Averting West Coast Port Shutdowns
A dockworker dispute shows why ports need to be treated like railroads and airlines.
by Diana Furchtgott-Roth, Manhattan Institute, November 24, 2014
West Coast ports are suffering a series of slowdowns, leaving stores with lower supplies before Black Friday and the Christmas season, and stranding agricultural exports such as Washington state apples on the docks.
The International Longshore and Warehouse Union has suspended negotiations with the Pacific Maritime Association, which manages the ports, until after Thanksgiving, leaving retailers and exporters with limited options, and dragging the dispute into December.
Congress should reform labor laws to deal with this. Currently, ports are governed by the National Labor Relations Act (NLRA), while airlines and railroads are required to abide by the 1934 Railroad Labor Act (RLA). The disruptions at the ports that are being used as a tactic of negotiation are allowed under the NLRA, but would not be permitted under the RLA.
Railroad crews cannot decide to stop working on the tracks, and airline crews cannot withhold fuel from planes. But workers can simply not show up for shifts in Los Angeles and Oakland in order to hold out for higher wages.
Small groups of workers are holding all 29 West Coast ports hostage to their demands. The workers are paid an average of $147,000 annually, with $82,000 in benefits, including free health care. The disruptions will reduce employment because shippers go to Canada, or ports on the East or Gulf coasts.
Congress could pass a bill moving ports to the RLA, just as it moved airlines to the RLA in the 1930s. With ports increasingly important to the U.S. economy, it is time to give ports the same protections as railroads and airlines.
Negotiations concerning a new labor contract between the International Longshoremen and the Pacific Maritime Association began in May 2014 and expired in July 2014. The negotiation process has been prolonged into November, and the PMA has accused the ILWU of purposefully slowing processing times at ports from Seattle down to Long Beach, leading to congestion of products destined for export from or import to U.S. markets.
The ILWU disagrees. ILWU spokesman Craig Merrilees, who told me in a telephone conversation that his union wants safety upgrades and job-tenure guarantees, said there has been “incredible frustration on the part of workers due to congestion that has made their work more dangerous and difficult.” Rather than a worker slowdown, he said ports are plagued by a chassis shortage, as well as lack of shipping containers. Plus, there have been bottlenecks at rail depots, as rising shipments of crude oil by rail have displaced shipments of other products.
Whatever the cause, the smooth operation of ports along the West Coast is critical for the employment of Americans and the health of the U.S. economy. Cargo handled at West Coast ports supports millions of American jobs and had a value of $2.1 trillion in 2013, about 12.5% of gross domestic product.
Slowdowns are devastating not only to the manufacturers, food producers and retailers that use the ports, but to consumers who will either not have access to these goods or face higher costs due to reduced supply. Economic losses could generate a backlog that could linger for months, especially if foreign companies that purchase American goods decide to replace U.S. products with a more reliable foreign supply.
The fundamental problem is that ports are held to a different standard than other industries that facilitate trade, as airlines and railroads are required to abide by the 1934 Railroad Labor Act while ports are governed by the National Labor Relations Act.
The RLA, passed in 1926 and amended in 1934, provides a framework for mediation in the event of disputes between labor and management of the airline and railroad industries. The act created the National Mediation Board (NMB), an independent agency to oversee the reconciliation process, minimizing the disruption of transit points.
The purpose of the act and the NMB, as stated in the statute, is to “avoid any interruption of commerce,” while providing for “the prompt and orderly settlement of all disputes” that arise in labor matters. Those are two things desperately missing in today’s West Coast labor dispute.
Labor contracts under the RLA do not expire like the current West Coast contracts, but remain in force until a new agreement is reached. The RLA stipulates that, first, management and labor can begin negotiating a contract between themselves and without outside help, although the majority of cases require mediation.
If negotiations are not productive, then federal mediation is required before either unions or employers can engage in slowdowns, strikes or lockouts. The NMB cannot force either party to accept an agreement that it arbitrates, but both labor and management are legally bound to a series of negotiations. If both parties cannot reach a settlement after initial mediation, they must commit to a month-long “cooling-off” period.
Under the RLA, commerce and transportation remain uninterrupted during the dispute and mediation process, unlike what is occurring on the West Coast now. This presents a win-win situation for all parties concerned and, most importantly, the American consumer.
Ports are critical to U.S. infrastructure and trade, and should be governed in the same manner as the railroad and airline industries. President Obama and Congress should not allow millions of jobs and hundreds of billions in income be held hostage every time a contract expires. Protections written into the RLA adequately safeguard our nation’s airline and railway networks, and it would be a logical step to extend the Railroad Labor Act to our critical West Coast port network.
Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute. You can follow her on Twitter here.
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