Ask an expert: How could labor strikes affect the economy and the election?

UNIVERSITY PARK, Pa. — Dockworkers along the U.S. East and Gulf coasts went on strike on Oct. 1, shutting down ports from Maine to Texas. Penn State News spoke with three faculty experts to discuss what the shutdowns mean for consumers and for the Democratic and Republican presidential tickets:

Brent Moritz, associate professor of supply chain management, studies supply chain and operations management.

Steve Tracey, professor of practice and former executive director of the Center for Supply Chain Research, researches supply chain strategic planning and implementation.

Paul Clark, professor of labor and employment relations, studies labor unions, strikes and union-management partnerships.

Q: How long could the dockworkers’ strike last, and what are the possible economic implications?

Moritz: I do not think anyone knows how long it will last. However, if it lasts more than a few days, it will begin to be widely disruptive across a range of industries and products. Each day of the disruption will take about five days to clear throughout the U.S. supply chain, so if the strike lasts a week or two, we could see disruptions lasting into early 2025. 

The first places it will be seen is in the imports of fresh produce – about 75% of bananas come through the East Coast ports, and one cannot simply tell the bananas to stop growing, nor is it easy to re-route fresh fruits from specialized ports such as Wilmington that are equipped to deal with them. Similar issues will happen with other fresh products from the Caribbean and Latin America. The import and export of automobiles and auto parts will cause additional economic dislocation. Like bananas, there are few ways to re-route those auto, and component, imports and exports. The Port of Baltimore handles about 650,000 vehicle imports per year, and about 175,000 exports per year. The Port of Brunswick (Georgia Ports) handles between 500,000 and 600,000 auto imports per year and about 200,000 exports per year. It is just not possible to re-route that many vehicles. 

In economic terms, the Port of New York and New Jersey handled about $271 billion of goods, and the Georgia Ports handled about $174 billion of goods per year in 2022. So, that means disruptions in New York and New Jersey of about $750 million per day, and for the Georgia Ports about $500 million per day in imports and exports.

Q: Why are the dockworkers striking? How might the federal government intervene?

Tracey: At issue are two things. The important one, which is the main issue to resolve, is the future of automation on U.S. ports. U.S. port infrastructure is well behind its global peers, and automation is one of those key components. The International Longshoremen’s Association (ILA) sees this as a job-killer and, while that is debatable, it is the main concern on both sides. The second concern is wages, which in the context of the first concern is a non-issue. The U.S. Maritime Alliance (USMX) can give the workers any amount they want if they agree on port infrastructure and automation upgrades. That is the important thing to pay attention to. And, it has to be resolved.

That said, how long the strike will last depends on the implementation of the Taft-Hartley Act — my bet is the Biden Administration will change their mind if it looks like it has any material effect on the economy, which could take a while, or if it looks like it is affecting the polls for Harris’ campaign negatively. Or, it could depend on if the ILA and USMX can make meaningful progress in negotiations.  

Clark: Members of the ILA perform critical work in the United States’ supply chain. Their strike threatens to halt shipments of a wide range of consumer and commercial goods through major eastern and southern ports. If the strike continues for more than a few days, it could result in shortages of goods just as the holiday shopping season begins.

The president has a legal mechanism he could use to order the workers back to work to protect the economy, but that would be seen as an unfriendly act by the American labor movement that Joe Biden has long supported. The strike also has ramifications for the 2024 presidential election as it could adversely impact the nation’s economy. That would likely hurt Kamala Harris’ chance of capturing the White House.