Tens of thousands of dockworkers have gone on strike indefinitely at ports across much of the US, threatening significant trade and economic disruption ahead of the presidential election and the busy holiday shopping season.
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Members of the International Longshoremen’s Association (ILA) walked out on Tuesday at 14 major ports along the east and gulf coasts, halting container traffic from Maine to Texas. This action marks the first such shutdown in almost 50 years.
President Joe Biden has the power to suspend the strike for 80 days for further negotiations, but the White House has stated he is not planning to act.
What is the strike about?
Talks have been stalled for months, and the current contract between the parties expired on Monday. The two sides are fighting over a six-year master contract that covers about 25,000 port workers employed in container and roll-on/roll-off operations, according to the US Maritime Alliance (USMX), which represents shipping firms, port associations, and marine terminal operators.
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On Monday, USMX announced it had increased its offer, which would raise wages by almost 50%, triple employers’ contributions to pension plans, and strengthen healthcare options.
Union leader Harold Daggett has called for significant pay increases for his members while voicing concerns about threats from automation. USMX has accused the union of refusing to bargain and filed a complaint with labor regulators asking them to order the union back to the table.
Under the previous contract, starting wages ranged from $20 to $39 per hour, depending on a worker’s experience. Workers also receive other benefits, such as bonuses linked to container trade.
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Mr. Daggett has indicated the union wants to see per-hour pay increase by five dollars per year over the life of the six-year deal, which he estimates amounts to about 10% per year. The ILA claims that workers are owed after shipping firm profits soared during the Covid pandemic while inflation hit salaries. It has warned to expect a wider strike of its members, including those not directly involved in this dispute, although the exact numbers are unclear.
What items will be affected by the strike?
Time-sensitive imports, such as food, are likely to be among the goods first impacted. The ports involved handle about 14% of agricultural exports shipped by sea and more than half of imports, including a significant share of trade in bananas and chocolate, according to the Farm Bureau.
Other sectors exposed to disruption include tin, tobacco, and nicotine, according to Oxford Economics. Clothing and footwear firms, along with European carmakers that route many of their shipments through the Port of Baltimore, will also take a hit.
What will the economic impact be?
More than a third of exports and imports could be affected by the strike, potentially hitting US economic growth to the tune of at least $4.5 billion each week of the strike, according to Grace Zemmer, an associate US economist at Oxford Economics. Others have estimated the economic hit could be higher. She stated that more than 100,000 people could find themselves temporarily out of work as the impact of the stoppage spreads.
“This is really a trigger event, one that will see dominoes fall over the coming months,” said Peter Sand, chief analyst at ocean freight analytics firm Xeneta, warning that the stand-off could also push up wider shipping costs. This would hit consumers and businesses that tend to rely on so-called “just-in-time” supply chains for goods.
How could this affect the US election?
The stand-off injects uncertainty into the US economy at a delicate time. The economy has been slower, and the unemployment rate is ticking higher as the US election approaches in six weeks.
The strike risks putting President Biden in a tricky spot. US presidents can intervene in labor disputes that threaten national security or safety by imposing an 80-day cooling-off period, forcing workers back on the job while negotiations continue.
In 2002, Republican President George W. Bush intervened to open ports after 11 days of a strike action by dockworkers on the west coast. The US Chamber of Commerce business group has called on President Biden to take action.
“Americans experienced the pain of delays and shortages of goods during the pandemic-era supply chain backlogs in 2021. It would be unconscionable to allow a contract dispute to inflict such a shock on our economy,” said Suzanne P. Clark, president and CEO of the business group.
ILA’s Mr. Daggett endorsed Democrat Biden in 2020 but has been critical of the president more recently, citing pressure on west coast dockworkers to reach a deal a year ago. He met with Donald Trump in July.
While any strike chaos is likely to hurt Democrats, the cost of alienating allies in the labor movement just weeks before the election would be greater, said William Brucher, a professor of labor studies and employment relations at Rutgers University.
Public support for strikes could be tested by this dispute, which has been championed by Mr. Daggett, who was acquitted of links to organized crime in a 2004 case by federal prosecutors. A related civil suit remains unresolved.
Films such as the classic On the Waterfront (1954) once defined the dockworkers union’s image, but Professor Brucher believes that historical memory has largely faded and many people share the dockworkers’ concerns about the cost of living and automation.
“As much as it could sway public opinion against the ILA, a strike by ILA members is their decision, and I don’t think they will be swayed by public opinion in any meaningful way,” he said.
“What is more likely to happen is the pressure of a strike will force employers back to the table with a much more substantial offer.”
