Originally published Oct. 4, 2024
Sports fans know that a lot can change in the fourth quarter of a game. So too for the U.S. economy, as a substantial labor action commenced the minute that calendars turned to the fourth quarter of 2024.
Roughly 45,000 members of the International Longshoremen’s Association union conducted a brief strike this week. These are the workers who move cargo between ships and ground transportation. The 14 affected ports, spanning from Texas to New England, account for 19% of the nation’s imports and 10% of exports, by value. The workers' primary demand was protecting their jobs against automation, along with higher wages.
One demand proved easier than the other. An offer by the U.S. Maritime Alliance of a graduated 62% wage increase over five years was enough to end the strike after three days. But the deal only runs through January 15 of next year. Negotiations will continue on the more thorny issue of protecting workers’ jobs against automation. This trend is inexorable and not unique to the ports; strident demands may be in vain.
While short, the port strike showed that supply chain friction can still arise.
The strong leverage of workers was a theme of the COVID reopening cycle. A shortage of labor amid high demand enabled workers to make more aggressive demands. Despite a normalizing labor market, the stevedores demonstrated that labor still has some power. Consultancy RSM estimated a loss of $4.3 billion in trade, or about 0.1% of gross domestic product, for each week the strike carried on. The knock-on shortages of fresh food and raw materials for production of vehicles and pharmaceuticals had the potential to cause broad upset.
The strike was one among many reasons to be braced for an unusual interval ahead. A prolonged walkout could have weighed down readings of employment and gross domestic product. The damage from Hurricane Helene is still being tallied but has certainly brought some regions to a standstill. Oil prices are on the rise again amid escalations in the Middle East. Election uncertainty is forestalling decisions about investments. The fourth quarter, only days old, is already bringing much more suspense than we would like.
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