Subject: The True Cost Of Strikes And Strike Threats: Beyond Immediate Financial Fallout: LRI INK

September 14, 2023

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The True Cost Of Strikes And Strike Threats: Beyond Immediate Financial Fallout

by Kimberly Ricci

By now, you know that Big Labor wants everyone to know that this is the so-called “Summer Of Strikes.” That’s also not news to the healthcare industry, which has been enduring a plague of strikes since 2021 and recently saw the Kaiser Permanente saga come out of remission with 85,000 workers gearing up for a strike authorization vote.


Yet several other industries have endured the specter of strikes this summer. That includes the averted UPS strike, which was anticipated to cause $7.1 billion worth of damage in 10 days and be the most expensive in U.S. history.


Elsewhere, the twin WGA and SAG-AFTRA strikes, in a tale as old as time, have reportedly cost $5 billion in losses so far with no deals in sight. Warner Bros. Discovery alone anticipates having to swallow a $500 million loss in earnings with the financial impact lasting beyond 2023.


That begs the question of the true cost of other high-profile strikes in history. During the 1969-1970 General Electric strike, the company suffered not only $79 million in immediate losses but also 20% of annual profits. In the case of the 2005 NYC transit strike, the city sustained over $1 billion in losses, yet businesses and workers also took hits.


Then there’s the SoCal grocery store strike, which could serve as a harbinger for the UAW’s current shenanigans. In 2003, four grocery store chains endured four months of chaos with over 50,000 workers picketing in front of stores. That mess cost at least $1.5 billion for the grocery chains, and even though the stores found replacement workers, many customers found other places to shop and never returned. 


The UAW collective bargaining kerfuffle is destined for substantial consequences no matter whether or not a strike happens. Let’s consider both possibilities. 


The Big Three automakers have been offering progressively sweetened deals to Shawn Fain, who is still trashing them with soap-operatic flair. The UAW strike fund was built to last twelve weeks, which would send vehicle output plummeting. A mere 10 days of lost production would cost $5 billion for the Big Three, but there’s another long-term consequence on the way.


Strike or no strike: get ready for higher auto prices, which are already higher than pre-pandemic levels but could skyrocket more due to a withering auto supply in the event of a strike. And even without a strike, Ford, GM, and Stallantis will need to add higher labor costs – and Fain demanded those 46% raises – to the price of autos.


Inflation-strapped consumers will turn away from those higher prices out of necessity. This could be a boon for foreign automakers (Toyota, Hyundai, Honda, and Volkswagen) with U.S. plants that are non-union and therefore not subject to financial pressures from the UAW. 


All of this will likely circle back to UAW members in the form of job losses. Hindsight can be 20/20, but boy, unions sure do like to ignore history and cause a world of pain.

The Beltway Blues: A Lingering NLRB Vacancy And A Perpetual Nominee

by Kimberly Ricci

The National Labor Relations Board’s recent decisions, including Cemex, have been delivered by a Democrat majority intent upon carving out Biden’s goal of broadening paths for union organizing. The resulting effects now leave employers to navigate sweeping changes in a procedural maze, which has been woven by a quasi-judicial body of five members nominated by the president and approved by the Senate. 


Any shuffle in NLRB members can present a great impact, but it sounds like the board’s new normal will remain, at least for now. 


The current board’s makeup only includes four members after the departure of Republican John Ring last December. That leaves one Republican (Marvin E. Kaplan) and three Democrats (Lauren McFerran, David M. Prouty, and Gwynne A. Wilcox) to issue far-reaching decisions for the workplace. Wilcox was recently re-upped to a second five-year term after a short absence, yet the vacant seat remains.


The process of naming and approving Ring’s replacement was not expected to be speedy, yet the 3-1 edge is a glaring one. A mystery candidate was recently offered to the White House, according to Sen. Lisa Murkowski, who says that Senate Majority Leader Chuck Schumer assured her that there would be no problem with confirmation after Biden gave the all-clear on vetting. That promise is one reason why Murkowski crossed party lines and voted for Wilcox to receive a second term.


Two veteran management-side labor lawyers—Terrence Kilroy of Polsinelli PC and Mark Carter of Dinsmore & Shohl LLP—are rumored to be under consideration for the GOP seat, according to reports from Bloomberg.


How long will that process take? Stay tuned.


In the meantime, Biden’s choice for Secretary of Labor replacement, Deputy Secretary Julie Su, remains no closer to Senate confirmation than she did back in May. Yet Su, pursuant to DOL policy, is permitted to indefinitely serve as acting secretary because she was previously confirmed as deputy.


Accordingly, Su has declared that she has “no intention” to leave her temporary post and is forging ahead with major moves. Those include a notice of proposed rulemaking to “restore and extend overtime protections'' for salaried workers who earn $55,000 or less per year. That adds up to around 3.6 million workers, and the proposal will be subject to the customary 60 day public comment period before going into effect. 


Quite possibly, Su will still be unconfirmed throughout those 60 days, and the slim Senate majority currently held by Democrats and opposition from Kyrsten Sinema and Joe Manchin do not bode well for a smooth outcome. However, the U.S. Government Accountability Office is now reviewing how long Su can continue to be acting secretary despite such a divided and stalemated Congress.


The pushback on Su’s nomination has much to do with her history as California Secretary of Labor under Governor Gavin Newsom. She championed a law that came close to eliminating the gig economy, which caused chaos for the trucking industry and gig worker app companies. Su’s dissenters worry that she would spread the law nationally, which could upend the business models of several companies, arguably creating more turmoil in an already fraught economy. 

CEMEX UPDATE WEBINAR RECORDING AND SLIDES NOW AVAILABLE

If you would like to view the LRI Cemex Update webinar given by Phil Wilson, you can request access to the slide deck and video recording by completing this form. We will need your name, a contact number, and your work email address in order to verify you are with a company.This webinar is for management-side labor and employee relations professionals only.

Fast(er) Times For Fast-Food Workers? California Greenlights A Trend

by Kimberly Ricci

No doubt about it, we do live in inflationary times, and California might be intent upon making that problem worse. What happens in California also does not stay in California, so employers will want to watch out for when the rest of the U.S. starts to follow suit.


Some context: Healthcare workers in the Golden State are moving towards a $25 industry minimum wage. That incremental process bumps workers at larger clinics to $23 per hour in 2024 and $25 in 2026. Workers at smaller, more Medicaid-reliant hospitals would only bump up to $18 in 2024 and slowly move up to $25 by 2033.


Where this gets weird: Most fast food workers in California are poised to earn $20 per hour in 2024. In other words, fast times might really be faster for 500,000 fast food workers than for some licensed healthcare workers. It’s a sobering thought.


What happened? A compromise that will almost certainly be signed into law.


This news follows intense lobbying efforts by the SEIU after the Fast Food Accountability and Standards (FAST) Recovery Act, or AB 257, was placed on hold for a Nov. 2024 ballot referendum. Gov. Newsom had signed that bill, which would have mandated $22 per hour for fast food workers employed by chains with 60+ locations nationally. AB 257 also set up a “Fast Food Council,” through which workers could bypass employers and bargain through the industry as a whole.


The SEIU reacted to FAST roadblocks with strikes, and employers expressed concerns about FAST placing an unfair financial burden on franchise owners.


What’s in the compromise: As noted above, the fast food minimum wage will now be $20 rather than $22 per hour. The Fast Food Council’s authority will be more limited, essentially by withdrawing AB 257. An updated set of standards will be the result of modifying another bill, AB 1228, which will provide the new framework of what was envisioned as FAST. Some key modifications: 

  1. The Council’s nine-member voting body will no longer be able to prescribe binding standards and can now only make limited recommendations for working conditions and wages.

  2. The Industrial Welfare Commission will no longer receive resurrected state funding – to establish further wage boards for other industries – for the first time in two decades as originally planned. That continued IWC defunding is important, if only to insulate other industries from enduring similar sweeping changes.

  3.  AB 1228 would have increasingly burdened the fast food industry by making franchisors jointly liable for any franchisees’ violations of laws regarding wages, scheduling, and more. That joint liability has now fallen off the table. 


Does this spell the end of formal unionization efforts for California’s fast food industry? Nope. Any collective bargaining agreement will supersede AB 1228 and the Council.


Stay vigilant: Copycat laws could soon be in process in the other U.S. states with Democratic governors and lawmakers. Also, yes, this newest stunt from California will obviously do nothing to curb rampant inflation. 

Weekly Hot Links


Marvel Visual Effects Workers Vote to Unionize

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Arresting Development: U.S. Circuit Court Directs U.S. Marshals to Take Haven Salon + Spa Corporate Officials into Custody for Refusing to Comply with Board’s and Court’s Orders

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UPS says new contract with Teamsters to increase cost at 3.3%

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UAW president says union is heading toward strike unlike Detroit Three automakers have ever seen

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About Labor Relations INK

Labor Relations INK is published weekly and is edited by Labor Relations Institute, Inc. Feel free to pass this newsletter on to anyone you think might enjoy it. New subscribers can sign up by visiting here.


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Contributing editors for this issue: Phillip Wilson, Greg Kittinger, Michael VanDervort, and Kimberly Ricci 


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About Labor Relations Institute

LRI exists to help our clients thrive and become extraordinary workplaces. We improve the lives of working people by strengthening relationships with their leaders and each other. For over 41 years, LRI has led the labor and employee relations industry, driven by our core values and our proven process, the LRI Way.

 

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