By Allysia Finley, December 18, 2014, Wall Street Journal
Christmas may come late for many Americans this year thanks to a West Coast labor brawl.
Manufacturers and retailers complain that the International Longshore and Warehouse Union (ILWU), which represents about 20,000 dockworkers on West Coast ports, has deliberately slowed down traffic during the holiday season to increase their leverage in contract negotiations. Because the union’s last collective-bargaining agreement expired in July, longshoremen can’t be disciplined for slacking off.
The innocent casualties in this fracas are customers who will have to pay more and wait longer for products to be delivered. Domestic and foreign businesses are redirecting shipments to East and Gulf Coasts ports to avoid the bottleneck.
FedEx CEO Fred Smith noted in the company’s earnings call on Wednesday that congestion at ports “has slowed down a lot of the retailing activity in late November and early December and led to a lot of ‘not in stock.’ So I suspect that you’ll see a lot of purchases of gift cards in lieu of merchandise.”
The ILWU and Pacific Maritime Association, which represents port employers, are under a media blackout that bars them from discussing negotiations. However, prior contract snags have hinged on the association’s efforts to employ more technology. We hear that the two parties are also wangling over who pays for the ObamaCare excise tax on expensive “Cadillac” health plans that takes effect in 2018.
Employers ought to have the upper hand in negotiations since longshoremen are among the most generously compensated blue-collar workers in the country. Full-time dockworkers earn $147,000 annually on average on top of $82,000 in employer-paid benefits. Workers, retirees and their families don’t have to pay a penny for their health benefits, which includes dental and vision care.
The union is trying to gain an advantage by snarling up port traffic. The ILWU isn’t calling a strike because it doesn’t want to inflame public opinion and weaken its bargaining position, especially once people get a load of their generous pay and benefits. A strike might also compel the Obama administration to intervene to prevent economic collateral damage. Retailers and manufacturers commissioned a study this summer that estimated that a work stoppage could reduce U.S. GDP by $2 billion per day.
President Obama has so far been loath to antagonize the union by intervening. Businesses have exhorted the White House to appoint a federal mediator, as the president did in the fall of 2012 during a labor dispute on East and Gulf coast ports. Back then, the administration had a political stake in maintaining labor peace and keeping ports operating smoothly during the presidential campaign. Perhaps saving Christmas isn’t as important as winning an election.