Ten of thousands of dockworkers could go on strike on Oct. 1 in a move that experts say could wreak havoc on American supply chains and reignite the rapid inflation seen in the early years of the Biden-Harris administration.
The International Longshoremen’s Association (ILA) — which represents more than 85,000 workers at three dozen U.S. ports along the East Coast and Gulf of Mexico and whose members collectively handle about half of the U.S.’ maritime imports — has threatened to go on strike for the first time since 1977 if their wage and automation protection demands are not met by the United States Maritime Alliance (USMX) — the coalition representing shipping employers. The move could cost the U.S. economy roughly $5 billion a day in trade, and would massively disrupt supply chains in a way not seen since the COVID-19 pandemic, causing rapid inflation and hiking the cost of living for everyday Americans, experts told the Daily Caller News Foundation.
The impending dockworkers strike could result in “a sharp rise in shipping costs, similar to the supply chain disruptions seen during the COVID-19 pandemic, which contributed to price increases throughout 2021 and 2022,” Peter C. Earle, senior economist at the American Institute for Economic research, told the DCNF. “While estimates vary, the Cleveland branch of the Federal Reserve alleges that 40 to 60 percent of the increase in prices in the post-pandemic period, particularly in the energy, food, and shipping sectors, were driven by gummed-up supply chains.”
Inflation skyrocketed in 2021 and 2022 amid COVID-19 supply chain backups caused by emergency factory closures, sick workers and challenges getting goods across borders. The inflation rate, which sat at just 1.4% under former President Donald Trump, peaked at 9.1% in June 2022 and only fell back below 3% in July.
The Biden-Harris administration’s Secretary of Transportation Pete Buttigieg took paternity leave in 2021 amid an ongoing supply chain and ports crisis, with watchdog group Protect the Public’s Trust (PPT) obtaining records revealing Buttigieg refused key meetings during that time.
“Perhaps it is not a coincidence that so many crises involving the Department, from the supply chain breakdown to the FAA system outage that grounded flights all over the country, have occurred on his [Buttigieg’s] watch,” PPT Director Michael Chamberlain previously told the DCNF.
Over half of America’s port capacity is located along the East and Gulf Coasts and nearly half of U.S. imports would be impacted by a work stoppage, according to a study from nonprofit MITRE published in July. The shuttering of Port Houston alone could lose the U.S. economy as much as $51 million per day in exports.
“A sleeping giant is ready to roar on Tuesday, October 1, 2024, if a new Master Contract Agreement is not in place,” ILA President Harold J. Daggett said in a press release on Sep. 17. “My members have been preparing for over a year for that possibility of a strike.”
The negotiations are largely centered around worker pay, with media reports indicating the ILA is demanding a 77% pay increase over six years and has rejected an offer from the USMX to increase wages by 40%. ILA representatives say the significant wage increase is necessary to combat recent inflation, with prices up over 20% since President Joe Biden took office in January 2021.
The strike could involve as many as 25,000 workers, according to USMX, CBS News reported.
However, the contract dispute “is not simply a matter of higher wages for ILA workers,” George Kochanowski, CEO of logistics company Staxxon, told the DCNF. “Port automation (specifically what automation the ILA will or will not allow) is a major complicating issue impacting the negotiations.”
The ILA stepped away from the negotiating table in June due to an Alabama port’s use of auto gates, a technology that allows for the autonomous processing of trucks picking up goods from a facility.
Even if an agreement is reached before the Oct. 1 deadline shipping costs are likely to rise, with Kochanowski telling the DCNF that, “financial concessions made to the ILA will result in higher shipping shipping rates, further fueling an upward price spiral.” Ultimately, “importer[s] will be faced with either accepting lower margins or pass[ing] those additional costs through to the end consumer in the form of inflationary price increases,” according to Kochanowski.
If the stoppage does occur, it would come shortly before the holiday season, potentially placing additional economic pressures on Americans during the busiest shopping period of the year.
“Even a short disruption could have ripple effects that exacerbate the regularly strained holiday season,” Earle told the DCNF. “With inflation still significantly above the Federal Reserve’s target and unemployment rising, consumers could face an expensive holiday period with delayed shipments and higher costs for gifts. Such a combination of supply chain disruptions and economic pressures could further burden households during one of the busiest shopping seasons of the year.”
The U.S. Department of Labor reached out to USMX on Monday in a move that suggests the White House might be willing to intervene to resolve the labor dispute.
“The Biden administration has a record of stepping in and forcing a deal if they feel the broader economy is threatened, especially if it is a supply-chain matter,” Sean Higgins, a labor and employment expert at the Competitive Enterprise Institute, told the DCNF. “Nobody should be surprised therefore if the administration intervenes again.”
Biden signed a bill in December 2022 that blocked a looming rail strike, instead imposing a contract on 115,000 rail workers.
“If they do [intervene], it will likely be a last-minute thing,” Higgins added. “The administration doesn’t want to annoy the union movement ahead of the election, but they still might do it if they feel their back is against the wall.”
The USMX filed a charge with the National Labor Relations Board (NLRB) Thursday accusing the ILA of unfair labor practices, according to a USMX press release shared with the DCNF.
The ILA and the Biden-Harris administration did not respond to requests for comment. The USMX did not respond to the DCNF’s questions, but shared its latest press release regarding its filing of an Unfair Labor Practice charge with the NLRB.
(Featured Image Media Credit: Tyler Casey/Unsplash)
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