Roundtable: How Labor Strikes Are Reshaping US Industry Risk and Strategy

Labor strikes and workforce disruptions are no longer rare operational setbacks. Across manufacturing, accommodation, education and healthcare, work stoppages are increasingly influencing pricing strategies, capacity utilization and long-term investment decisions. Rather than short-lived shocks, strikes are compounding existing pressures tied to labor shortages, cost inflation and supply chain fragility.

To explore how sustained labor unrest is reshaping operational risk and strategic positioning, three IBISWorld analysts examine the impacts across major industries:

• Evan Jozkowski: Manufacturing  
• Michal Dalal: Accommodation
• Gabriel Seiler: Education and Healthcare Services

How are rising labor strikes and workforce disruptions affecting day-to-day operations and planning in your industry?

Evan Jozkowski: Labor agreements play a crucial role in the manufacturing sector, particularly in the automotive and aerospace supply chains. Among these industries, the United Auto Workers (UAW) and International Association of Machinists and Aerospace Workers (IAM) represent the majority of unionized workers. These industries have faced a slew of workforce disruptions in the past few years, including the Big 3 automaker strikes, GE Aerospace labor negotiations and the first Boeing defense strikes in nearly three decades, just to name a few.

The most pressing concerns center around work stoppages. While a week or two of idling factory time may seem minor, time and costs quickly add up. For instance, 3,000 workers went on strike at Pratt & Whitney for 16 days, totaling more than 48,000 cumulative days idle. Boeing’s 72-day strike correlated with 230,400 days idle. Big 3 Automaker strikes in 2023 accounted for 860,200 hours of work.

Day-to-day operations grind to a halt, costing manufacturers millions each day and unsettling everything from production quotas to procurement strategies. Manufacturers have reported significant cost increases, largely leveraging demand inelasticity to pass costs onto buyers. In the automotive sector, Big 3 automakers reported a combined EBIT decline of more than $4.0 billion and $10.4 billion in total economic losses following strikes.

Michal Dalal: Ongoing labor disputes and workforce disruptions are fundamentally reshaping the day-to-day workings of the accommodation industry. The Labor Day weekend walkouts of 2024, for example, saw over 10,000 workers across two dozen hotels demand living wages and better working conditions, illustrating their growing resolve. That momentum carried straight through 2025, keeping the pressure high on hotel operators already struggling with chronic labor shortages and historically high turnover. In 2025, 65.0% of hotels reported not having enough staff—a shortage most keenly felt in housekeeping but also impacting front desk, maintenance and culinary roles.

Hotels are increasingly forced to scale back services when faced with disruptions, so rooms are cleaned less often, operating hours for restaurants and lounges are scaled back and guests see longer wait times at check-in. Planning has become more unpredictable, so hotel managers are building in more slack, accepting lower occupancy rates to maintain service standards, and cross-training and upskilling staff to keep things running amid labor constraints.

Gabriel Seiler: Educational services and healthcare industries have faced labor shortages for a very long time. They’re essential services and their revenue is closely tied to political and budgetary decisions from various federal, state and local governments. This means many operate under fixed annual allotments and can’t rapidly raise salaries or bring on more staff. Additionally, most jobs in the sectors come with long hours, stressful work environments, and low pay relative to the level of education required. The combination is a recipe for worker frustration. The two sectors are the most prone to work stoppages, collectively accounting for nearly half of all workers in 2024.

However, since labor shortages and strikes aren’t new issues for the healthcare and education industries, they’ve developed repeatable strategies to handle walkouts. They also nearly always receive advanced notice before a strike, giving them time to formulate a response. State laws determine whether or not schools can hire substitutes and non-union temporary staff. The more common response is simple but insurmountable-- they just have to cancel class altogether. That reality results in very short strike times, typically about two days.

The situation is much more dire when healthcare strikes occur, and medical care providers must carefully shift operations to ensure they can still support public health and help those facing medical emergencies. In the lead-up to a strike, hospitals discharge patients who can safely be released. They reschedule or fully cancel elective procedures and make plans to reroute some ambulances to other facilities with more staff.

What second-order effects are you seeing on costs, pricing or service availability as labor disruptions persist?

Evan Jozkowski: For one, late deliveries also sour key buyer relationships, especially in more elastic industries, like metal or rubber suppliers. In comparison, automakers have largely priced cost increases, with Ford stating that UAW renegotiations will add $850-$900 to vehicle costs. General Motors similarly estimated a $ 575-per-vehicle increase in potential costs, totaling $9.3 billion across UAW and Unifor strikes.

This suggests the need for cost correction elsewhere, especially when automakers still deal with persistent pricing challenges due to the pandemic and, more recently, tariffs. With average car prices sitting above $47,000 in December 2025, many companies have continued to cut labor and scale back less profitable plants. GM and Ford reported 900 immediate layoffs related to UAW strikes, while Stellantis reported more than 1,300 permanent layoffs. Dealers and repair services also reported major parts shortages, highlighting the automotive industry’s missed production quotas because of strikes.

Similarly, Boeing cut 10.0% of its workforce following January 2025 commercial division strikes, resulting in more than 17,000 employees being laid off. These strikes and subsequent layoffs undoubtedly add to the manufacturing sector’s cost structure. Boeing faced major delivery issues with key 737, 777 and 767 models, further eroding relationships with major airlines, especially amid high-profile crashes and groundings. The trend is consistent, recent labor strikes have compounded existing operational and supply chain struggles, contributing to massive cost increases, production shortfalls and layoffs.

Michal Dalal: A consequence of persistent labor shortages is a gradual erosion of quality, as it becomes harder to maintain the same level of service. Guests end up with diminished experiences due to unexpected cancellations, fewer available amenities and slower service across the board. To combat rising turnover and attract new hires, 47.0% of hotels reported offering higher wages.

As labor becomes more expensive, hotels and other accommodations must look for ways to offset costs, like increasing room rates during peak periods, upselling premium add-ons and even unbundling amenities typically included with a hotel stay. Services like airport shuttles or valet parking are increasingly subject to additional fees, as are late check-out and luggage handling. Ultimately, these challenges lead to travelers paying more and receiving less, while hotels grapple to maintain their usual standard of service.

Gabriel Seiler: Many educational services and healthcare industries are bound by regulations directly tying their workforce size to their operating capacity and, accordingly, their service availability. Teacher-to-student ratios are especially strict in the youngest age groups, such as preschools. Preschools legally can’t admit more students if they don’t have the staff to supervise them. Even for institutions with some leeway on their staff-to-student ratios, schools risk sending their existing workforce to the picket line if they let their class sizes grow too large. We saw that cited as a primary complaint in teacher strikes in Portland in 2023. In Portland, district negotiators actually showed a willingness to make concessions on cost-of-living pay increases if it meant smaller class sizes.

Hospitals and other healthcare providers’ staff-to-patient ratios are especially scrutinized in some states, but certain programs across the nation can lose access to federal funding from the Centers for Medicare & Medicaid if providers fail to maintain sufficient staffing levels. Healthcare industries are under the same pressure as schools to keep their employees happy by ensuring their workforce can accommodate capacity, meaning their healthcare workers don’t have to work even longer hours or take on more stress. If they don’t, they also risk inciting more walkouts and exacerbating capacity issues. The massive New York City nurses’ strike underway cites protections from poor staffing levels as one of their top demands.

How are labor disruptions influencing competition and strategic positioning among firms in your sector?

Evan Jozkowski: Labor disputes have contributed to significant competitive disruption and capital reallocation among automotive, aerospace and broader manufacturing sectors. Strikes create sharp divergence in on-time delivery performance, pushing some customers to shift volumes or programs to less-disrupted rivals or regions. In many advanced industries, like semiconductors, autos and aerospace, where R&D programs run for years, a single high-profile stoppage due to labor disputes can reframe a supplier as “high-risk,” reshaping sourcing decisions and share of business for an entire product cycle.

Disruptions are accelerating investment in automation and digitalization. Some OEMs and Tier 1s are using strike episodes as catalysts to redesign footprints, optimize production and cut costs, often reshoring critical work, splitting programs across multiple sites or shifting to more automated lines to reduce exposure to any one unionized plant.

Manufacturers have had to come to the table with unions more frequently and with less power, underscoring the importance of union-manufacturer relationships. Manufacturers that handle negotiations constructively can turn stable labor relations into a competitive asset, preserving institutional knowledge and reducing downtime versus peers locked in recurring conflicts.

Michal Dalal: Smaller, limited-service establishments can gain an edge by presenting themselves as reliable options during periods of labor unrest. Using their lower exposure to strikes and more consistent offerings as key selling points, smaller accommodations appeal to travelers seeking certainty and continuity between stays. Large, unionized hotels in urban cores often find themselves at a disadvantage, as they are more susceptible to disruptions and face greater reputational risks when service lapses.

Alternatively, big brands are doubling down on their reputations for reliability and leaning into technology adoption and automation. By rolling out self-service options, these chains are signaling that they will deliver a seamless guest experience even when staffing is unpredictable. The result is a more dynamic, competitive landscape, driven by establishments working to prove who can best guarantee peace of mind to travelers.

Gabriel Seiler: We’re seeing a notable rise in competition among educational institutions across the board, and labor strikes are only intensifying it. The Trump administration has embraced school choice programs, increasingly allowing parents to use public funds to pay for private schooling. Competition is compounded by the continued erosion of the number of K-12 students as birth rates remain below replacement. Public schools and private schools are on a more level playing field than ever, pushing public schools to raise their quality to maintain enrollment. Quality largely translates to staffing levels and a schools’ ability to offer one-on-one attention to students, but that’s impossible if a school can’t keep its staff in the classroom.

The story is the same at the postsecondary education level. Ballooning student debt and lackluster graduate earnings are making many question the value of a college degree, pushing them to trade schools and other alternative forms of higher ed. Ensuring students receive proper attention from professors and support staff is crucial to boosting graduates’ job prospects and attracting new freshmen.

In healthcare, labor disruptions are pushing patients, workers, and capital toward organizations that establish reputations as stable, high-trust employers with adequate staffing levels. Staff sizes will continue to vary among institutions and across states; federal legislation introduced in 2023 sought to standardize nurse staffing ratios but gained little traction.

Looking ahead, how could sustained labor unrest reshape capacity, investment decisions and risk exposure over the next year?

Evan Jozkowski: Continued labor unrest will swing the pendulum further toward automation, potentially drawing additional union ire. Automotive and electronics manufacturers have shown the highest adoption rates, but many general manufacturing and machinery producers have experienced compounded growth, according to the IFR. Increased industrial robot density suggests that companies prefer long-term automation investments to the risk of labor instability, especially for assembly-related positions.

Long-term labor disruption could also contribute to a more active M&A cycle, especially given the additional threats posed by interest rates, tariffs and technological disruption. Additional labor costs can present the final catalyst for companies to sell, restructure or merge with competitors.

Over the next year, these dynamics are likely to harden a divide between “labor-resilient” platforms and those seen as structurally exposed to unrest. Manufacturers that can demonstrate credible automation roadmaps, diversified footprints and stable labor relations will emerge as industry and sector leaders. In parallel, customers, especially across highly elastic industries, may increasingly prioritize suppliers with proven continuity through recent disruptions, turning labor strategy from a back-office concern into a visible differentiator in commercial negotiations.

Michal Dalal: With ongoing shortages and tensions, hotels will continue to struggle staffing their properties, leading to fewer rooms that can actually be cleaned, serviced or checked in each day. As a result, capacity will drop over time, forcing hotels to close entire floors, restaurants and event spaces, and in some cases turn away bookings.

The stakes only get higher as major events loom on the horizon. In 2026, the World Cup and other mega-events are set to bring an enormous influx of travelers into cities like Philadelphia, which will host six World Cup matches and the MLB All-Star Game within weeks of each other.

To keep up with demand, hotels are scrambling to ramp up automation, investing in self-check-in technology, mobile keys, and even robots or outsourced services to keep things running smoothly with smaller teams. This shift is already underway, with big collaborations like Marriott tapping RobotLAB and LG to bring cleaning and delivery robots to their properties nationwide.

There is a real risk of reputational damage when labor disputes spill into public view. Picket lines outside properties and narratives about poor labor practices can quickly attach themselves to a business’s reputation, shaping how travelers and corporate clients evaluate future stays.

Gabriel Seiler: Since labor unrest is by no means new to the sectors, healthcare and educational services will be better positioned than some other industries to navigate the rising frequency of strikes and walkouts. However, they do currently have access to some tools previously unavailable to them that may help them reduce their reliance on workers and insulate themselves from labor unrest.

Healthcare services will be especially well positioned to reduce their reliance on labor, a trend they have focused on over the past five years. Telehealth and new automation initiatives are reducing administrative work and allowing healthcare providers to service more patients with their same workforce sizes. US Census data shows that healthcare industries have generated revenue faster than they’ve raised wages, meaning they’re allocating those extra funds to other expenditures, including automation. Continued automation, especially with AI, will help them dampen their exposure to labor strikes.

Educational institutions will struggle more to reduce labor intensity. While remote instruction can help a single teacher assist more students in a given day, rising competition will keep quality in-person instruction a primary demand for students, especially for younger children. Non-public educational services may instead adapt to cater to higher-earning demographics to generate more revenue per student. Generative AI does offer a minor solution, though, as educational institutions may increasingly provide AI assistants for teachers to reduce their workload when grading papers or creating lesson plans. This would reduce time spent working when off-the-clock, providing a lower-cost route to meeting one of teachers’ most common demands.