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Columns | Go Far With Kovar

How Much Do Strikes Affect the Economy?

by Taylor Kovar

October 10 , 2023

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.

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!
Taylor Kovar

"Go Far With Kovar" October 10, 2023 Column
Legal Disclaimer: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. To submit a question to be answered in this column, please send it via email to Question@GoFarWithKovar.com, or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.


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