Do strikes give workers greater bargaining power?
Over 3,500 hourly employees have been striking against Volvo-owned Mack Truck since October 12th after contract renegotiations between the United Auto Workers (UAW) and the company failed to resolve a slate of issues including wage increases, shift premium, holiday schedules, health and safety concerns, retirement, subcontracting and temporary workers, and health care coverage. By withdrawing their labor power, workers are hoping to gain leverage in collective bargaining with Mack Truck. However, the fact that the strike coincides with an industry shift from production to clearing inventory in addition to the increased supply of laid-off workers could pose a challenge to the UAW’s negotiations. As inventory piled up to reach all-time records, manufacturers have already started scaling back production and labor when the UAW decided to strike.
We can analyze the power dynamics in negotiations between Mack Truck and the UAW through the framework of network bargaining experiments. Consider Mack Truck and workers as nodes in a network exchange graph. An edge between a worker and the company is formed when the worker is an employee of the company, agreeing to provide their labor for the wage that the company is willing to pay. In a way, the value of the edge between these 2 nodes would be the market value of the company’s production. In this exchange network between Mack Truck and workers, Mack Truck would always seize most of the value of production as they have greater power being a big, established corporation and having an incredibly wide set of outside options. Since manufacturers like Mack Truck can replace workers more easily than workers can switch jobs, companies generally have more viable outside options than workers do and hence, would have greater power over workers. In some respect, striking is a great mean to balance the scale of power. By striking against Mack Truck, workers are playing the ultimatum game with the company: Mack Truck either agrees to split the value of production in a proportion that workers deem “fair” or both parties receive nothing as no production happens. Additionally, striking seems to be effective in balancing the power between workers and the firm as collective bargaining gives workers more leverage as a united front. If negotiations fail, the company would lose not one but all workers on strike, and hence actually have fewer outside options than they seem to have.
In reality, however, negotiations following the strike might face challenges as the powers of the workers might be diminished by the surge of labor supply, and hence more outside options for the company, from the workers laid off and the downward production cycle of the industry. As inventory peaked over the past year, companies within the industry have already started to downsize and lay off workers when the strike began. The lack of demand for labors makes workers less powerful as they now have fewer outside options and since Mack Truck currently does not need to worry about production, they might be indifferent to the workers’ “ultimatum” strategy in the immediate term. However, Mack Truck is not without incentive to reach a deal with the UAW as in the long term, the company would still want to maintain a stable production line in the US. In order to do so, Mack Truck would have to actively negotiate a new contract with the UAW so while the strike may not enforce immediate pressure on the company, it still shows the company that workers are willing to walk away if they are not rewarded what they think they deserve. Therefore, if Mack Truck wants to maintain that “valuable edge” between itself and the workers, they would have to be willing to give workers much fairer compensations.
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