The massive workforce and the shortage of supplies

Deere & Co. workers hold signs during a strike outside the John Deere Des Moines Works plant in Ankeny, Iowa on Oc...


Deere & Co. workers hold signs during a strike outside the John Deere Des Moines Works plant in Ankeny, Iowa on October 15.


Photo:

Rachel Mummey / Bloomberg News

Forget what you heard about the collapse of organized labor. A wave of strikes across the country highlights the power of unions amid the current national labor shortage, with potentially damaging consequences for lingering supply problems nationwide.

The biggest strike came after midnight Thursday when more than 10,000

Deere

& Co. left work. On October 10, workers overwhelmingly rejected a pay and benefits increase deal negotiated by their United Auto Workers representatives.

In another year, employees might have jumped on terms they refused. By 2027, the deal would have raised the annual salary of a typical production worker to $ 72,000, from $ 60,000, according to the company. Employees could also earn one-time bonuses and better retirement benefits.

But several factors reinforce the demands of the workers. Inflation has soared to 5.4% in the past year, eating away at current wages and pushing employees to wait for bigger increases. This is expected to spread to other businesses and industries as inflation persists. A labor shortage has also increased wage demands and union influence, as employers are finding out.

These circumstances have pushed thousands more workers to picket lines in recent months. Frito-Lay employees got a bigger raise in July and the end of some tight working hours. Washington state carpenters stepped up their proposed 21% pay hike this month after resisting for three weeks. More than 1,400 Kellogg employees left their jobs last week at four factories across the country.

The unions planned these strikes at a time of economic tension. Supply chains are caught between restored demand and scarce labor, creating production shortages in countless industries. In retail alone,

Selling power

estimates that approximately 350,000 missing workers will cost businesses $ 223 billion by the holiday season.

Work stoppages make this pain worse for businesses and consumers. The Des Moines Register reports that farmers fear repair and delivery delays as Deere manages its strike. Kellogg, whose CEO said in May was holding back price increases, saw its share price drop when workers quit.

This show of labor force turns the victim story of the unions and their political allies upside down. Union membership as a part of the private workforce has declined over the years for a variety of reasons, including the example of auto and steel companies plagued by bad union contracts and legacy costs. Thousands of unionized auto workers have lost their jobs while non-union workers have thrived in auto companies in southern states that grant the right to work.

However, unions still hold an important weight in organized industries. Self-presentation as victims comes in handy for unions in their quest for bargaining advantages from their political allies. The AFL-CIO, Big Labor’s main lobby, led the campaign for the passage of the PRO law, which would give unions the advantage against management. Despite workers’ demonstrated success on the picket line, union advocates and Democrats want to ban right to work laws in states and limit how employers can advocate against union demands.

***

The recent strikes are not without irony for President Biden, an outspoken labor lawyer who now faces political damage from rising inflation and severe supply shortages. The president on Wednesday announced agreements with retailers to speed up deliveries and relieve congestion at busy ports. One wonders what he promised in return to the longshoremen in the port of Long Beach.

Our view is that unions and managers can solve their own problems and that wage gains in a tight labor market are welcome when they reflect productivity gains. The problem arises when wage demands undermine a company’s ability to compete in the marketplace, ultimately hurting workers who will lose their jobs in the future.

Meanwhile, the reality in today’s economy is that the more workers there are on strike, the longer it will take for supply to catch up with demand.

What is behind the high price of everything and what will be the political cost?

Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Published in the print edition of October 18, 2021.

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