Shift first reported on the West Coast port contract dispute between International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) back in June 2014. Eight months later, the labor dispute has reached a critical breaking point… for the U.S. economy.
A whopping 29 ports—critical entry points for billions of dollars in trade with Asia—will be shut down on the West Coast for four of the next five days, beginning yesterday. PMA is halting operations due to the fact that about 20,000 ILWU workers have deliberately slowed their work in order to cause congestion at ports, leaving food to spoil and products to sit idly in shipping containers. Continuing to remain open means PMA would have to pay union workers 50% overtime for Lincoln’s Birthday, which was yesterday, and over the three-day Presidents Day weekend, for work done at a crawling pace. The ports are open today.
The ILWU blames port slowdowns on “higher trade volume and some technical issues,” refusing to admit members have engaged any type of job action. Of course, this is the same union that threatened the lives of Washington State employees for daring to cross picket lines.
PMA has offered to raise the full-time average wages of ILWU, currently at $147,000 per year, by 14%. That, however, doesn’t appear to cut it for the union. Obamacare remains a primary obstacle to achieving a new deal. Simply put, ILWU does not want to assume the added costs of Obamacare’s “Cadillac” plan tax.
ILWU members receive extremely generous health benefits valued at $40,000 per employee. In 2018, Obamacare will impose a 40% tax on “Cadillac” health plans—those deemed too generous by the government—defined as plans exceeding $10,200 a year in value for individuals or $27,500 for families. Considering ILWU plans are worth $40,000, the union will begin to receive a hefty tax bill it is not willing to pay in 2018.
West Coast ports have been congested since November, wreaking havoc on the supply chain. According to CNN Money, “ships from Asia often need to anchor for 10 days or more outside of the ports, before they can unload their goods. That in turn is costing companies like retailers, billions of dollars.”
Retail and manufacturing groups project that a full, extended shutdown of West Coast ports would cost the U.S. economy $2 billion per day. They have “urged the Obama administration to intervene to keep the two sides at the bargaining table until a deal is done.”