Is the economic impact of the labor disputes at West Coast ports just hype?

A labor dispute between shipowners and longshoreman on the West Coast has been going on for months now. This weekend, the president dispatched labor secretary Thomas Perez to California to try to resolve it. For more, economist Christopher Thornberg joins Alison Stewart from Los Angeles.

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    In Canada today, 3,000 members of the Teamsters went on strike.

    They are in a dispute with the Canadian Pacific Railway over wages and benefits. Analysts say a prolonged strike would affect the flow of oil, lumber, auto parts and other products into the United States.

    Another labor dispute between ship owners and longshoremen has been going on for months now on the West Coast of this country. And, this weekend, the president dispatched Labor Secretary Thomas Perez to California to try to resolve it.

    For more about this, we are joined now from Los Angeles by Christopher Thornberg. He is an economist and a founding partner of Beacon Economics.

    So, Christopher, tell me, what is at the center of this dispute, and why has it gone on for something like nine months?

  • CHRISTOPHER THORNBERG, Founding Partner, Beacon Economics, LLC:

    Well, we have to remember that, you know, there is a long history of tension between the longshoremen and the various owners of the shipping companies that move products in and out of those ports.

    This time around, the contract was up for renewal. Those negotiations had been carrying on.

    I know the workers at the port have been working under the old expired contract for a number of months.

    Contract negotiations haven't been going very fast.

    And, as a result of that, there's been kind of this, if you will, guerrilla action going on between both parties.

    It's somewhat of a work slowdown by one side of the equation, and, of course, these kind of weekend-long lockouts on the other side of it. And, overall, the tensions are just getting hotter and hotter.


    What is the fight about?


    Just the same old, right, wages and benefits.

    The port workers are looking to really increase some of the benefits they're getting right now.

    And, at the same time, we know that technological change continues to alter operations at the port. And they're fighting very hard to try and maintain the overall level of employment at those ports.


    Thus far, who has been most affected by this slowdown dispute? And, if it goes on much longer, who will be most affected?


    When you sit down and really look at what has been happening at the ports, say, in terms of containers moving in and out, while there are these sort of delays, the overall volume hasn't dropped by very much at all, to be perfectly honest, by the numbers we have been seeing.


    What about farmers in the Midwest or truckers? I mean, wouldn't this affect their livelihood?


    At some level. But remember that a lot of farmers have alternative ways of getting their crops, shall we say, out and about.


    Right now, there are 29 ports affected from Southern California up to Washington State. And the backlog has been its worst in the past week, since this whole thing started.

    So, what does that mean for an average consumer?


    Not much at this particular point in time.

    You know, I realize that it's easy to make big news about these ports. You hear all the rhetoric about these being an important, almost, if you will, an artery of the U.S. economy, and if it gets cut off, we almost think about the body economy bleeding out, as the case may be.

    But those kind of views are highly overstated. Go to your local supermarket, go to your local department store, the shelves are stuffed with products and goods.

    Nobody in the United States is being denied any kind of consumption choice as a result of these disruptions. And, candidly, it would take a very long time for that to happen.

    The ports are a cheap and convenient way of moving product in and out of the United States, but they are not the only way.

    You can wheel stuff through Canada or Mexico. You could ship it through the East Coast. You can put it on planes. There are plenty of ways of moving product in and out.

    This may be a hassle and indeed even a financial hit for some companies, but on the macro sort of level, where we look at the winners and the losers, overall, it doesn't really mean all that much for the U.S. economy, or even here in Southern California, as it may be.


    Christopher Thornberg, thank you so much for sharing your analysis.


    My pleasure.

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