Imploding U.S. mortgage markets leave behind trillions of dollars in economic damage. The dollar's slide against the euro and the yuan raises fears of a currency collapse. January job losses portend recession.
To these threats to U.S. economic stability, add a new and severe one that is brewing in the conference rooms of the Cathedral Hill Hotel, a blue-collar establishment on Van Ness. There, West Coast dockworkers' representatives are devising a strategy to renegotiate a unified ports agreement with shipping companies that is scheduled to expire July 1. If the renegotiation is as fractious as it was in 2002 — when shippers attempted to break the union by shutting down 29 West Coast ports for 10 days — an extended dispute could paralyze U.S. economic activity and send financial markets tumbling.
A shutdown like the last one "carries the very real risk of triggering a sudden crisis in international financial markets," U.C. Berkeley professor Stephen Cohen, co-director of the Berkeley Roundtable on the International Economy, wrote in a 2002 paper. When I spoke with him last week, he said he'd be watching the situation this time, too: "I don't think the significance is any different. At some point, you start running out of parts, and the factory stops, and the factory that relies on that factory for components stops, and you have a chain reaction that's really rather a nightmare."
I'm the last person to wish further disaster on America — the newspaper industry, after all, is one of the first casualties in an economic decline. But I still say good on the International Longshore and Warehouse Union (ILWU), the dockworkers' syndicate started 70 years ago in San Francisco by Harry Bridges. Though the union, now representing 25,000 workers, has shrunk since jobs disappeared with mid-century innovations in the shipping industry, it still ranks among America's blue-collar royalty thanks to contracts that give full-time workers typical annual wages in the six figures.
While the upcoming labor negotiations might terrify some economists, they could also inspire victims of America's mirage economy, where decades of apparent stability and growth have been accompanied by greater poverty and uncertainty among those on the bottom rungs. During the coming hard times, America will need a labor movement that can put a scare into Wall Street — even if every once in a while the workers contribute to the risk of economic uncertainty for the rest of us.
Cohen's view isn't shared by everyone. Ken Jacobs, chair of the UC Berkeley Labor Center, says the effects of the short-term shutdown in 2002 were "grossly overstated."
"If you have a lockout that stretches over a long period, you would start seeing an impact," he said. "But the short term is much, much smaller."
The impact, however, of a labor movement emboldened by the ILWU's influence over the first link in the stateside industrial supply chain might be significant: It could provide hope for workers during the coming recession.
The mood was jovial last week at the ILWU Local 10 hiring hall near Fisherman's Wharf, where members had gathered to hear Ken Riley, president of the union local in Charleston, South Carolina. In 2002, members of the S.F. Local 10 had helped Charleston dockworkers rebuff an effort by a Danish shipper to use nonunion workers.
Clerks, crane operators, and other port workers told me they had gathered to give each other support for what they expected to be a nervous period before the spring's West Coast contract negotiations pitting the ILWU against the Pacific Maritime Association, which represents shippers.
Author Suzan Erem, whose book about the 2002 labor dispute, On the Global Waterfront: The Fight to Free the Charleston 5, has just been published, attended the meeting with other union notables to declare that international collaboration among unions could help exploit globalized trade to workers' benefit by using union clout at ports around the world.
In 2000, The New York Times ran a story about how Charleston police violently quelled a union demonstration. Lawrence Thibeaux, then-president of S.F. Local 10, was appalled, and called Riley to offer help. "It was basically what you'd call a cold call," Thibeaux said.
West Coast union members eventually raised $100,000 to help pay for the legal defense of five workers arrested during clashes between picketers and police. Meanwhile, Local 10 executive board member Jack Hayman contacted his friend Julian Garcia, leader of the Spanish dockworkers' union La Coordinadora. The two had known each other since the mid-1990s, when dockworkers worldwide supported a strike in Liverpool, England.
Garcia was glad to lend a hand. His union drafted a letter to officials of Nordana Line, the company seeking to use nonunion labor in Charleston. Hayman recalled the letter as saying, "It's not loaded professionally, and unless it's loaded properly, we won't unload this ship in Spain."
Nordana officials, apparently concerned that their company might become the target of sympathy strikes at ports around the world, decided to negotiate with the Charleston dockworkers. Before long, the union had a contract.
To me, Riley and Hayman's success seemed to raise the question: If international cooperation can bolster laborers' wages in South Carolina, why can't workers who have influence over cargo use their leverage to expand union benefits for other U.S. workers just a few steps up the global supply chain from the Oakland docks?
The modern, just-in-time global economy is often analyzed as a threat to workers, because fluid international markets mean that jobs can be outsourced anywhere. Overlooked is the fact that when companies depend on international logistics, they are at the mercy of workers who run the cargo network. "It's someplace you have great labor power," notes Ken Jacobs of the Labor Center.
The forthcoming negotiations will partly focus on how far the union's influence extends into companies' distribution networks. In the happiest of circumstances, the ILWU's influence might expand further into America's logistics system. The union's success might inspire, or perhaps even provide support for, other workers, such as the great masses of retail and service workers who toil without union protection.
In this column I've criticized unions such as the Service Employees International Union (SEIU), which has cut deals with employers at workers' expense. And I've lambasted Local 38 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry, which seems to be run as a family fiefdom for the benefit of SF labor boss Larry Mazzola.
But I make these arguments from a pro-union perspective that says America could be stronger with more powerful, honest, democratic, and, yes, wealthy unions such as the ILWU.
Steve Zeltzer, a Bay Area labor activist and videographer, tells me the ILWU is one of the more democratic unions. Hence its "caucuses" at the Cathedral Hill Hotel this week, in which members' representatives discussed which issues to press during the upcoming contract negotiations.
Many analysts nowadays associate weak labor unions with a high U.S. standard of living. This bizarre line of thinking says that cheap, imported tennis shoes, offshore tech support, and vegetables grown by workers paid less than minimum wage allow consumers a relatively high standard of living. Such logic says that if stockers, truck unloaders, and retail clerks were paid well, the rest of us would suffer such a reduced standard of living that it wouldn't be worth the higher wages.
But a paper released in December by U.C. Berkeley's Center for Labor Research and Education found that the impact on shoppers would be minimal if stores such as Wal-Mart increased workers' wages from their current near-minimum-wage status to a mere $10 per hour. The study also found that such an increase would be a bonanza for poor working families.
Additionally, Wal-Mart's status as a wage- and price-setting benchmark means that increased wages there could lift other workers' income as well. Economists love arguing about whether wages raised through collective bargaining encourage employers to hire fewer or more workers. For my part, I'll say that during the 2008 recession, workers will need power from wherever they can find it.
"I think the real challenge for the ILWU is following the work," Jacobs said. "Unions such as the ILWU and the Teamsters really are looking at the supply chain in terms of organizing."
Union organizing director Peter Olney says the talks will focus in part on efforts by shipping and other companies to move their cargo operations inland. This could either be a disaster for unions — as jobs are steadily removed from their orbit — or a boon, as union influence possibly moves deeper into the supply chain.
Plans for a so-called Southern California Logistics Airport in Victorville, which would place rail, air, and other unloading facilities about 100 miles inland from the Port of Long Beach, are part of the shipping industry's intent to relocate work currently done at West Coast ports. Shippers could theoretically use such ports to eliminate union jobs by moving inland work such as freight container dispatching and cross-country train loading. "There's knowledge-based technology work, but there's also good old-fashioned muscling and hustling of cargo," Olney said.
Pacific Maritime Association spokesman Steve Getzug said this year's contract negotiations won't be as contentious as they were six years ago, when shippers sought to reduce portside jobs by streamlining cargo operations. "With an early start, there will be the possibility of finishing without the disruptions of 2002," he said. "We're looking for an agreement that allows us to manage record cargo volumes as efficiently as possible."
ILWU communications director Craig Merrilees, however, is holding off on announcing a labor-management love fest. When I mentioned recent stories in the Journal of Commerce predicting peaceful negotiations, Merrilees said it was far too early to speculate about the outcome: "We won't really know until there's been an effort to sit down and see if we can resolve whether good jobs are going to be a priority."
If not, and if the two sides hold out past July, a port stoppage could create catastrophe. "The first day doesn't cost you much; neither does the third or fourth," Cohen said, adding that there comes a point when factories begin running out of supplies. "By the 30th day, my God: it's a grand snowball, and at some point the snowball becomes an avalanche."
I'm hoping that day never comes. If it does, I'll be rooting for the dockworkers.