investments, or investment strategies. Investments involve
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to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
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