Jobless claims up around U.S. amid GM strike

Kalea Hall
The Detroit News

The impact of the national United Auto Workers strike against General Motors Co. is extending far beyond Michigan and the automaker, hitting multiple states and multiple companies forced to lay off thousands of employees.

As 46,000 GM employees prepare to spend a fourth week walking picket lines outside of 55 GM U.S. facilities in 19 states, thousands of laid-off employees not on strike but impacted by it are waiting at home for a call to return to work. It's not yet clear when those calls might come.

The work stoppage at GM plants in Texas, Tennessee, Ohio, and Michigan has led to nearly 11,000 unemployment claims that officials in those states attribute to automotive supplier and support companies, The Detroit News learned after contacting unemployment offices in each state.

"The strike is really entering a critical phase now that we are past three weeks," said Robert Dye, chief economist at Comerica Bank. The strike comes "at a critical time" for Michigan since the economy here was showing signs of losing momentum before the walkout started Sept. 16, and now the strike "could only make that worse." 

That's already starting to happen. Suppliers are beginning to issue layoff notices, and GM employees now have missed two paychecks. Strikers are eligible for weekly $250 strike checks. In comparison, the top production wages are about $1,200 per week, and temporary production employees make about $630 per week.

Loss of income for GM and non-GM employees because of the strike will lead to less consumer spending, said Patrick Anderson, CEO of the East Lansing-based Anderson Economic Group. "Even if the strike ends today it's still going to be with us at Christmas shopping time."

The group says supplier employees are taking a bigger hit to their wallets than GM workers on strike or "the people who didn’t have the chance to vote 'yes' or 'no' on a strike," Anderson said. "They work at supplier companies, or they are self-employed. Many of them were just told not to show up until the strike was over."

Through Oct. 6, total direct wage loss for all GM and supplier employees will exceed $412 million, the Anderson group estimates. The strike has furloughed almost 10,000 non-UAW GM employees in Mexico, Ohio, and Ontario, the automaker has said.

Michigan, or "ground zero" for the impact as Dye puts it, had seen 3,500 unemployment claims as of Sept. 30. Specifically, UAW Local 659 in Flint said that the 625 Lear Corp. employees it represents have been laid off, echoing Lear's confirmation that its employees have been affected by the UAW-GM strike.

In Texas, where GM produces its profit-rich, full-size GMC, Chevrolet and Cadillac SUVs at Arlington Assembly, the state has identified about 40 companies directly impacted by the strike that supply parts and provide transportation and delivery services. So far the state has seen about 2,200 claims from the employees at those companies. 

Ohio's Department of Job and Family Services confirmed 14 companies with about 3,600 employees have been impacted, and so far more than 2,600 claims have been submitted. In Tennessee, where GM's Spring Hill Assembly plant is located, 25 employers have been impacted by the strike, and, so far, more than 2,400 claims were submitted due to the GM national strike.

Kansas Department of Labor Spokeswoman Julie Menghini said the state has "seen an increase in claims the last few weeks from certain industry sectors, such as manufacturing, but we have no direct information as to if those claims are related to the ongoing labor dispute."

The strike hasn't yet had a "big impact" on the state of Indiana, said Scott Olson, director of media at the Indiana Department of Workforce Development. Researchers at the state pointed to U.S. Department of Labor data showing initial claims down by 337 from the week prior and continued claims up 605, which are not unusual weekly shifts.

The latest jobs report issued Friday by the U.S. Bureau of Labor Statistics shows the manufacturing sector lost 2,000 jobs during the month of September. Grant Thornton LLP Chief Economist Diane Swonk wrote that the contraction was "in response to weakness related to tariffs and trade."

GM's national strike occurred after the September survey and will not show up until the October employment report that will come out Nov. 1, she added. Depending on when it ends, the strike will have "a very small impact" on the third quarter but those losses will be recouped in the fourth quarter.

"It does have spillover effects," Swonk said. "It is affecting suppliers and it is affecting production in both the U.S. and in Canada, but GM isn't as big as it once was, and the effects are smaller than they once were."

The U.S. initial claims for unemployment increased by 4,000 for the week ending Sept. 28. Comerica's Dye wrote: "The level of initial claims is still very low, but the recent increase comes as the impact of the now three-week-long UAW/GM strike ripples upstream to GM's suppliers." 

JPMorgan Chase Bank believes the strike did not impact the bureau's September report, but Economist Daniel Silver did note the increase in jobless filings as an effect of the strike.

"We can’t track every way that the UAW strike has impacted other workers, but it seems likely that recent rise in claims is associated with spillover from the UAW strike because the increases have been larger in states that have higher shares of employment associated with motor vehicle and parts manufacturing," Silver wrote in a note Friday.

Suppliers close to the assembly plants that are focused on production of particular GM vehicles aren't "going to be able to build ahead too much," said Michael Robinet, executive director of Southfield-based IHS Markit Automotive Advisory Services, so most of those suppliers have ended production unless they are building for other automakers.

He added that some suppliers still are shipping but are sending product to warehouses instead of assembly plants.

"This labor stoppage has been a bit different in that respect versus other labor stoppages because usually everything stops," Robinet said.

Since the labor market is still tight, suppliers that are considering laying off their skilled laborers do so "with great trepidation." 

Instead of laying off employees they might do training, machinery builds and other projects to keep them employed during the strike.

"Smarter suppliers are going to evaluate their operations, they are going to adjust their schedules accordingly," he said. "But they're also going to be very careful about how they lay off people that are going to be difficult to replace."

Twitter: @bykaleahall