Strikes in the ports of Los Angeles and Long Beach that began last Tuesday are delivering a blow to the U.S. economy.
Clerical workers from the International Longshore and Warehouse Union (ILWU) Local 63 have been without a contract for 2.5 years, and negotiations between them and the ports broke down last Monday.
The ILWU has accused management of trying to outsource clerical jobs to overseas workers that are paid far less and receive fewer benefits.
Reuters reports that 10,000 dock workers that are members of the ILWU Local 63 are refusing to cross picket lines set up by 500 striking clerical workers, essentially shutting down 10 of 14 container terminals between the two ports.
Gluskin Sheff's David Rosenberg writes, "If you think Hurricane Sandy and the fiscal cliff are problematic for the economic backdrop, how about the strike (now in its fifth day) that has shut down the nation's busiest ports—LA and Long Beach?"
And with good reason. The impact of the strikes is estimated to be about $1 billion a day, and Matthew Shay, CEO of the National Retail Federation (NRF) has asked the White House to intervene in the contract negotiations:
"A 10-day lockout at the West Coast ports as a result of stalled negotiations in 2002 led to lingering supply chain disruptions and cost the U.S. economy $1 billion for each day of the lockout. It took the ports a full six months to recover, and the strike had a profound impact on the retailers, importers, manufacturers, agricultural exporters and other affiliated industries that rely on the ports every day.
An extended strike this time could have a greater impact considering the fragile state of the U.S. economy."
But international trade economist Jock O'Connell told Mercury News the impact could be lower than the $1 billion-a-day estimate. And some point out that the strikes occurred during a historically weak period for international trade.
The two ports are the busiest ports in the country and support 1.2 million jobs in California*. Nine ships have so far been redirected to other ports, and many are concerned that this will impact its credibility and drive business away.
*Piece was updated to reflect that the 1.2 million jobs were across California, not just Southern California.
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