Dockworkers’ port strike leaves Harris campaign high and dry

The dockworkers strike at ports from Maine to Texas threatens economic shock waves hurting American consumers and inflicting political pain on the campaign of Vice President Kamala Harris.

About 50,000 dockworkers at 36 ports along the East Coast and Gulf Coast ports walked off the job after talks broke down between the International Longshoremen’s Association and the United States Maritime Alliance (USMX), which represents ocean carriers and port operators.

The union is demanding a new contract with a 77% wage increase to $69 an hour. That is more than for West Coast longshoremen, who earn an average of roughly $233,000 annually in wages and overtime, plus $99,474 in benefits. The union also demands language in the next union contract to protect union jobs from automation.

ILA President Harold Daggett said the increase is necessary to compensate for inflation and years of small raises.

USMX has responded with an offer of a 50% wage hike over six years and pledged to keep a limit on automation, which the union rejected as too “stingy.” On Tuesday, Mr. Daggett told CNBC that the union wants a 61.5% pay increase over six years.

“We have demonstrated a commitment to doing our part to end the completely avoidable ILA strike,” USMX said in a statement. Leaders said their offer is better than every other recent union settlement.

“We look forward to hearing from the union about how we can return to the table and actually bargain, which is the only way to reach a resolution,” the statement said.

Mr. Daggett has pointed to shipping companies’ record profits, which were inflated because of shortages in the early years of the COVID-19 pandemic, and the generous contract awarded to West Coast dockworkers last year.

The strike, the first by dockworkers since 1977, puts Ms. Harris in a difficult political situation. She desperately needs the support of rank-and-file union workers who remain skeptical of her despite the backing of labor leaders.

At the same time, she needs a healthy economy, and the strike could lead to supply chain snarls and product shortages. J.P. Morgan estimated that the strike, which affects ports in New York, Philadelphia, Miami, Houston and elsewhere, could cost the economy as much as $4.5 billion per day.

The ILA is one of the few unions that have not publicly endorsed her, and Mr. Daggett has tried to show support for both candidates. He has praised the Biden administration’s efforts to secure a deal, calling Acting Labor Secretary Julie Su “terrific,” and also asked his union members to pray for former President Donald Trump after a July assassination attempt. He has also spoken positively about a meeting he had with Mr. Trump in 2023.

“I do think Harris is between a rock and a hard place here,” said Paul Clark, who teaches labor relations at Pennsylvania State University. “She doesn’t have a lot of options as far as I can see. It’s not a great set of events for her.”

The Harris campaign did not respond to a request for comment, but the White House issued a statement saying President Biden and Ms. Harris were “closely monitoring” the strike and any supply chain snarls that could result.

Mr. Trump blamed Ms. Harris for the strike. He directly tied the situation to her casting the tie-breaking vote for two of Mr. Biden’s spending bills that had been deadlocked in the Senate.

“The situation should have never come to this and, had I been President, it would not have,” Mr. Trump said in a statement. “This is only happening because of the inflation brought on by Kamala Harris’ two votes for massive, out-of-control spending and her decision to cut energy exploration.” 

“American workers should be able to negotiate for better wages especially since the shipping companies are mostly foreign flag vessels, including the largest consortium One,” he said. 

Ms. Harris only has two tools available to end the strike. She can use the White House bully pulpit to urge the end of a strike or call on Mr. Biden to invoke the Taft-Hartley Act, which would force longshore workers to return to work for 80 days.

Mr. Biden issued a statement clearly stating that he had no plans to invoke the Taft-Hartley Act. The president said the collective bargaining process should play itself out, and he tried to shame USMX into kowtowing to union demands by mentioning the need to deliver aid to those impacted by Hurricane Helene.

“Collective bargaining is the best way for workers to get the pay and benefits they deserve,” Mr. Biden said. “Dockworkers will play an essential role in getting communities the resources they need.”

Republicans on Capitol Hill sent a letter urging Mr. Biden to invoke the Taft-Hartley and “every authority” at his disposal to “ensure the continuing flow of goods and avoid undue harm to Americans.”

In 2002, President George W. Bush used Taft-Hartley to stop a West Coast port strike. He argued that the strike was detrimental to the nation’s health and security. Mr. Biden, who often boasts that he is the most pro-union president in history, would be unlikely to do that.

In 2022, Mr. Biden signed legislation to prevent a national rail strike, saying the broader economy was at risk. Frustrated rail workers accused the president of turning his back on them.

That leaves Ms. Harris trying to talk with union leaders and USMX through back channels to find a quick resolution to the strike. Mr. Clark said he doesn’t expect the union to listen to her.

“The longshoremen are at the point where they have tremendous leverage. They geared up for this strike, they prepared for it. I don’t see them sitting on their hands to help the Harris campaign,” he said.

The total impact would depend on the length of the strike. A one-week shutdown would cost the U.S. economy about $2.1 billion, according to Anderson Economic Group, which specializes in estimating the costs of strikes. Much of that would come in the loss of perishable goods such as bananas that would not be delivered.

It also concluded that striking workers and those who might be temporarily laid off would lose a combined $200 billion in wages, bringing the total damage to the economy to about $4.1 billion.

In a video released last month, Mr. Daggett made it clear that the union is prepared to continue this strike for as long as necessary, even if it damages the U.S. economy.

“First week, it will be all over the news — boom, boom, boom. Second week, guys who sell cars can’t sell cars because the cars ain’t coming in off the ships. They get laid off. Third week, malls start closing down. They can’t get goods from China. They can’t sell clothes. They can’t do this. Everything in the United States comes in on a ship,” Mr. Daggett said.

Mr. Clark said the economic impact of the strike, including increased inflation and layoffs, will be felt before the election next month, but he said it’s unclear how big of an impact the strike will have on the economy over a few weeks.

“The strike has the potential to really have a negative impact on the economy, but I don’t know how quickly that is going to happen. The effects might start to be seen in two or three weeks, which would be very unhelpful to Harris,” he said.

Mr. Trump could benefit from the strike. He has not aligned himself closely with the unions the way Mr. Biden and Ms. Harris have, and further economic damage among voters who already blame Mr. Biden for high prices could send them into Mr. Trump’s camp.

“I think Trump is the beneficiary of this situation. He’s not a sincere supporter of the labor movement, and anything that damages the economy is good for him. I don’t see any detrimental impact on his campaign,” Mr. Clark said.

Stopping the flow of goods into America’s largest ports will cause high prices, shipping delays and a shortage of goods right before the holiday season, a recipe for increased inflation. Also, the inability to access critical products could force some companies to halt production, resulting in layoffs.

Before the strike, some importers diverted their shipments to the West Coast and some retailers moved up their orders of holiday inventory. Prices for the containers shipping to the East Coast have increased in recent weeks.