Tens of thousands of dockworkers have launched an indefinite strike at ports across much of the U.S., threatening to cause significant disruptions to trade and the economy ahead of the presidential election and the busy holiday shopping season. Members of the International Longshoremen’s Association (ILA) walked out on Tuesday at 14 major ports along the East and Gulf coasts, bringing container traffic from Maine to Texas to a halt.
This action marks the first major shutdown in nearly 50 years.
President Joe Biden has the authority to suspend the strike for 80 days to allow for further negotiations, but the White House has stated that he does not plan to intervene.
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 at an impasse over a six-year master contract that affects about 25,000 port workers engaged in container and roll-on/roll-off operations, according to the U.S. Maritime Alliance (USMX), which represents shipping firms, port associations, and marine terminal operators.
On Monday, USMX announced that it had enhanced its offer, which would raise wages by nearly 50%, triple employers’ contributions to pension plans, and improve healthcare options. Union leader Harold Daggett has called for significant pay increases for his members while expressing concerns about the potential threats posed by automation. In response, USMX has accused the union of refusing to negotiate, filing a complaint with labor regulators to compel the union back to the bargaining table.
Under the previous contract, starting wages ranged from $20 to $39 per hour, depending on a worker’s experience. Workers also received additional benefits, including bonuses tied to container trade. Mr. Daggett has indicated that the union seeks to see hourly pay increase by five dollars each year over the life of the six-year agreement, which he estimates amounts to roughly 10% annually.
The ILA has stated that workers are owed compensation after shipping firm profits soared during the COVID-19 pandemic, while inflation has eroded salaries. The union has warned that a broader strike involving its members, including those not directly engaged in this dispute, may occur, although the exact numbers remain unclear. The ILA claims to represent over 85,000 individuals, with approximately 47,000 active members reported in its annual submission to the Labor Department.
What items will be affected by the strike?
Time-sensitive imports, particularly food, are expected to be among the first goods impacted by the strike. The ports involved handle about 14% of agricultural exports shipped by sea and over half of imports, including a significant portion of banana and chocolate trade, according to the Farm Bureau.
Other sectors likely to face disruption include tin, tobacco, and nicotine, as noted by Oxford Economics. Clothing and footwear companies, along with European automakers that route many shipments through the Port of Baltimore, will also feel the effects.
Imports to the U.S. surged over the summer as businesses attempted to expedite shipments ahead of the strike. “I don’t think we will see immediate, significant economic impacts… but over the course of weeks, if the strike continues that long, we could begin to see prices rise and some shortages in goods,” said Seth Harris, a professor at Northeastern University and a former White House labor adviser.
What will the economic impact be?
More than a third of U.S. exports and imports could be affected by the strike, potentially costing the U.S. economy at least $4.5 billion each week the strike lasts, according to Grace Zemmer, an associate U.S. economist at Oxford Economics.
Other estimates suggest the economic toll could be even higher. She noted that over 100,000 people could find themselves temporarily unemployed as the repercussions of the stoppage spread.
“This is really a trigger event, one that will see dominoes fall over the coming months,” warned Peter Sand, chief analyst at ocean freight analytics firm Xeneta, emphasizing that the standoff could also drive up broader shipping costs.
That would negatively impact consumers and businesses that rely on so-called “just-in-time” supply chains for their goods, he added.
How could this affect the US election?
The standoff introduces uncertainty into the U.S. economy at a sensitive time. With the election looming in six weeks, the economy has been slowing down, and the unemployment rate is inching higher. The strike places President Biden in a challenging position.
U.S. presidents can intervene in labor disputes threatening national security or safety by imposing an 80-day cooling-off period, which would compel workers back to their jobs while negotiations continue. For instance, in 2002, Republican President George W. Bush intervened to reopen ports after 11 days of dockworker strikes on the West Coast.
The U.S. Chamber of Commerce has urged 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,” stated Suzanne P. Clark, president and CEO of the business group.
Although ILA leader Harold Daggett endorsed Democrat Biden in 2020, he has recently criticized the president, especially regarding pressures on West Coast dockworkers to reach a deal a year ago. Daggett even met with Donald Trump in July.
While the chaos from any potential strikes is likely to hurt Democrats, the risks of alienating labor movement allies just weeks before the election could be more detrimental, noted William Brucher, a professor of labor studies and employment relations at Rutgers University.
However, public support for strikes may be tested by this dispute, which Daggett has championed. He was acquitted of having ties to organized crime in a 2004 case by federal prosecutors, although a related civil suit remains unresolved.
Movies like the 1954 classic On the Waterfront have historically shaped the public’s perception of dockworkers’ unions, but Professor Brucher believes that historical memory has faded. Many people today empathize with the dockworkers’ concerns about the rising 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 likely force the employers back to the table with a much more substantial offer.”
