What’s behind the dockworkers strike and what it means for U.S. consumers

Tens of thousands of dockworkers along the East and Gulf coasts are on strike, freezing operations at ports that handle about half of all U.S. imports and exports. Analysts estimate the work stoppage by the International Longshoremen’s Association could trigger chaos in the supply chain just weeks before the election. William Brangham discussed more with Peter Goodman of The New York Times.
Amna Nawaz:
Tens of thousands of dockworkers along the East and Gulf Coast walked off the job this morning.
William Brangham has been covering the story.
So, William, this essentially freezes operations at ports that handle, what, half of all U.S. imports and exports?
William Brangham:
That’s right, Amna.
This strike is being called by the International Longshoremen’s Association. And they believe, analysts believe that this strike could cost the U.S. economy billions of dollars every single day. In fact, today, the president of a union local in Philadelphia made clear that workers intend to use every single bit of leverage they have.
BOISE BUTLER, International Longshoremen’s Association Local 1291: We may be 60,000 members from Maine to Texas, but what we control in the economy is billions of billions of billions of dollars every day, every day, OK? And all we want them to do is share.
William Brangham:
So, to understand what’s behind this and what this means for U.S. consumers, we’re joined again by Peter Goodman. He’s global economics correspondent for The New York Times and author of “How the World Ran Out of Everything: Inside the Global Supply Chain.”
Peter Goodman, great to see you back on the “News Hour.”
We have got about 50,000 workers on strike at 14 major ports across the East and Gulf Coast. What are they striking about? What is it that they want?
Peter Goodman, The New York Times:
Well, they want higher wages. They want a piece of the action after years in which international shipping carriers have racked up record profits.
And they also want assurances that there will not be more automation without their permission at major ports. They see automation as a way to replace them with robots. And, of course, they’re not paranoid to have concluded from history that if you go back to the beginning of containerized shipping in the 1950s, the people who own ships use machinery as a way to make themselves less vulnerable to work stoppages by labor.
And they’d rather pay machines than human beings, who can go on strike, who can be home sick, who can be wanting to do other things than moving cargo.
William Brangham:
The U.S. Maritime Alliance, they have said they have offered a nearly 50 percent wage increase…
Peter Goodman:
Right.
William Brangham:
… increases to their retirement benefit plans, and some specific language about automation in this regard.
It sounds like, though, they are not anywhere close to a deal.
Peter Goodman:
Yes, it’s unclear how much of this is posturing. Maybe they are close, but we’re in the final stretch and the union is posturing to try to get more.
I mean, their initial demand was reportedly 77 percent increase in wages over six years. Their argument was not only are the carriers making record profits, but their own wages have not kept pace with inflation in the years when inflation has been very high. So they’re playing catchup.
The automation question, we’d have to see the nitty-gritty of the contract proposals to know how far apart they are. But we do know, certainly from — I know from spending my day in Newark, which is the busiest port on the East Coast, and talking to some of these striking dockworkers and looking at their placards, that they are very concerned that automation is a way to hurt their livelihood and replace them.
William Brangham:
So this is the first major strike along the East Coast in, I think it’s almost 50 years. We don’t know how long it’s going to last. But what are the implications here? Who could get hurt by this strike?
Peter Goodman:
Well, if it doesn’t last more than a couple of days, it’ll end up being a blip, because there was so much anticipation of this strike by companies that move product that, as one guy, the CEO of Flexport, put it to me, most of their customers are now sitting on two months worth of excess inventory.
They have diverted shipments to West Coast ports, anticipating that there’d be problems at East and Gulf Coast ports. But if this lasts longer than a week or two, well, then we will really have a problem, because ships can’t come into these ports, which means they’re stuck waiting for a chance to load and unload. Any ship that’s stuck in a floating queue off Newark or Savannah or Houston is a ship that can’t be deployed somewhere else in the world.
So, suddenly, you have scarcity elsewhere. You also have congestion at ports like Los Angeles and Long Beach. These two ports together are the gateway for roughly 40 percent of all imported goods reaching the United States by container. People will remember that during the worst of the pandemic, we had 50, 60, 70 ships stuck miles off the coast of Southern California waiting for their chance to load or unload at the docks.
That could happen again. Then we could have product shortages. We could have inflation. I mean, it could be very bad. We have seen estimates of $5 billion a day in damage if this strike continues.
William Brangham:
Can we talk a little bit about the politics of this? We are just a few weeks away from an election. President Biden has said he will not intervene, even though he has the federal authority to do so.
What are the political implications if this strike really drags out?
Peter Goodman:
Well, if this strike really drags out, it’s going to be bad politically because it will probably exacerbate inflation. We could have product shortages.
And, of course, this is an election that could hinge on economic sentiments at a time when people are very unhappy about higher consumer prices. The problem for Biden and Harris is that labor is a core Democratic constituency, and the optics of stepping in to intervene and undercut the leverage of the union could be very bad, could anger the rank-and-file.
Of course, two years ago, Biden did something similar in imposing a settlement on rail workers who were threatening to strike. That also threatened real supply chain disruptions. And he imposed a settlement that had lower wages than the union wanted and it had no paid sick leave, which really angered rank-and-file workers.
So there are no good options here for Biden and Harris.
William Brangham:
All right, Peter Goodman of The New York Times, always great to talk to you. Thank you so much.
Peter Goodman:
Thank you.