Why Are So Many People On Strike?

From actors to airline and UPS employees, workers across America are striking, threatening to strike, or canceling strikes at the last minute.

Nearly 700,000 American workers are on strike or anticipated to go on strike so far this year. Nearly half of them are employed by UPS, which agreed earlier this month to a whopping increase in pay and benefits. That deal, if ratified by UPS workers, will avoid what could have been one of the biggest strikes in US history.

We’re also tracking strikes by 11,500 screenwriters and 170,000 members of the SAG-AFTRA actor’s union, 32,000 hotel workers in California, and scattered strikes by Amazon and Starbucks employees. Meanwhile, another 150,000 Detroit autoworkers are threatening to go on strike.

According to Bloomberg, there have been 177 strikes so far in 2023, compared to 314 in 2022. That compares to an average of 16 large-scale strikes per year over the past decade.

That might sound like a lot of strikes, but there really aren’t as many as you might think, especially if you have a long memory. For instance, in the 1970s, there were an average of 289 work stoppages per year.

As well, the number of striking employees has fallen sharply over the decades. In 1970, nearly 2.5 million employees were on strike at some point during the year. By 2022 – a banner year for work stoppages in the past decade – the number had fallen to 120,600.

That’s a 95% reduction from 1970. Even this year’s 700,000 estimate would represent a two-thirds reduction.

Still, the uptick in strikes seems to be tilting the averages back toward historical norms. But why?

We think it’s this: the fact that adjusted for inflation, real wages are falling. Real wages started falling off a cliff in 2021, as the COVID lockdowns ended. Since then, real wages have fallen the most in nearly 80 years. Indeed, real wages fell more in 2021 and 2022 than they did in the inflationary 1970s or even the global financial crisis of 2007-2009.

This chart from the Federal Reserve Bank of St. Louis shows the trend:

Also keep in mind that losses in real wages shown in this graph reflect official inflation rates, as measured by the Consumer Price Index (CPI).

But as we’ve observed many times, if inflation was measured the same way it was in 1980, the CPI would be roughly double what it is now. And real wages would be falling much faster than the official numbers indicate.

We’ve long warned that during times of inflation, wage-earners don’t stand a chance, because wages almost never keep up with inflation. And naturally, wage-earners aren’t happy about that situation. So occasionally, they go on strike.

Indeed, the real surprise is that amidst by far the fastest fall in real wages since World War II, a lot more workers aren’t on strike. One big reason they’re not striking is that union membership is declining. Today, only about 10% of US workers are union members. Fifty years ago, nearly one-third of American workers were unionized.

It also explains why when union workers do strike, employers often cave and give them the higher wages they’re demanding. A case in point is the recent settlement between UPS and the Teamsters Union. Assuming that UPS drivers ratify the contract, they’ll receive an average of $170,000 in annual pay and benefits at the end of the five-year term of the agreement. Currently, full-time drivers receive a pay package worth around $145,000 annually.

The question is, will other companies give into worker demands for higher real wages?

Some no doubt will, but we think labor upheaval will continue in the months ahead. In Detroit, 150,000 employees who work for the Big 3 automakers – Ford, General Motors and Stellantis (formerly Fiat-Chrysler) – are threatening a strike starting in mid-September if management won’t meet their demands. The United Auto Workers (UAW), which represents them, wants a 46% wage increase over the four-year life of the contract, more time off, and a return to a guaranteed pension for newer workers.

In contrast, the Big 3 wants the UAW to accept smaller wage increases, cuts in health care benefits, 401(k) contributions, more temporary employees, and fewer vacation days for new hires.

Meanwhile, the strike in Hollywood by 11,500 screenwriters and 160,000 members of the SAG-AFTRA actor’s union shows no signs of ending. This strike isn’t just about wages – it’s also about the increased use by studios of virtual actors and performances.

This technology, aided by artificial intelligence, could easily be adapted to replace actors in background roles. These number of background actors, listed in credits with titles like “girl on skateboard” or “man on motorcycle” vastly exceed the number of actors in leading roles.

The Alliance of Motion Picture and Television Producers (AMPTP), which represents Hollywood studios and streaming services says that under its proposal, virtual background performers would only be used “in the motion picture for which [a human] background actor is employed.”

But SAG-AFTRA claims that AMPTP members like Disney and Netflix are actually planning something very different. The union believes that they’ll demand that background actors give up the right to their image and likeness forever, after being paid for a single film appearance.

We don’t have an ax to grind for or against management or the unions involved in any of these labor disputes. Still, with inflation far higher than official numbers indicate, we can’t blame wage-earners for trying to reclaim at least some of the purchasing power they’ve lost to rising prices.

There’s a larger lesson at work here as well. Inflation is even a more insidious threat to anyone on a fixed income or who receives an income tied to the official CPI. That includes more than 71 million Americans who receive Social Security benefit.

If you receive a fixed income or one tied to the CPI, unlike union workers, going on strike won’t get your benefits increased. Your only recourse is to live below your means and invest the money you save into productive assets (e.g., rental real estate) whose value generally increases with inflation.

This is the strategy wealthy people have used for centuries to build their wealth. It’s one we first discovered in the 1980s, after learning first-hand how devastating inflation is to a wage-earner with no significant assets.

Inflation isn’t going away, despite what you might hear from politicians. And the sooner you begin this strategy, the more time you’ll have to accumulate productive assets that can at least keep pace with it.

On another note, many clients first get to know us by accessing some of our well-researched courses and reports on important topics that affect you.

Like How to Go Offshore in 2023, for example. It tells the story of John and Kathy, a couple we helped from the heartland of America. You’ll learn how we helped them go offshore and protect their nestegg from ambulance chasers, government fiat and the decline of the US Dollar… and access a whole new world of opportunities not available in the US. Simply click the button below to register for this free program.

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