A thick fog enveloped Long Beach last week, creating a visibility challenge as the fog horns sounded during the early hours when most were still asleep.
The bustling activity at the Port of Los Angeles and Port of Long Beach, critical hubs for over 40 percent of U.S. containerized imports, has come to an unusual halt. Just offshore, a flotilla of container ships sits idly, awaiting resolution on a contentious labor dispute.
If you haven’t driven through Terminal Island over the Gerald Desmond and Vincent Thomas Bridges, you’re missing an impressive sight. The scale of containers, cranes, semi-trucks, and railcars is truly overwhelming.
However, this extensive operation is currently gridlocked. Loading and unloading activities were sidelined last weekend, leading to a spike in the number of ships anchored and waiting to enter the ports—from 20 to 31.
By the middle of the week, this number decreased but, unfortunately, is not expected to stay low for long. This weekend could see further complications.
Dead in the Water
This weekend coincides with a holiday, meaning workers earn at least 50 percent more than their usual pay. Consequently, the Port Maritime Association is hesitant to yield to the demands of the International Longshore and Warehouse Union, especially as their wages potentially inflate even further.
The Union claims it is willing to negotiate, but the Association contends that their demands are unrealistic. In the meantime, the $1 trillion in trade that transits through these ports remains stagnant…
As reported by the Wall Street Journal, “The failure to resolve the problems at the West Coast ports is causing widespread pain for shippers, retailers, meat and poultry companies, and manufacturers across the country.” Rail services to the West Coast have been curtailed, as an increasing number of ships anchor outside the ports of Los Angeles and Long Beach.
This suspension of operations over Thursday, Saturday, Sunday, and Monday will undoubtedly exacerbate the backlog. There’s a possibility the number of waiting ships could exceed the record of 65 set during the standoff in 2004, with ships lined up “halfway down to San Diego, like 50 miles down the coast,” as recalled by Art Wong, spokesperson for the Port of Long Beach.
We certainly plan to witness this phenomenon firsthand, as we are always intrigued by extraordinary sights—much like a hunchback or a cluster of container ships.
Dock Worker Shakedown and You
The National Retail Federation has called upon President Obama to intervene. “It’s time for the White House to immediately engage in this critically important economic priority and compel both sides to negotiate until a deal is reached.”
But what can the President realistically do? Even if he were to force an agreement, it may not be one built to last, as it would likely ignore the crucial aspect of labor productivity.
Henry Hazlitt wrote in *Economics in One Lesson*, “The belief that labor unions can substantially raise real wages over the long run and for the whole working population is one of the great delusions of the present age.” This misunderstanding stems from a failure to recognize that wages hinge fundamentally on labor productivity.
An agreement that overlooks productivity is as unfeasible as a floating brick or the President’s ears. Without external pressure, employers might reject workers who demand more than their output warrants, while workers could opt out of jobs that offer less than their productivity justifies.
No doubt dock workers perform commendably, with many working diligently. However, if they are dissatisfied with their wages, it could be more advantageous for all involved if they sought to enhance their skill sets, rather than relying on shaking down imported goods.
Of course, they likely prefer for consumers—like you—to absorb the increased costs.
Sincerely,
MN Gordon
for Economic Prism
