By Nandita Bose and David Shepardson
WASHINGTON (Reuters) -U.S. President Joe Biden's strategy of backing politically crucial unions while avoiding strikes that cripple the economy has hit a bump in Detroit.
During a summer of labor unrest, Biden has touted his pro-labor policies by speaking out for unions, while his administration behind the scenes tries to smooth the way for deals with employers to avoid costly walkouts, union leaders and administration officials said.
But in a reminder of how hard it is to appease energized workers while tamping down on price hikes that cause inflation, Biden and auto workers union UAW - the only major union not to endorse his 2024 presidential run - are at loggerheads.
Biden's Labor Day prediction that the union would not strike against Detroit's automakers ahead of a Sept. 14 contract deadline was soundly rejected by UAW President Shawn Fain.
"He must know something we don't know," said Fain in response, adding that he was "shocked" by the comment. "Maybe the companies plan on walking in and giving us our demands on the night before. I don't know, but he's on the inside on something I don't know about."
White House Press Secretary Karine Jean-Pierre said Biden's comments about the UAW over Labor Day was him being "an optimistic person."
The president remains "optimistic" about a resolution of negotiations with the UAW, she said on Tuesday, and believes the union is at the "heart of an electric vehicle future that is Made in America with union jobs."
Labor unions like the UAW - which represents 146,000 workers at General Motors (NYSE:GM), Ford (NYSE:F) and Stellantis NV (NYSE:STLA)'s North American unit who are demanding cost of living increases and pay that matches company profits - are key to Biden's game plan for winning reelection in 2024.
He needs their support to win key states like Pennsylvania and Michigan again, which stand to bear the brunt of any major strikes against carmakers.
A UAW strike that shuts Detroit's Big Three manufacturers could cost carmakers, suppliers and workers over $5 billion, a study by the Michigan-based Anderson Economic Group says. With new car inventories slim, consumer experts say that could translate to higher car prices - an important component of inflation.
Biden is "more pro-labor than any other president but he is doing a balancing act when it comes to strikes," said Kate Bronfenbrenner, director of labor education research at Cornell University's School of Industry & Labor Relations (ILR).
Biden created a White House team in 2021 to support new unions, which his administration says are key to fighting U.S. inequality, and has backed collective bargaining and union wage increases since taking office. The White House has tried to play a role in several recent large-scale union contract negotiations involving rail workers and West Coast port workers.
On Wednesday, Biden reiterated that "collective bargaining means everyone wins," and said the successful negotiations to resolve a labor dispute at West Coast ports will have a direct impact on lowering inflation. Workers there ratified a new six-year contract last month that includes a 32% pay raise.
While other major labor unions have endorsed Biden's 2024 run, the UAW, which backed Biden in 2020, has held out, citing his electric vehicle policies. Biden's Republican rival, Donald Trump, stepped up his attacks on the Democrat's EV policies over the Labor Day weekend, urging auto workers to support him. Trump won Michigan in 2016, helping propel him to the White House; Biden beat him by 154,000 votes in Michigan in 2020.
The UAW failing to endorse Biden is "a bit of a danger signal," given Michigan's importance in 2024, said Harley Shaiken, labor professor at the University of California, Berkeley. The hesitancy to endorse Biden, Shaiken said, "could convince many UAW members, 'Well, if the leadership doesn't think they're so great, why not Trump?'"
SEASON OF STRIKES
The labor tensions in Detroit come as unionized workers across a wide range of industries are striking, or threatening to strike, to win back concessions made during the pandemic.
In 2022, there were 23 large strikes in the U.S. involving 1,000 workers or more, affecting over 120,000 workers, according to the Bureau of Labor Statistics. In 2023, the data through August shows 34 similar work stoppages affecting over 142,000 workers. Around half a million more threatened strikes in the first half of 2023, estimates from national labor unions show.
Biden, 80, is tying his 2024 re-election bid to the health of the economy, highlighting job growth, rising wages and fading recession fears. At the same time, the Biden campaign is seeking donations from corporations and executives, and endorsement from business for its economic policies.
Accelerating Detroit's shift to electric vehicles is a central element of Biden's climate policy, and the administration is offering billions of dollars in federal subsidies to spur domestic EV and battery production.
UAW members in Michigan, Ohio, Indiana, Illinois and other Midwestern states, however, mainly build combustion trucks and SUVs.
WHITE HOUSE'S ROLE
The president has directed his staff to engage in "prudent policymaking," over labor issues, two senior White House officials said in late July, indicating that the White House will not jump into every high-profile negotiation. They said they are in constant touch with unions and employers, monitoring the progress in talks.
"We don't view our role as waiting for more opportunities to jump in and facilitate," one of the officials said.
The White House last week announced $12 billion in Energy Department grants and loans that automakers could use to retool factories to build electric vehicles, a nod to the UAW's push to stop Stellantis from closing a Jeep assembly plant in Belvidere, Illinois. The company blamed the decision to idle the plant on the high cost of converting to electric vehicles.
That is a contrast from direct mediation by administration officials last year in an agreement to prevent a national rail strike that could have devastated the American economy.
Biden's intervention provoked criticism from some workers and labor allies, who blamed the administration for undercutting their negotiating position.
That dynamic is why the Teamsters, representing UPS workers, urged the White House to stay out of its talks at a critical phase in July - as it ultimately did, labor experts said.