The deal reached Thursday evening that ended a strike by 50,000 portworkers has a lot of winners and few if any losers.
The deal only covers wages, not other contract provisions. But the union agreed to return to work Friday after a three-day stoppage while those other details, including increased use of automation and technology, are negotiated.
But that wage deal stopped what could have become the most disruptive US strike in decades had it lasted weeks or months. The strike halted the flow of imports and exports across dozens of ports, what could have been a massive blow had the strike continued.
Here’s how the major players made out.
The main winners are the members of the International Longshoremen’s Association. The members of that union will get an immediate raise of $4 an hour, on top of their current top pay of $39 an hour. That works out to a raise of more than 10%.
And they will get the same $4-an-hour raise every year over the six-year life of the contract. That $24 in cumulative raises will raise their pay 62%. And they returned to good-paying jobs without losing much in wages. Unlike a lot of unions, the ILA lacked strike benefits for members to help them pay their bills.
The deal fell short of the 77% increase the ILA had been asking for, but it was well above the earlier offers from management of raises of 22%, over the life of the contract, then 40%, and finally just less than 50%.
A week ago, few outside of the US labor movement or the world of shipping knew ILA President Harold Daggett. By the end of the week, the controversial union boss was a national figure and something of a star in both of those worlds.
With colorful language — dropping profanity in almost every other sentence — and strong pronouncements, like expressing a willingness to crash the global economy to get union members their demands, he played his hand particularly well.
Daggett drew attention to the record profits that the shipping lines, have been making since the pandemic, and how his members had reported to work throughout the pandemic to move the goods needed by consumers and businesses. And his strategy won.
Not all the attention was positive. Raising eyebrows was his nearly $1 million a year in salary, far more than the heads of some larger unions. Also surfacing were past allegations of mob ties, which Daggett denies and from which he was acquitted in a 2005 federal RICO case. The union said he received death threats and was harrassed, which he characterized as efforts to make him cave at the bargaining table.
But Daggett was likely pleased by other attention the strike brought to it and its members, and to the profits the foreign-owned ship lines were making, said Dr. Sal Mercogliano, a maritime historian and an associate history professor at Campbell University.
“They wanted the public attention,” Mercogliano said of the union Friday. “The leverage the ILA had was massive.”
And Daggett kept all the locals up and down the two coasts unified, which Mercogliano said wasn’t a certainty entering negotiations. Mercogliano said that a year ago he would never have predicted all the locals would have went on strike against all the ports.
Businesses and consumers
The fact that goods will start to flow again in relatively short order, and that there will be few if any shortages, can only be considered a win for businesses that ship goods, as well as the consumers who buy them.
“The decision to end the current strike and allow the East and Gulf coast ports to reopen is good news for the nation’s economy,” the National Retail Federation said late Thursday. “It is critically important that the International Longshoremen’s Association and United States Maritime Alliance work diligently and in good faith to reach a fair, final agreement before the extension expires. The sooner they reach a deal, the better for all American families.”
Shortages could have led to increased prices for a number of products. The congestion at West Coast ports coming out of the pandemic proved to be a major factor in the higher prices that started in 2021.
There were calls for President Joe Biden to use his powers under the Taft-Hartley Act to force the ILA members back on the job for a 90-day “cooling off period.”
It would have removed much of the union’s bargaining leverage, although not all, as Daggett made clear in a video to members that he expected they would continue to get paid, and that members would then move just a fraction of the cargo they normally do.
Still, Biden refused to act. He and other members of the administration — including Vice President Kamala Harris and Transportation Secretary Pete Buttigieg — made clear in public statements that they wanted to see a deal rewarding union members for their work producing record profits for foreign-owned shipping lines.
The fact there was a strike at all was not a win for the administration, said Mercogliano. A clear win would have been avoiding a strike.
But avoiding a long strike that would lead to a major economic disruption, with shortages for consumers, factories shutting down due to lack of parts or ability to export, and calls for it to act in a way that would have angered the Democrats’ supporters in organized labor, would have been catastrophic. As Biden said Friday afternoon, “We averted what might have become a major crisis for the country.”
For that he can thank his Acting Labor Secretary Julie Su, who was in New Jersey on Thursday working to bring together the wage deal.
It may seem strange, but shipping lines also came out better.
A fast deal is a win for an industry that is very profitable right now. In just three days, the strike had tied up 5% of the world’s container capacity, Mercogliano said. After a full week, it would have been 10% and climbing.
“For the ship lines, as long as they’re making profits, this is not a big blip,” said Mercogliano.
Not that this was the deal that the the United States Maritime Alliance, the group that negotiates on behalf of ship lines, terminal operators and ports, wanted. But it was the one they could settle for after the Biden administration made clear it wasn’t going to intervene. Mercogliano believes the Biden administration put greater pressure on the USMX, as the group is known, than the union.
The Biden administration “had leverage over maritime alliance,” Mercogliano said. He said the USMX “heard the word they never want to hear – ‘antitrust,’” suggesting the administration might have considered taking action against the way ship lines coordinate with one another.
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