Morning Brew Daily - Why Elon Musk is Winning the UAW Strike & Oil Hits Highest Price In 2023

Episode Date: September 18, 2023

Episode 149: Toby and Neal have the latest details on the United Auto Workers strike and why it has Elon Musk raking in cash off. Plus, the latest news on talkshows planning to return this fall as the writers' and actors' strikes continue to freeze Hollywood and why oil is the priciest it has been this year. Also, Deion Sanders and NYC pay transparency have won the weekend. Speaking of winners, who took home the who took home the Ig Nobel Prize Awards? And finally a preview of the week ahead. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning, Brew, Daily Show. I'm Neil Freiman. And I'm Toby Howell. On today's pod, the auto strike is only in its fourth day, but we are ready to declare a winner. Then Drew Barrymore has posted more emotional Instagram videos than episodes of her talk show in the last 48 hours, as she and the industry as a whole grapple with how to restart production amidst the broader strikes. It's Monday, September 18th. Let's ride.

Toby, the big trend on social media over the past week is for women to ask men how often they think about the Roman empire. So I'll bite. How often do you think about the Roman Empire? I never think about it because if I'm going to think about a cool one in the pre-Columbus America. I'm of course talking about the Inca Empire. Great architectural achievements, unreal road network, textile manufacturers like you wouldn't believe in an innovative record keeping system. So I have no room for the Roman Empire when I'm on the Inca train. What about you, I do think about the Roman Empire all the time when I look up to the night sky and see Jupiter and Venus. I think about it when I'm reading about the Senate or eating a Caesar salad. I think about it whenever I watch football and get excited about upcoming Super Bowl LVIII.

No, just kidding. I never think about it. Whoever says they think about the Roman Empire every day is completely lying. You don't know enough about the Roman Empire to have deep thoughts about it. You clearly do, though. You clearly do. All right, now, before we jump into the news of the day, let's hear a quick word from our sponsors. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill three-burner gas grill, or get $50 off a select Weber Spirit grill and bring big flavor to your backyard.

Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th, Exclusion supplies to homedipo.com slash price match for details. So the UAW strike is now in its fourth day, and it's becoming clear that no matter which side blinks first, there's already a winner of this strike, and that winner is a man named Elon Musk. Tesla's CEO was already enjoying a major cost advantage over his Detroit-based rivals, thanks to a more streamlined manufacturing process and lower wages for Tesla's non-unionized workforce. And now that UAW employees are on strike and will probably get higher wages, no matter

how this dispute ends, Tesla's edge in this area will only grow. So for some context, Tesla's labor costs average $45 an hour compared to GM Stalantis and Ford 66 an hour. And if the UAW gets the pay bumps it wants, labor costs for Detroit's big three could swell to $136 an hour. Tesla has already been slashing prices on its cars this year to maintain its commanding market share in EVs, and it will be harder for its competitors to match its prices if they have to shell out even more for labor. Yeah. And then if you also factor in the fact that these big three automakers are also transitioning from gas-powered cars to electric as well, which is costing a lot of money. Suddenly, these advantages for Tesla are just keep stacking up and up. And I mean, look at Tesla's last

quarter. Their second quarter profit rose 20% even after they reduced prices. So again, all signs are pointing to this being somehow Elon Musk is just going to come out of this, the biggest winner by far. Yeah. And also the foreign auto makers, Toyota, Honda that are making, that are making cars here without a unionized workforce. But a lot of Musk's moves many years ago regarding Tesla seem to be paying off right now because he has a particular vertical integration that a lot of other automakers don't have. So they supply, like they don't rely on a bunch of other suppliers for parts because they make a lot of their stuff in-house.

And the reason that auto production is coming to a standstill now, even though the UAW is only striking at three different plants, is because there's this interconnection. network of suppliers. Meanwhile, Tesla is not hampered by that. So it's just kind of a foresight by Musk. And then in terms of compensation packages, too, because Tesla is non-unionized, as you mentioned, and one of the big reasons why they can almost get away with that is because they offer their workers' stock options rather than a profit-sharing bonus like the big three automakers do. And this works, obviously, when you own Tesla stock. And it, I mean, it's doubled in the last year. it's up just a ridiculous amount over the past decade or so. And so he, Musk, when he's asked

about unionizing or anything like that, he just points to the fact that he probably has some the highest compensated workers in the industry because their stock performed so well. He said that we've minted multiple millionaires on factory floors just from stock options. Again, this all falls apart if the stock doesn't go up, but right now he can point to that and say they're well compensated. So what, is there anything that could slow Tesla's role here? And it's possible that with the UAW strike, if they get these major pay bumps that they want, then Tesla's workforce could think about unionizing. They tried, UAW tried to do this in the past in 27 and then 2018 when production for the Model 3 was getting going. And even Elon Musk described it as

production hell. That did not work at Tesla's factories. So we'll see if it happens this time around. But Elon's also very anti-union and has been accused of union busting in the past. Yeah. And then just to wrap up how the UAW strike is going, Biden dispatched a team from the White House to try to make amends and wrap this thing up. You have multiple senators also joining the picket lines. Senator John Federman joined it. So there's still a lot of room to go on this. And I mean, now that the White House is getting involved, maybe things will speed up, but maybe not. All right, Neil, let's move on to another story involving the other strike that's still laboring on. Drew Barrymore, who has controversially made the decision to bring back her daytime talk show despite the SAG After Strikes, changed her mind yesterday and decided to postpone the return. The saga has had more flip-flops than a Florida beach during spring break. On Friday, Barrymore released a long emotional video defending her decision to bring back the show, saying, this is bigger than me and how 150 people rely on the show for their livelihoods.

But backlash from fans and those within Hollywood made her reconsider. and now the show is once again postponed. Now, you may be wondering how her show could come back at all if Barrymore is a member of Sagafra. But as a talk show host, she is covered by a separate agreement called the Network Code that technically allows her to make the show during the strike. Neil, so much drama, so much confusion,

not just with Drew Barrymore's show, but with a variety of others as well. Yeah, so a bunch of other talk shows we're aiming to come back starting today, the Jennifer Hudson show. I'm learning all about these day-time shows that I never know. knew about. I did not know Drew Barrymore had a talk show nor Jennifer Hudson. But there were two

other talk shows that also decided to postpone in the wake of Drew Barrymore's decision and all the backlash to her. But this thing has been going on for 140 days now. It's the second longest writer's strike in history. And you're starting to see some of the people in this industry buckle a little bit because there are a bunch of employees that aren't that aren't striking that are starting that like kind of need work here. So a lot of these talk shows. are like, well, like, can we figure out a way where we can come back and get these people working again? And that is just not seen as, that's just seen as crossing the picket line. So the writers and their supporters are not going to have it.

Yeah, Bill Maher announced this week that his weekly show on HBO would be returning. And he defended his actions saying kind of the same thing that you were saying is that he's not prepared to see so many below the blind people in his words suffer so much, saying that, yeah, a lot of other people outside of just writers rely on me. So it's definitely a rock and a hard place, but especially for Drew Barrymore, who is a member of SAG after. Like, you do, it does feel too close to crossing the picket line versus even though technically she's allowed to. I mean, other talk show hosts have decided not to use this loophole. Stephen Colbert, Jimmy Fallon, Jimmy Kimmel, Seth Myers, and John Oliver, they've all started a podcast together. And they're using the proceeds from that to support their staff.

I mean, I've seen. They probably listen to us to prepare. Get some tips. I've seen John Oliver doing stand-up. up to just do fund the staff. So there are ways around this problem, but so without doing what Drew Barrymore was trying to do. This is interesting, though, that is not an apples to apples comparison because those are network shows. And Drew Barrymore's show is a syndicated TV show.

And I learned that these syndicated daytime talk shows actually have a contractual obligation to produce new content to 200 different local stations over the course of the year. So they have a business, they sort of have to produce content. or they'll lose their show to these local stations. So they have to produce like 35 to 40 weeks of new episodes over the course of the year. And they're not doing that right now. They're not fulfilling their obligation. This show could get dropped.

So, yeah, another sort of business angle to consider when thinking about these talk shows specifically. Yeah, a lot of pressure. I was just thinking, Neil, technically we're a daytime talk show as well, aren't we? I mean, we talk to each other during the day. So under that banner, yeah, we're a daytime talk show. All right, Neil, let's move on. We don't have any writers, though. Yes, clearly, clearly, clearly.

All right, Neil, the inflation report came out last week, and there wasn't anything too too exciting in there, save for one little nugget. Oil prices have been sneakily on the rise. And I guess oil took our lack of coverage personally because in the week since, prices have continued their march ever higher and are now on track to reach $100 a barrel this month for the first time in 2023.

They've already searched 30% since June. And just to put that rise in perspective, that's the biggest quarterly increase since Russia invaded Ukraine. So what's driving prices up towards triple digits? It's a classic case of lower supply and increased demand. OPEC plus, which is the consortium of oil producing countries in the Middle East as well as Russia, have extended production cuts into the end of 2023. And that combined with increased demand, especially from the aviation industries in the U.S., Europe and more recently China, have spurred a jump in prices.

Neil, it's been a minute since we've talked about oil prices. It's not good when we talk about them because it means they're going up. This is not good for inflation. And to me, it shows that the Fed only has a certain limited toolkit to bring down inflation. We've talked about interest rates at 22-year highs, and everyone's like, well, why is inflation back down to 2%? Well, there are other macro forces at work here that drive prices higher. And especially fuel prices is an intermediary into so many other things.

So a lot of manufacturing processes, a lot of transport uses fuel that comes from oil prices, that comes from oil. So when oil prices are higher, these costs are going to be passed along to consumers ultimately. So we talked about the aviation industry, which uses so much fuel that's like one of their top costs. Their airfares had been going down over the course of the summer. It was the big story. And now they jumped, I think in the last CPI report, they jumped 4%. So those are taking back up. So you could see this play across a variety of industries, agriculture,

industrials the like. Yeah, this is why we kept saying don't celebrate the rise. We haven't beat inflation yet because, yes, stuff like this happens. And I do feel bad for the Fed a little bit, but they were dealt a good hand because a lot of the inflation prices that they're comparing to in terms of last year is coming from the period when the Ukraine war started. And so obviously, a lot of the prices have been lower compared to that. But now we're seeing them inch back up. And all those gains that we got from dropping energy prices might be, we might be giving it back to the field. So I feel bad for J-Fat. I always do. You always do. You're like, I feel so bad for this guy. Well, just oil prices obviously translate to gas prices. So let's do a quick gas price check-in.

They are at an average of $3.88 a gallon, which is up big from the summer. And it usually goes down after the summer because people stop traveling so much. But that's 21 cents higher than the same day last year. There are a dozen U.S. states that average $4 a gallon or more. So I mean, I'm sure President Biden is looking at these gas prices and thinking about his re-election prospects. Right. It's definitely, that's always the underlying of gas prices in our, have such a big mind share in people's minds, and they always blame the government for higher oil prices. And so sometimes it's just OPEC plus doing their, you know.

All right, now, before we jump into our next story, we're going to take a quick break. We're the Hartford, with decades of experience insuring millions of unique small businesses. When it comes to your small business insurance. Thank you. One size absolutely does not fit all. Get a quote or find an agent today at thehart.com slash small business. You said this place was steps from the water. We just haven't found the steps yet.

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When you want savings, not surprises. It matters where you stay. Hilton, for the stay. Okay, let's head to our winners of the weekend, our Monday segment, where we profile two people or things that treated the weekend like Toby treats a dollar slice at 3 a.m. I won the pre-show cornhole game, so I get to go first. And my winner is your ability to stock someone's salary. In other words, pay transparency.

A New York law that requires employers to disclose salary ranges for jobs advertised to the public went into effect yesterday, joining a wave of states including Washington, California, and Hawaii that mandate pay transparency to reduce wage disparities for women and people of color. This particular law is expected to have ripple effects beyond New York's borders because it also applies to remote employees who work outside of New York, but report to a boss or office that's based in the state, and New York is home to a lot of company head. quarters. So we should probably anticipate a lot more salary ranges posted on job sites. And thanks to pay transparency laws, they've already been surging. As of August, more than half of U.S. job postings on Indeed displayed some sort of salary information, which is the highest level on record. Yeah. I mean, the purpose of the laws is to let people know how much they should

be getting paid. So it's definitely working in that sense. But I have seen a little pushback from small business owners. A lot of them who are saying that we didn't even know this went into effect. and the enforcement around it's a little annoying and being in compliance versus out of compliance is a fine line. And so there's always this secondary order effect where the employers might be coming up against these laws and saying, it's just an annoying level of compliance

that we have to go into. So I don't know. There's two sides of it, but it's still a good thing overall for salary transparency. Yeah. And another second order effect is actually it's leading to retention problems.

Remember last week we talked about how everyone, Once they got a lot of people, once they get promoted, leave for a new job. And a large chunk of that could be because salaries are very public now. So you can say, okay, I got promoted, but they're still paying me a little less than I would get at another place. So there are second order effects. Overall, it does seem like a win for workers in the United States. Speaking of when, let's go to my winner of the weekend, who is a two-time winner now, actually, and that is University of Colorado football coach Dion Sanders.

His team won again this weekend over their arch rival Colorado State, but it was a business move he used he made that earned him his second winner of the weekend nod. Leading up to the game, Colorado State's head coach criticized Dion for not taking his hat and sunglasses off when he's talking to other people. So not only did Dion seize on that moment as a rallying cry to hype his team up, but he also capitalized monetarily on it. Dion has this new line of sunglasses with a local company called Blenders, and after he handed out a free pair to everyone on his team, his line racked up $1.2 million in sales and one night alone.

Also, searches like Dionne Sanders, sunglasses, Coach Prime sunglasses are exploding on Google. Neil, I feel like this is going to go down as a business school case study on how to capitalize on increased media attention as a brand. I think so. I mean, we just got off Taylor Swift and Beyonce Summer where they kind of moved local economies just by their sheer, personality and influence.

And I feel like the same thing is happening with this guy. I mean, he is a powerhouse. He's a content powerhouse. He is a, you know, a commercial powerhouse. He can move product. Like, I wouldn't be surprised if the Fed cited the Coach Prime effect in its next inflation report. I know. It was crazy.

He's everywhere. At the game, too, Lil Wayne was there. He wrapped the team out of the tunnel, which you just don't see in college football. Offset was there, the rapper. And then the rock was on the sidelines for some reason. And so suddenly Colorado has become the center of the sporting. And honestly, like, entertainment universe at the time, because you're right, like the Dion Prime or the Coach Prime effect, we're definitely going to see it in the next. I think Amazon's making a documentary about it right now.

So you're going to see them everywhere. All right, Neil, let's move on. We've all heard about the Nobel Prizes that we hand out to the best and brightest in a variety of fields. But I don't think as many people have heard of the Ig Nobel Awards, which are apparently a thing that took place just before the weekend. the Ig Nobel Awards hands out prizes to actual scientific papers or inventions that, instead of changing humanity, celebrate the most random, ridiculous things scientists have studied over the past year. So, Neil, of course, I have to read off some of the winner. The winner of the Mechanical Engineering Prize was a paper on reanimating dead spiders to use as mechanical gripping tools

like the claw machines you see at movie theaters. The winner of the Public Health Prize was a team who invented a toilet that uses a variety of technology. like computer vision system, an anal print sensor, and a real-time ID camera. Can you say that on this podcast? I think so, to monitor and quickly analyze what you're pooping out. And finally, the winner of the Psychology Prize was a team who conducted experiments on a city street

to see how many passers-by would stop to look upward when they would see a stranger looking upward as well. That one I would be interested in reading. I know the answer to that. I had that flag. So if one person is looking up, only 4% of passerby, would stop and I'll look up. But when the crowd had 15 people, 40% stopped and looked up.

That still feels low to me. 40%. If I saw people can't be bothered. Yeah, that's true. That's true. Which other one stood out to you? I like the one where they did, they basically documented the amount of nose hairs people have. This has apparently been a mystery to biology and science for centuries.

But a scientist looked into how many nose hairs the average human has. And do you want to take a guess? Oh, gosh. How many nose hairs per nostril? I'm going to say 110. No way. Was that way under? No, no, no.

It's 120 to 122. There we go. I was going to go lower than that. There's also another one that I liked about ocean mixing, which I did not know was the thing, but is when the top level of the ocean mixes with the bottom level. Do the temperature difference? Yeah. So they mix.

And for a long time, that was thought to be by because of macro things like. currents and the tides, but these scientists found out that what had to do a lot with it is anchovy sex. Antioves can we say that on the pod? That's a good question right there. Yeah, all these awards were absolutely hilarious. They take it so, they have such a good time with it. These are real researchers.

Yeah, totally. Poking fun at themselves, so you love to see that. You know what it reminded me of was the Golden Raspberry Awards, which are also known as like the Razies, which are awarded for the worst cinematic failures of the year. so it's kind of anti- Oscars. And so obviously I looked into the Razies a little bit. Do you know who the most awarded actor ever in the Razies are for worst performances of all time? Like Rob Schneider.

He's up there. Like in that vein? In that vein. He has a lot of muscles. Vin Diesel? Sylvester Salon. He's the most awarded actor ever with 10 awards at the Razies. Adam Sandler is top.

I was going to say. I didn't want to say it. I didn't want to say it because he's, he's revitalized himself so much. Absolutely. Yeah, Sylvester Sloan is just not a good actor. All right, for our final segment, let's run down what you can expect in this super busy week ahead. Midtown Manhattan is going to come to a standstill with the UN's General Assembly beginning today. That's a gathering of world leaders that happens annually in New York and emotions are already running high

with tens of thousands of protesters taking to the streets yesterday to push President Biden to be more aggressive in his climate policies. another big theme will be aid to Ukraine in its fight against Russia. Ukraine President Vladimir Zelensky is coming to the UN to ask world leaders to continue supporting his country and will also address Congress later in the week. It's so funny, all these major, major geopolitical things are happening while all New Yorkers talk about is like, ah, the traffic this weekend is going to be so bad. So it is funny to see the juxtap. It is, it is tradition.

We also have a major IPO on tap, which will be fun. The grocery delivery service Instacart plans to IPO on. Tuesday in one of the most anticipated public offerings of the year. The company is hoping to piggyback off the success of the chip designer arm whose successful IPO we discussed on the show last week. If Instacart also gets a nice first day pop, the IPO floodgates are open. Are you ready to declare them back? I'm back. All right. Not I'm back. IPOs are back. And then on Wednesday, we'll have the Fed's interest rate decision. Jerome Powell is expected to hold rates steady this time around, but we'll still be listening to his press conference for his thoughts on whether we should expect another hike

this year, and I'm sure oil and fuel prices will definitely be a part of the discussion. What else do we have? Talk like a pirate day on Tuesday. I'm already formulating some extremely corny jokes for the pod in my head. So apologies in advance. And then Apple's recently unveiled iPhone 15 and a new line of watches will be available on Friday. I will be refraining from ordering everything as I'm famously an Android guy. The only thing I'm going to do is upload the Apple, the Apple Watch's new kind of iOS dropped or iOS watch dropped. And I think there's some cool fitness updates. So I'm definitely going to be updated.

Very nice. And then on Saturday, we get the first day of fall. And then I also saw that sunset in New York City on Monday was at 7 p.m. And the sun won't set later than 7 p.m. in New York City again until March 12, 2024. So we're in first days where we exit the podcast and it is still pitch blackout. And we're into it. We're in. We just got to embrace it.

All right. We have to wrap it up there. Hope you all have a productive start to the week. It's National Cheeseburger Day. so check for deals at your local fast food joint. I guess that's an oxymoron. It's also national right into your podcast day, so we look forward to receiving all your messages

at our email address, Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is Soback as our editor and producer. Samantha Vela's and Raymond Liu are associate producers. Yuchenoa Ogu is our technical director. Billy Minino is on audio, hair and makeup, another legacy of the Roman Empire. Devin Emery is our chief content officer

and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th, the powerful vocals of Demi Levato on May 17th, and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at Yamavatheater.com, only at Yamava Resort and Casino, celebrating its 40th anniversary.

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