Everything You Need To Know About The Port labour Dispute That Could Disrupt The Whole Economy

labour disputes at ports on both US coasts could disrupt trade in the new year and skew high frequency employment data. It could produce shortages of some consumer goods. The resulting higher prices could filter through into measured inflation.

The proximate cause of the disputes differ, but at its heart is a push by the employers to boost competitiveness through forcing changes in labour practices.

In 15 ports from Massachusetts to Texas, including New York and New Jersey, the employers’ union association — the U.S. Marine Alliance — seeks to cap the “container royalty,” which are payments made to workers based on the weight of container cargo. The dock workers, represented by the International Longshoreman Association, are resisting. The workers also insist on maintaining the eight-hour day (pay guarantee).

The union represents 14,500 works at the 15 ports, the NY-NJ ports alone accounting for 4,000. Last year, NY-NJ handled $208 bln worth of goods. It is the second-largest port in the country for household imports from China. Overall, it handles 10 per cent of imports from China, almost 70 per cent of imports from Israel, and 37 per cent of imports from Italy. 40 per cent of the imported autos come through the NY-NJ docks.

Following the breakdown in negotiations, and with the December 30 deadline looming, both sides have agreed to mediation. The situation in the four northwest ports does not look as promising. The 3,000 dock workers, represented by the International Longshore and Warehouse Union, rejected the contract proposals of the employers, which indicated it was their “last, best and final” offer.

The ports cover two-thirds of the U.S. grain terminals in the Puget Sound and along the Columbia River, and account for a quarter of all U.S. grain exports and half of the wheat exports. Reports suggest the employers have sought over 750 changes in the contracts, in some cases, upending 80 years of practice.

However, most of the issues come down to control of the workplace. The shippers want to use few workers to (un)load ships, allow elevator workers to assist in the loading of ships, and greater management discretion on hiring and staffing issues.

The shippers and owners of the grain terminals, who are represented by the Pacific Northwest Grain Handlers Union Association, seem particularly aggressive. The union has not asked for authorization to strike. It has not set a strike deadline. It has not threatened a walkout. Nevertheless, there are reports that the shippers are considering locking out the union employees and keeping the ports open with replacement workers. A Delaware company, specializing in providing security and replacement workers during labour disputes (shades of the Pinkertons) has been hired.

A capital strike is when investors withdraw from the productive process and squeeze interest rates higher in the hope of driving the debtor to change its behaviour. A labour strike is when employees withdraw from the productive process, disrupting the ability to complete the circulation of capital from investment to profits.

A lockout is not a strike. It when employers force employees out of the productive process until they capitulate to the employers’ demands. Through the employers’ union association, they have a monopoly on the supply of jobs for longshoremen.

By preparing to establish buffer zones to prevent the labour dispute from interfering with the port activity, the U.S. Coast Guard, and by extension, the U.S. government abandons the honest broker role to favour the employers. It complements the use of replacement workers and seeks to minimize the ability of the labour dispute to interrupt business.

The employers seek a type of pattern bargaining. After a protracted struggle, the union had capitulated to new workplace rules at a new grain terminal in Washington in 2011. The employers want all the dock workers to adhere to those new rules. Deeper still, shippers are facing competition from rail. For a number of different reasons, using railroads to bring grains to the ports may be less expensive than barges.

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