For most of the last half century, the United States has been blessed with relatively few labor disruptions. In the private sector, union membership has long been on the decline in the private sector. The bulk of the conflicts have stemmed from public sector unions, as we discovered during the extended school closures of 2020–22. The teachers’ union revealed its power.
And yet here we are, facing a potentially devastating strike in ports on the East and Gulf Coast. For the first time since 1977, the International Longshoremen’s Association is holding out for much higher wages and better benefits.
Even a week-long strike will result in pileups of cartons and goods, driving down supplies, stressing retail, and sending prices higher. A longer strike could lead to much worse, including grave shortages followed by possible rationing. The Democrats want management to give in while the Republicans favor using federal law (Taft-Hartley, a bad law designed to fix other bad laws) to force everyone back to work.
This could end quickly or be drawn out for months. Given the election-dominated environment, the drama at the ports could easily be deployed as theater. A quick reopening would certainly help the party in power which would take credit. An extended closure could be a political disaster and make a case for the insurgents that the economy is fragile and failing.
The larger question concerns why this is happening just now. Decades have gone by with smooth operations at the ports with no snags, and now suddenly we have legions of furious workers demanding a new long-term contract that would push their wages much higher.
There are major factors and minor ones. The major factor is inflation. The wages of workers have simply not kept up with inflation. They are flat today relative to 2019 once adjusted for inflation. But to adjust something by inflation requires an accurate reading of the data, which the Bureau of Labor Statistics has not provided.
In real life, the costs of living the good life have soared far above the ability of average workers to pay. The official inflation data does not include interest rates. It misreads the costs of health insurance. It does not account for the real costs of groceries, rent, or much of anything else. For this reason, even if workers’ wages are adjusted for inflation, they are still lower in real terms than they were five years ago.
In an industry in which pay is determined by union/management negotiations and deals, it is inevitable that high inflation would lead to worker disgruntlement, and hardly surprising that this would end in an old-fashioned strike. This same problem is now affecting all private-sector unions such as those in the music industry.
There is also a seething bitterness about the social and economic differences between workers and management. During the 2020–2021 lockdowns, the workers were sent home without pay to live on stimulus payments from government, which did not come anywhere near covering the bills. Meanwhile, management did not miss a paycheck and even enjoyed huge raises from the billions in stimulus payments dolled out to businesses.
The world of lockdowns fed into the entire framing that gave rise to modern labor unions in the first place. The claim was that labor needed to cartelize and act as a group, striking from providing services when it was necessary to stop disproportionate power from accruing to management structures. The deep idea here is that there is an inherent conflict in a capitalist society in which capital owners extract surplus value from workers who, despite making the enterprise possible, get the short end of the stick.
It’s a Marxist fable that is generally not true. The labor contract is a voluntary one, and the capitalist/owner usually gets more in the way of profit because he/she accepts more responsibility for outcomes. Capital has to pay out wages and salaries long before the final product is sold and renders revenue, which is to say that all decisions by capital are inherently speculative. The tradeoff of being a worker is that you are granted more security without the inherent risk of enterprise.
All of that presumes a functioning and fluid free market in which competition exists within the market for both firms and workers. Everyone works out mutually agreed-upon terms of employment and peace prevails. The only time in U.S. history when labor unions gained substantial power over production was during the 1930s and 1940s when government intervened on their behalf and against the managers and stockholders.
Again, this is how it works in a free market.
What happened in 2020 and following was anything but. All enterprises were suddenly subjected to a central plan that privileged the wealthy and powerful over the workers who were denied the right to labor for their families. Meanwhile, a different class of workers—let’s call them peasants in the old Marxian parlance—found work by delivering groceries, fixing infrastructure, and tending to the sick. The result was a palpable presentation of class differences that oddly fit the Marxian model: the elites versus the workers.
In this case, then, the old Marxian fable of class conflict became all-too real. It really was the ruling class versus the workers, the rich versus the poor, the privileged versus the marginal. Class conflict was hammered into existence by virtue of edicts from the top, and it came with a new nomenclature. We spoke of essential and nonessential workers, for example, and of large businesses and small.
The carnage of this division was intense and is still with us. Inflation makes it work because falling purchasing power has the most dramatic impact on wage workers while hitting the well-to-do in much less impactful ways. As a result, these dock workers are looking at their bills, the price of groceries, the rise of rents and insurance payments, and then note how well off management is doing, and finally something snaps.
You can denounce them and point out that they make more than fast-food workers but think of the implications of a loss of 30 to 50 percent of purchasing power over 4 years, which is not an unreasonable estimate of what has happened. Most workers cannot do anything about it but unionized workers do have options.
The union’s demands are a serious problem because shippers themselves face real economic strains after two years of disruption and a reorganizing of world supply chains that have only added to accounting difficulties. In some ways, then, this strike comes at the worst-possible time. Management is truly not in a position to grant the unions all that they are demanding.
The longshoremen are also concerned that technology is working to reduce their hours and take away their jobs. So much of the loading and moving today can be handled by machines and the union bosses know this. It is a legitimate concern but eschewing technological upgrades is not really a viable path for the long term. Reality will dawn at some point.
We’ll have to see how the negotiations go once they start, which they surely will, but the shipping companies would do well to rethink their own managerial labor costs. Without knowing the specifics on the inside of this industry, it is a good bet that management structures are in fact overpopulated and overpaid.
To be sure, these unions are famously a mixed bag, with the upper reaches living very well—millionaires with Bentleys and yachts—while claiming to represent the interests of their members who pay high dues. We do not know for sure whether and to what extent this strike truly represents the wishes of the membership. Matters are always more complicated than they seem on the surface.
Regardless of how you come down on this particular matter, what we see here is a continuing fallout from the disastrous pandemic response that disrupted the normal course of commerce and funded that disruption with $6 trillion in fake money that later showed itself in inflation that reduced the real wages of the people who do the work. Very few people will make this connection but the logical trajectory is all there and undeniable.
