Harold Daggett is not what you would call a reasonable man, by any reasonable measure. What’s more, the head of the International Longshoreman’s Association, and architect of the recent dockworkers strike, is not shy about admitting it. In a video interview posted on YouTube last month he said, “When my men hit the streets from Maine to Texas, every single port a lockdown, you know what’s going to happen? I’ll tell you… I will cripple you.”
His rhetoric may not be lacking for hyperbole, but he’s not entirely inaccurate as to the impacts of his strike, which could effectively immobilize the American economy. And for what grand cause? Because the shipping conglomerates had the temerity of not only parsimoniously offering a mere 50% wage increase, triple employer contributions to retirement benefits, and increased health care; but of rejecting his perfectly reasonable demand of a 77% pay raise and an absolute prohibition on any automation, from now until the end of time, at any Gulf and East coast port in the U.S.
Demands of that sort tend, in reasonable people, to elicit suspicions that they are being offered facetiously, or as something of a reductio ad absurdum. But Daggett is quite serious. The strike which was threatening to cut off imports all along the east coast has been suspended – owing to nothing more than political calculations wedded to the pending election – but it is far from over, and come Jan 15, Dagget will be driving his Bentley back down to the dock to imperil the American economy again.
This time the animating issue will not be wages; the union got a 62% pay raise over six years to entice them to go back to their jobs, meaning that dockworkers at the port of New York-New Jersey will be making, on average, around $500,000 a year when you include container royalties – still around $400,000 shy of what Daggett makes. No, the issue in the next skirmish will be automation. Daggett’s demand: “Absolute, airtight language that there will be no automation, including semi-automation” or a-crippling they will go.
The Luddite impulse that motivates the likes of Mr. Daggett is neither new – the term itself refers to the 19th-century English textile workers who expressed their dismay with automation by going around and smashing cotton mills – nor exempt from economic reality. Automation is not a conspiracy of industrialists to fire scads of workers; it improves efficiency and productivity – something which American ports are sorely lacking.
According to the World Bank’s Container Port Performance Index 2023, no U.S. port even ranks among the top 50. The economy desperately needs expanded port capacity, and since new container terminals are almost as rare as new LNG terminals or nuclear plants, automation is the key. You think supply chain issues are bad now, wait a few years while the union hierarchy ensures American ports are stuck languishing in the last century.
This brings to mind the year’s other grand demonstration of union leadership intransigence: hostility to Nippon Steel’s purchase of U.S. Steel. The United Steel Workers (USW), taking a page from ILA’s playbook, have vehemently opposed the sale, despite it being probably the most labor-friendly acquisition agreement in the history of corporate acquisitions. Nippon Steel has agreed to honor all existing (and generous) collective bargaining agreements, keep U.S. Steel’s headquarters in Pittsburgh, and to not close any plants or lay off a single worker until at least 2026. And they are investing some $2.7 billion into U.S. Steel’s existing plants. The alternative to this level of foreign investment? The continued hemorrhaging of American domestic steel manufacturing.
But the union brass is having none of it, preferring the sale go instead to Cleveland-Cliffs. The problem is, Cleveland Cliffs doesn’t have the capital to make the sale; and its track record from previous acquisitions suggests that the company’s commitment to protecting steelworker jobs is mixed at best even if it did. But, you see, they are a union shop. The rest is irrelevant.
As insurance, union chiefs have trotted out the national security line, the last refuge of the protectionist. That line of reasoning, such as it is, amounts to a giant non sequitur – Japan is an ally with whom we haven’t been at war for almost 80 years, and who’s allegiance and partnership is critical in helping to contain Chinese aggression in the Pacific.
Tools are available to the government to assert the public interest and attenuate the monopolistic control and extortionary obstinance of union leadership. If the dockworkers resume their strike, the Taft-Hartley Act grants the President the authority to delay it for a 90-day cooling off period. In the case of the Nippon Steel acquisition, the government could simply ignore the union’s bosses, stay out of the way, and let everyone win.
Such salvation is unlikely. Biden has publicly stated he “doesn’t believe in Taft-Hartley”; Trump, instead of taking Biden/Harris to task for this failure, prattles on about “foreign flag carriers.” And all three have voiced their unthinking opposition to the Nippon deal, intoxicated as both camps are on the populist elixir of protectionism. Such trafficking in economic superstition bodes ill for the economy, not least because it feeds the unreasonable appetites of the Harold Daggett’s of this world.
