Boeing’s more than seven-week machinist strike has already impacted the U.S. labor market and will play a major role in the upcoming jobs report from the Department of Labor on Friday—the final report before the November 5 presidential election and the Federal Reserve’s meeting next week. Meanwhile, Boeing’s impending layoffs will take months to fully appear in job statistics.
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When the Department of Labor conducted its survey in mid-October, around 44,000 workers across the U.S. were on strike, including 33,000 Boeing machinists. These workers stopped working on September 13 after overwhelmingly voting against a union-endorsed labor contract and opting for their first strike since 2008.
Economists predict that the U.S. economy will add around 100,000 jobs in October. However, Bank of America forecasts that the payroll count could be at least 50,000 jobs lower than expected due to the effects of the strike and the aftermath of Hurricane Helene and Hurricane Milton.
Christopher Waller, Federal Reserve Governor, noted in an October 14 speech that these factors could cause up to a 100,000-job reduction in the October report, calling it a “significant but temporary loss of jobs.” He also suggested that while these numbers “might have a small effect on the unemployment rate, it may not be very noticeable.”
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The machinist strike has complicated matters for Boeing, as new CEO Kelly Ortberg tries to guide the company through safety, quality, and financial crises. Most of the striking machinists work in the aerospace sector, primarily in Seattle, where they recently voted 64% against a new proposal that included a 35% wage increase, higher than the initial 25% offer but still insufficient to bring the machinists back to work.
The Biden administration has intervened, urging both sides to reach an agreement. Acting Secretary of Labor Julie Su held face-to-face meetings with both parties, including an October 23 meeting before the latest proposal was put to a vote. The International Association of Machinists and Aerospace Workers (IAMAW) District 751, which represents Boeing’s machinists, stated on Tuesday evening, “With continued support from Acting Labor Secretary Julie Su, our union bargaining committee had a productive face-to-face meeting with the company to address key negotiation issues.”
The dispute remains unresolved, and Boeing is likely to continue impacting U.S. employment numbers. Earlier this month, CEO Ortberg announced that the company would cut 10% of its global workforce, equivalent to approximately 17,000 employees, to streamline operations and focus on core areas. However, layoff warning notices are expected to go out in mid-November, meaning that these job losses may not appear in employment statistics for some time.
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During an October 23 quarterly earnings call, Ortberg stated that one of the biggest issues voiced by employees was “too much overhead, which slows them down from getting their work done.” He added, “We’re going to focus our workforce reduction on streamlining these overhead activities and consolidating where possible.” This indicates that Boeing is looking at significant restructuring to optimize production and improve efficiency.
The effects of Boeing’s strikes and workforce reductions extend beyond Boeing, further disrupting the already fragile aerospace supply chain. Spirit AeroSystems, Boeing’s primary fuselage supplier, recently put around 700 employees in Wichita, Kansas, on a 21-day furlough. A company spokesperson said Spirit was considering hundreds more furloughs or layoffs if the Boeing strike continues beyond November 25.
Stephen Juneau, an economist at Bank of America, noted that layoffs and their announcements are more complicated to factor into federal employment surveys than strikes, adding, “We don’t have a good sense of when they will happen.” This adds to the unpredictability of upcoming jobs reports, especially as Boeing’s strike and layoffs take effect.
President Biden faces pressure as unemployment rates and economic data become critical points leading up to the election. The October jobs report will be the last major economic indicator before the November 5 vote, and any fluctuations in employment numbers could significantly influence voter sentiment. Boeing’s strike and its impact on the aerospace supply chain could result in fewer jobs, posing a challenge to Biden’s re-election campaign.
Meanwhile, the Federal Reserve is gearing up for its policy meeting, and Fed officials will closely monitor the labor data. Employment declines due to the strike and natural disasters like the hurricanes could prompt the Fed to reassess monetary policy and potential interest rate hikes.
This event is not only a barometer of the U.S. labor market but also a reflection of the instability in the aerospace industry and the challenges facing major corporations like Boeing.
