Experts predict the U.S. economy will have sluggish growth in 2015, ranging from two to three percent.
Now, even that anemic growth is in jeopardy as some of the busiest ports on the West Coast, from San Diego to Seattle, are at almost a virtual standstill, with only a trickle of cargo being unloaded and loaded. According to the National Retail Federation, the commerce conducted at the 29 West Coast ports account for 12.5 percent of the U.S. GDP. A complete lockdown of the ports would cost U.S. businesses $2 billion a day in lost imports and exports.
The reason for the port slowdown? Port workers, who are members of the International Longshore and Warehouse Union, have been without a contract since July, and as negotiations with the Pacific Maritime Association, the employer of the dockworkers, have been deadlocked, the workers have been showing their displeasure with a slowdown.
Meanwhile, as negotiations are bogged down, Washington State apples waiting to be shipped to Asia are rotting away on the docks; California citrus fruits are turning into pulpy mush in the Southern California sun; Idaho potatoes bound for Japan are stacked up in crates going nowhere.
Companies in the U.S. are starting to feel the full fallout of the slowdown. ConAgra Foods Corporation, one of the nation’s largest packaged-food companies, a leading exporter, and producers of such household brands as Hunts and Orville Redenbacher, has lowered its earnings forecast in 2015 because of the impact the West Coast Port slowdown will have on its potato product exports. Michael Kors, a leading U.S. apparel company, has had to divert shipments headed to the West Coast to more expensive air-based shipping. Honda announced that it would have to slow down vehicle production in its Ohio and Indiana plants, where it makes the Accord, since it can’t get parts from Japan.
The repercussions of the slowdown are also going global. For the first time in 11 years, McDonald’s in Japan posted a loss of $186 million, partially attributed to its potato shortage and its inability to serve enough French fries to satisfy normal customer demand.
In labor disputes like these, there are often two sides to the story, but here it’s difficult to sympathize with the dockworkers, who want higher wages for weekend and holiday work. The dockworkers’ salaries are, on average, a staggering $147,000 a year, not including a $35,000 health benefits package. Overtime work can push salaries to more than $200,000 a year. This is a job that requires neither a college education nor any advanced training, but merely shlepping containers on and off ships with cranes and into trucks. In addition, the dockworkers are rewarded with an $80,000 pension upon retirement. Meanwhile, the average associate professor salary at Harvard is $120,900. That the dockworkers’ union is even demanding more money while most Americans would be very thrilled to have such a salary smacks of greed and hijacking the American economy. If the port workers were de-unionized and the market determined wages, it’s highly unlikely that any one of the dock workers would be earning more than $20 or $30 an hour.
This costly slowdown has been dragging on for months, and it’s time for the president to intervene in order to settle the dispute. The president has to make it clear to the ILWU that the West Coast ports don’t belong to the union but to the American people, that they have no right to cripple the U.S. economy because they want absurdly high wages. Of course, no U.S. president wants to appear as anti-labor, but when the fate of the nation’s economy is at stake, it’s vital that the president take the lead and resolve the dispute as forcefully as possible, within legal guidelines. When U.S. Steelworkers threatened to strike in 1952, President Harry S. Truman was quick to nationalize the steel industry. Truman perceived the strike as a threat to U.S. national security during the Korean War. Similarly, President Ronald Reagan took decisive action when the air-traffic controllers went on strike in 1981, grinding air travel to a halt. Invoking the Taft-Hartley Act, Reagan fired all 11,000 striking air-traffic controllers and filled the positions with military air-traffic controllers. It made no difference to Reagan that the air-traffic controllers’ union had supported his 1980 presidential run. Reagan not only fired the strikers, but also banned them from ever again working as air-traffic controllers. Several union leaders were sent to prison for their support of the strike.
There will be a far greater political backlash to the president and his administration than affronting organized labor if they continue to sit by the sidelines as American exports rot and foreign imports are unable to find their way into stores. The jobs of hundreds of thousands of Americans should not be at stake because of the votes of 15,000 unionized dock workers.