No. of Recommendations: 10
Negotiations between shipping firms and longshoremen on most of the east coast still seem paralyzed. Workers are attempting to gain protections against automated trucks in the ports and more automation with crane operations as goods are loaded and unloaded. Shipping firms seem equally adamant that they require these changes to maintain profitability and keep up with traffic.
One news report on this looming strike threat estimated the economic impact of a shutdown on the US economy at $5 billion dollars per day. From the lack of context in the report, it isn't clear if that $5 billion estimate was simply a dollar value of goods transiting the effected ports per day or an attempt at calculating the incremental economic value in terms of wages and secondary activity generated by the daily activity. For example, if ten million dollars of goods transits port X each day and that work employs 20 workers operating as pilots, crane operators, in-port truck drivers, out of port truck drivers and ancillary workers, all of that incremental labor may cost $6,240 assuming an average wage of $39/hour for 8 hours of labor for 20 workers. That $6,240 is an immediate loss to the local economy because those wages aren't being paid, local restaurants aren't serving lunch to workers at the ports or beers after work, etc.
If a strike occurs and $5 billion in goods is backed up for (say) five days but eventually gets shipped when the strike is resolved, that's not really $25 billion in "lost" economic activity, that's simply the DEFERRAL of $25 billion dollars of goods changing hands. On the other hand, the same footprint of ports will likely see additional shipping demand over the next few months as goods and raw materials are shipped into the US for reconstruction efforts after Hurricane Helene. Obviously, anything slowing down those recovery efforts will have an additional perception of pain on the part of those trying to repair homes and businesses.
Perhaps more importantly, these parties have been going through the motions of negotiations without any sign of progress and workers seem very threatened by the risk of increased reliance upon more extensive automation of operations. If workers and operators are dug in, this contractual issue could be the October suprise no one wants, except for maybe Trump.
Most Americans don't want shortages of cars, electronics and cheap clothes from China. On the other hand, many American workers in many other fields share the same concerns with automation, self-driving vehicles and AI that are at the core of these longshormen concerns. The Biden Administration doesn't want a major economic shock hitting the economy and the media before an election. The Biden Administration doesn't want to be put in a position where it feels obligated to intervene in the negotations because favoring the workers would increase the likely duration of a strike but forcing a return to work would appear to be caving to management at the expense of workers. Yet, given additional pressures in the economy for recovery from a major storm, the government has some interest in ensuring the continued flow of goods in an economy heavily depedent upon imports. Obviously, the Harris campaign's goals are 100% aligned with the Biden Administration for all of the same reasons. As of September 29, the Biden Administration has publicly stated it will not intervene to prevent a strike.
This is possibly the only recent development that helps the Trump campaign since the uber-wealthy still backing his campaign have similar goals in leveraging automation to reduce dependency on labor and any expensive strike helps magnify fears of inflation and economic disruption that make the status quo less desirable.
The reality of this issue is that the east coast workers have been operating under their current contract for six years and that contract had no provisions that addressed the spike in prices that occured between 2020 and 2022. The fact that the rest of the economy already went through a wave of adjustments to those price shocks either through contracts or pressures in the individual job market doesn't change the fact that this block of workers is essentially emerging from a bubble in which they have been frozen into wage structures that have fallen FAR behind their peers on the west coast and workers in general. It would be unconscionable for the rest of us in consumerland and government to argue that a strike right now would be REALLY inconvenient for the rest of us economically or politically so we're just going to have to force these workers back to the docks.
The strike is set to begin October 1, 2024 and would involve nearly twenty five thousand workers at ports from Texas all away around the coast up to New York. East coast workers are demanding a 70% boost in wages over the next six years. That sounds like a lot but that is only a 11.11% raise per year compounded over the six year contract.
https://www.freightwaves.com/news/port-strike-stil...It's also important to understand the base from where that 70 percent increase is applied. When west coast workers re-negotiated their contract in 2023, they won a 32% increase in wages over their six year term. At that time, average earnings for those west coast workers were between $46.23 to $52.03 per hour which would impply yearly earnings for a 2000 hour work-year of $92,460 to $104,060 yet different statistics cited by employers show average annual earnings around $194,000.
https://www.washingtonpost.com/business/2023/06/15...In contrast, the current east coast contract sets starting wages at $39 after six years on the job. Actual starting wages are $20 dollars per hour for the "first hour worked" then the $39/hour rate is reached after six years. Given that east coast contracts seem to reflect a lower wage structure to begin with, the 70% increase over the term seems to reflect a major "catch-up" component. On the other hand, the west coast contrat negotiation faced some of the same concerns about automation so it seems any eventual settlement with east coast workers will come closer to the 32 to maybe 40 percent range than their asking position of 70 percent.
WTH
