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Are Employers Underestimating the Impact of Strikes?

The list of gains that the Hollywood writers secured to end a nearly five-month strike with studios once seemed excessively ambitious: not just wage increases, but also minimum staffing levels for shows, new royalties on successful series, and restrictions on outsourcing writing duties to AI.

However, the writers’ deal was not a one-off. It was the latest instance where workers gained substantial concessions and demonstrated their increased leverage.

For example, United Parcel Service employees secured significant pay increases for part-timers by pushing the company towards a strike. Similarly, the lowest-paid academic student employees at the University of California won salary increases of over 50% following a month-long strike.

Given the unions’ growing bargaining power and the economic costs associated with prolonged strikes, why are employers not making concessions more quickly?

According to union and management experts, the answer lies in employers underestimating the changing dynamics of the workforce. Employers continue to act based on outdated templates from previous decades, when employees had limited leverage.

Thomas Kochan, an emeritus management professor at MIT, explains that employers need to change their expectations and recognize the frustration and determination in the post-pandemic workforce.

Executives have been surprised by the rise of more assertive union leaders, their success in mobilizing members and the public, and the ineffectiveness of traditional bargaining approaches.

In Hollywood, the Alliance of Motion Picture and Television Producers, which represents entertainment companies, has typically tried to strike individual deals with guilds and then pressure others to accept similar terms. However, this strategy failed when the writers’ strike was joined by SAG-AFTRA, which represents actors.

Peter Newman, a producer and professor at NYU, acknowledges that the old playbook has become outdated. However, the strikes still saved studios hundreds of millions of dollars in the short term as Wall Street demanded cost reductions.

In Detroit, automakers are used to closed-door negotiations with the United Automobile Workers union. However, this year, the union’s new president, Shawn Fain, surprised executives by disclosing and deriding the companies’ offers publicly. The companies’ responses, expressing impatience, may have further galvanized members and gained public support.

Employers argue that they remain capable of acting in their self-interest, and there is no broad trend favoring labor. They believe unions are equally capable of miscalculations.

While a handful of executives might have misjudged the situation recently, it is too early to determine if the landscape has permanently shifted. The outcome of the U.A.W. strike remains uncertain, and workers’ resolve may diminish if the strike continues for weeks.

However, employers should not underestimate the determination of workers who feel they have little to lose from striking due to rising prices and the precarious nature of their jobs.

Public opinion also plays a role, with confidence in big business at an all-time low while approval of labor unions is close to a high. Union leaders have found success in keeping members focused on shared goals, utilizing social media to rally support.

Unions have also become more democratic, involving members in contract negotiations, which has increased their commitment to the leaders’ strategies.

Employers should recognize the shifting dynamics and the potential disruption caused by workers who are willing to follow through on their demands. The recent strikes symbolize a new era where negotiations extend beyond conventional issues and into areas like technology adoption.

Ultimately, employers must adapt their expectations, acknowledge the changing power dynamics, and engage in negotiations with a new mindset.

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