Ports along the East and Gulf Coasts are bracing for a strike at midnight, as the International Longshoremen's Union is demanding higher pay and protection from automation for its port workers.
Margaret Kidd, University of Houston instructional associate professor of supply chain and logistics technology, joins Morning Brief to discuss the looming port strike and how it may affect the US economy.
Kidd tells Yahoo Finance that some estimates project that a port strike could cost the US $5 billion per day. She notes that the last port strike was in 1977 and lasted for 45 days. Back then, trade only made up 16% of the US economy. Today, that figure is 28%; therefore, a port strike would be a "huge hit on the economy," Kidd explains
"I really hope that both sides can come together. Right now, it looks unlikely to be happening today. At some point, I think the president will have to step in, but he's vowed not to do that. So I think it's just going to be a matter of time. You know, maybe possibly another week, a week or two weeks into it, you could possibly see some federal action," she adds.
Ports along the Eastern Gulf Coast bracing for a workers strike at midnight. The International Longshoremen's Union, the ILA, are demanding higher pay and protection from automation. On Sunday, President Biden made clear he had no plans to intervene in those negotiations, telling reporters quote, I don't believe in Taft Hartley. Joining us now for more, we've got Margaret Kidd, University of Houston Instructional Associate Professor, professor teaching Supply Chain and Logistics technologies. Thank you so much for joining us, Margaret. I just want to start with a sense of the financial impact here. What can you tell us about the potential loss that is likely to occur on, on a daily basis, and even if we do see this continuing over the next couple of weeks?
Well, we're, we're seeing estimates that it could be in the $5 billion per day range. And, and granted, that, um, that relates to ports from Texas all the way up to Maine being closed as of midnight today. Um, you know, each region has, uh, the variation of that impact, um, will be fairly substantive though.
Margaret, how likely, I, I, seems like a, a strike is inevitable at this point. So, so, so I guess when you take a look at what is being negotiated or what the wants are on one sides, one side versus the other, how long do you expect this strike to last?
Well, that's a great question. The last strike was in 1977 and it lasted for 45 days. Um, what the typical American needs to keep in mind is our, our, the amount of our economy that was based on trade was only about 16%. Flash forward to current markets and we're more like 28%. So this would be a huge hit on the economy. I, I, I really hope that both sides can come together. Right now, it looks unlikely to be happening today. At some point, um, I think the president will have to step in, but he's vowed not to do that. So I think it's just going to be a matter of, of time. You know, may possibly another week, a week or two weeks into it, you could possibly see some federal action.
Well, it's interesting, Margaret, given that Biden has said he would not intervene, but of course we are also talking about this in the context of a presidential election. Could that potentially add pressure to the Biden administration to move more quickly on this?
There's pressure from all sides. I mean, the election's about 40 days out. Um, you know, if, if he doesn't resolve that this potential strike, then he looks weak on the economy. Um, if he does resolve it using federal action, um, he risked alienating labor. So, I mean, it's a really slippery slope, but at some point, um, you know, he, the administration will need to look at what is the overall impact, um, and, and it's just enormous. I, I can't think of any period in time where we had this amount of the economy potentially closed down.
Well, Margaret, they're pushing for a 77% pay increase. So if they, say they don't get 77%, but if they get something substantial, I, I guess when you see a demand like that, how tough is it then to reach some sort of common ground over these negotiations? And, and then, and then when you do see that type of uncertainty, I guess what is the potential fallout within the industries?
Well, I, I don't think that their, their pay increases unreasonable. Um, what we all need to remember is these were frontline first responders during COVID. They put their families behind and put the American people first, going to work every day while we were all in our pajamas doing zoom calls, right? Um, so I, I think they're, they are just. There should be some equity, um, but I think the bigger sticking point is the use of automation, um, in US ports. We've, we've lagged, um, Europe and Asia in terms of technology and automation in our supply chains and in our, uh, marine terminals. And that is the biggest point of debate at this moment.
But to your point there, Margaret, these workers have, uh, gone through a lot and they are going to have to forgo wages during the course of this. How long are they going to be able to keep up?
I think that would be a, a question for the ILA, but I think, you know, you have like this unanimous, um, backing for the strike. And again, in my mind, this will not be a 45 day strike. It'll probably be something much, much, a much quicker resolution.
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With the presidential election just over a month away, Kidd believes the port strike has put the Biden-Harris administration under pressure: "If he [Biden] doesn't resolve this potential strike, then he looks weak on the economy. If he does resolve it using federal action, he risks alienating labor. So, I mean, it's a really slippery slope."
The International Longshoremen's Union is seeking a 77% pay increase, which Kidd argues isn't unreasonable. "What we all need to remember is these were frontline first responders during COVID. They put their families behind and put the American people first, going to work every day while we were all in our pajamas doing Zoom calls," she explains.
Given how critical a strike is and how it may impact the economy, Kidd does not expect a strike to last long.
This post was written by Melanie Riehl.