Report Estimates $9.1 Million in Lost Michigan Income Tax Revenue Caused by UAW Strike

 

A new estimate from the Lansing-based Anderson Economic Group predicts that the United Auto Workers (UAW) strike against General Motors has “jumped from impacting the initial 49,000 UAW workers to nearly 150,000 throughout the U.S. auto industry.”

“What started as a concentrated event affecting a select group of workers has now ballooned in scope,” said Brian Peterson, director of public policy and economic analysis for the Anderson Economic Group (AEG).

The strike was launched on September 16 is now in its fourth week. As The Michigan Star reported, talks between General Motors and UAW union bosses broke down over the weekend as leaders warned that negotiations “have taken a turn for the worse.”

AEG estimates that the number of workers whose wages have been impacted by the strike has more than tripled since its inception.

“At the beginning of the strike, you had the 49,000 UAW workers across the country who walked off the job in September, but after three weeks, there are also 25,000 salaried GM workers whose wages have been affected,” Peterson explained.

He noted that an additional “75,000 employees who work for auto parts suppliers” throughout the country have either “been temporarily laid off or had their wages reduced since GM assembly plants no longer have demand for their parts or services.”

AEG has made the following estimates on the impact of the strike on the U.S. and Michigan economies:

• $660 million in lost profits for GM
• Direct wages losses for all employees in excess of $412 million
• $155 million in lost federal income and payroll tax revenue
• $9.1 million in lost Michigan income tax revenue

In a previous report, AEG explained that the Michigan economy suffers more than the U.S economy because of GM’s “outsized influence in the state.” A prolonged work stoppage could “push the state’s economy into recession,” AEG warned.

“Even if the strike ends today, the damage will continue to ripple through the fabric of the state’s economy,” said Patrick Anderson, AEG’s CEO. “We are estimating that between one and two percent of all the earned income this quarter for southeastern Michigan has already been lost to the strike.”

In total, 15 of GM’s 18 North American assembly plants have been shut down by the strike. That’s all the plants in the U.S. and one plant in Mexico and Canada each, according to Market Watch. The strike has already cost GM the production of 165,000 vehicles, and that number will likely climb to more than 200,000 by the time the strike ends.

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Anthony Gockowski is managing editor of Battleground State News, The Ohio Star, and The Minnesota Sun. Follow Anthony on Twitter. Email tips to [email protected].
Photo “UAW Strike” by UAW.