October 15, 2019

The Honorable Fred Upton

Member of Congress
2183 Rayburn House Office Building
Washington, DC 20515

RE: UAW-GM Strike Impact on US Economy; Taft-Hartley Consideration

Dear Congressman Upton:

As you are aware, the UAW strike against GM has now entered its fifth week. As I summarize
below, the loss of wages, salaries, production, and tax revenue are already very large, and are
becoming larger by the day. Should the parties not reach agreement in the next few days, I believe
intervention under the Taft-Hartley Act may be appropriate, as the economic damage already
inflicted on Michigan, Ohio, and Indiana already fully warrant intervention under the Act.
The Taft-Hartley Act was intended to apply only when a strike or work stoppage would “imperil
the national health or safety,” and it appropriately sets a high bar for such extraordinary
intervention into the bargaining of private parties. Given this high bar, I am writing to ask you to
consider whether an appeal to the President may be warranted in the next several days. Such an
appeal would request that the President exercise some of the powers authorized under the Taft-
Hartley Act to intervene, if there is no resolution.

Effects of the Current Strike; Comparison with 2002 Port Shutdown

Taft-Hartley was last invoked by President George Bush in 2002, during a shutdown of West
Coast ports. As further described below, the direct effects of the current strike are much larger than
those from the 2002 port shutdown. Specifically:
• The number of affected workers, who have been furloughed completely or have reduced
wages, has already reached approximately 175,000. The upper bound estimate of the number
of affected workers in 2002 is 36,000.
• Lost wages from striking workers and those furloughed because of the strike are already in
excess of $624 million. By comparison, we estimated lost wages at $36 million in 2002.
• Substantial lost employment and income exists in Michigan, Ohio, Indiana, Texas, and
Missouri, as well as in the Province of Ontario. By contrast, in 2002 lost employment was
almost entirely localized to a handful of ports, and one identified assembly plant, almost all
in California.

The following table summarizes these estimates, calculated by the same firm using the same
conservative methodology. Related citations are located in the appendix.

Anderson Economic Group LLC • www.AndersonEconomicGroup.com

1555 Watertower Place, Suite 100 • East Lansing, MI 48823 • Tel: (517) 333-6984 • Fax: (517) 333-7058
East Lansing | Chicago
The Honorable Fred Upton, October 15, 2019, page 2

TABLE 1. Comparison of Direct Economic Effects: 2002 Shutdown and 2019 Strike

Impact Metric 2019 UAW Strike 2002 Port Shutdown

Cause Strike called by UAW Shutdown by Pacific
against GM Maritime Association
against ILWU
Unionized workers on strike, 46,000 16,000
or prevented from working due to lockout
175,000 24,000
Workers furloughed or losing wages due to strike (as of 4 weeks, includes (upper bound)
GM and suppliers)
Direct Wage Losses $624 M $36 M
(Through 4 weeks) (Through entire duration)
Duration 4 weeks + 12 days
(ongoing)
Sources: Anderson Economic Group estimates for UAW-GM strike through four weeks, found at https://www.ander-
soneconomicgroup.com, most recently dated October 10, 2019; “Flash Estimate: Impact of West Coast Shutdown,”
Anderson Economic Group, October 2002.
Note: Direct effects of 2019 strike include only lost wages by automobile manufacturers and suppliers directly caused
by the strike. Lost wages do not include strike pay, settlement pay, or unemployment benefits. No losses at dealerships
or to retail customers are included due to substantial inventories.
The estimate of workers furloughed in 2002 is upper-bound estimate based on actual number of striking workers and
short duration of that work stoppage, as well as lack of evidence of any furloughs outside a narrow set of identified
facilities. See discussion in appendix

Extensive analysis supporting these estimates is available from the analyses published on the
Anderson Economic Group website. The October 10, 2019 analysis, which covered 4 weeks, is the
main source for these estimates. A number of other analyses are also available, almost all of which
involve higher estimates of the costs than we have published.1

1.Other estimates include those from Center for Auto Research, including an October 11, 2019 analysis
found at: https://www.cargroup.org/estimated-costs-of-the-2019-uaw-gm-strike; and comments by econ-
omists Charles Ballard of MSU and Gabe Ehrlich of University of Michigan included in one or more of
the articles below:
“G.M. Strike’s Economic Toll Is Showing: ‘I Might Lose the Business’,” New York Times, October 9,
2019, page 1; available at: https://www.nytimes.com/2019/10/08/business/economy/gm-strike-economy-
impact.html; “GM workers worry about paying bills as strike continues,” Washington Post, October 10,
2019, available at: https://www.washingtonpost.com/business/gm-workers-worry-about-paying-bills-as-
strike-continues/2019/10/10/9dacc808-eb13-11e9-a329-7378fbfa1b63_story.html; “GM Strike Starts to
Ripple Through Michigan Economy,” Wall Street Journal, September 26, 2019;
“GM CEO meets with UAW negotiators, another sign of progress ahead of union leadership meeting,”
CNN, October 15, 2019; available at: cnn.com/2019/10/14/business/uaw-gm-strike-progress.
In addition, reports from a variety of sources have been published on a near-daily basis from news media
regularly covering the automobile industry, including The Detroit News, The Detroit Free Press, Crains
Detroit Business, and Automotive News.
The Honorable Fred Upton, October 15, 2019, page 3

Summary of Request
This strike is already in its second month. By the beginning of this week, tens of thousands of
workers had lost two complete paychecks, a major US employer had lost at least $1.2 billion,
directly affected employees had lost over $600 million in wages, and the number of affected
workers reached at least 175,000. Given these daunting costs, I ask you to consider whether, should
no resolution be found within the next few days, an appeal under Taft-Hartley for federal
intervention is warranted.

Sincerely,

Patrick L. Anderson
Principal & CEO

CC: Selected members of Michigan, Ohio, Indiana, and Texas Congressional Delegations.
Attachments: Taft Hartley Act
Economic Effects of 2002 Port Shutdown
The Honorable Fred Upton, October 15, 2019, page 4

Appendix: Taft-Hartley Act

29 U.S. Code § 176. National emergencies; appointment of board of inquiry by President; report;
contents; filing with Service

Whenever in the opinion of the President of the United States, a threatened or actual strike or
lockout affecting an entire industry or a substantial part thereof engaged in trade, commerce,
transportation, transmission, or communication among the several States or with foreign nations,
or engaged in the production of goods for commerce, will, if permitted to occur or to continue,
imperil the national health or safety, he may appoint a board of inquiry to inquire into the issues
involved in the dispute and to make a written report to him within such time as he shall prescribe.
Such report shall include a statement of the facts with respect to the dispute, including each party’s
statement of its position but shall not contain any recommendations. The President shall file a copy
of such report with the Service and shall make its contents available to the public.

(June 23, 1947, ch. 120, title II, § 206, 61 Stat. 155.)

...

29 U.S. Code § 178. Injunctions during national emergency

(a) Petition to district court by Attorney General on direction of President Upon receiving a report
from a board of inquiry the President may direct the Attorney General to petition any district court
of the United States having jurisdiction of the parties to enjoin such strike or lock-out or the
continuing thereof, and if the court finds that such threatened or actual strike or lock-out—

(i) affects an entire industry or a substantial part thereof engaged in trade, commerce,
transportation, transmission, or communication among the several States or with foreign nations,
or engaged in the production of goods for commerce; and

(ii) if permitted to occur or to continue, will imperil the national health or safety, it shall have
jurisdiction to enjoin any such strike or lockout, or the continuing thereof, and to make such other
orders as may be appropriate.

(June 23, 1947, ch. 120, title II, § 208, 61 Stat. 155; June 25, 1948, ch. 646, § 32(a), 62 Stat. 991;
May 24, 1949, ch. 139, § 127, 63 Stat. 107.)
The Honorable Fred Upton, October 15, 2019, page 5

Appendix: Economic Effects of the 2002 West Coast Port Shutdown

The Taft-Hartley Act was invoked in October 2002 after 29 West Coast ports where shut down due
to a labor dispute between the Pacific Maritime Association port operators and the International
Longshoreman and Warehouse Union. President George Bush authorized the intervention on
October 9, 2002, which resulted in the Federal Mediation and Conciliation Service mediating a
settlement to the dispute. President Bush stated at the time:

This dispute between management and labor cannot be allowed to further harm the
economy and force thousands of working Americans from their jobs.

Anderson Economic Group evaluated the cost of the shutdown in a report dated October 15.1 We
identified lost wages and additional costs that arose due to the stranding of over 100 ships outside
the ports.2 Then, as now, we estimated the cost to the economy using a conservative methodology
that takes into account lost wages, costs arising from delay, and the fact that delays in shipping or
selling some goods does not mean they are lost, nor that consumers cannot acquire substitutes or
delay purchases. In the case of the 2002 shutdown, we estimated the lost wages at $36 million and
the lost US production at $925 million. We observed that the shutdown caused no ships to be lost,
few production losses outside perishable goods, and lost services arising from a small number of
advertising items that were time sensitive.

Note that our estimates at the time were substantially smaller than estimates of “$1 billion a day”
that had been repeated in news stories and which originated from an analysis commissioned by one
of the parties in the conflict.3 Multiple subsequent independent analyses arrived at estimates of
cost to the US economy that were broadly consistent with the figure we estimated at the time,
including:
1. Subsequent independent analyses, including by CBO in 2008.
2. A group of economists led by Jiyoung Park and published in the journal Growth and
Change in 2008.
3. An assessment by economist Peter Hall published in Economic Development Quarterly in
2004. Part of the title of this article, “We’d have to sink the ships,” refers to an exasperated
comment regarding the exaggerated “billion dollars a day” estimate.4

1.This report, “Flash Estimate: Impact of the West Coast Shutdown,” by Patrick Anderson and Ilhan
Geckil, is available on the AEG website at: andersoneconomicgroup.com/Portals/0/upload/Doc545.pdf
2.Ironically, one of the few identifiable production consequences was a California automotive assembly
plant run jointly by GM and Toyota, which shut down within days due to a shortage of parts.
3.Martin Associates, “An Assessment of the Impact of West Coast Container Operations and the Potential
Impacts of an Interruption of Port Operations,” 2000 (Lancaster, Pa.: Martin Associates, October 23,
2001), prepared for the Pacific Maritime Association.
On the exaggeration of the impacts in this work, see, e.g., the CBO article cited here, page 15:
However, in CBO’s view, that estimate overstates the likely cost of the 2002 shutdown because of
the limited nature of the impact-study approach used to produce the estimate.
See also the 2004 article by Peter Hall in Economic Development Quarterly, cited below:
During the West Coast port lockout in fall 2002, a widely quoted estimate claimed that a 10-day
shutdown of port facilities would cost the U.S. economy $1.94 billion a day. This article argues that
the estimated economic losses were vastly over inflated, and the episode provides an opportunity to
reflect on the use of economic impact studies to study short-term disruptions of infrastructure
services. Port impact studies are deficient in this task because they do not adequately address the
possibilities for substitution, even in the short run.
The Honorable Fred Upton, October 15, 2019, page 6

For example, CBO’s analysis, published in 2008, estimated that the costs of shutting down the
ports of Los Angeles and Long Beach—by far the two largest West Coast ports in terms of dollar
volume of imports and exports—for one week would range between $65 million and $150 million
per day.1 The report noted, looking back at the 2002 shutdown:

The economic cost of a port closure would depend on its duration and on how ship-
pers, producers, and consumers adapted to the shutdown. For a brief disruption, the
cost would depend greatly on how the backlog of ships waiting to enter ports was
resolved. In 2002, when a labor dispute closed major West Coast ports for 11 days,
almost all ships were able to land within the next month, so the net impact on annual
trade was minimal.

4.Peter V. Hall, “We’d Have to Sink Ships’: Impact Studies and the 2002 West Coast Port Lockout,” Eco-
nomic Development Quarterly, vol. 18, no. 4 (November 2004), pp. 354-367.
The quote is from a Wall Street Journal article in 2002, in which I asserted that, to reach a cost of a billion
dollars a day in a port dispute, “We’d have to sink the ships.”
1.CBO, “The Economic Costs of Disruptions in Container Shipments,” March 29, 2006, page 2. The CBO
report contains multiple scenarios and assessed a number of potential causes of disruption in ports.