Over the past half century, the United States has experienced relatively few labor strikes. In the private sector, union membership has been on a steady decline. Most disputes have arisen from public sector unions, with the prolonged school closures during 2020-2022 serving as a testament to the influence of teacher unions.
However, the catastrophic strikes currently unfolding at ports along the East Coast and the Gulf of Mexico present a unique situation. For the first time since 1977, dockworkers in these regions are on strike, with the International Longshoremen’s Association (ILA) demanding significant wage increases and improved benefits.
Even a week-long strike can result in container and cargo pile-ups, leading to reduced supplies, putting pressure on the retail industry and driving up prices. Extended strikes could have severe consequences, including critical shortages and potential rationing. Democrats hope for concessions from management, while Republicans lean towards using federal law, the Taft-Hartley Act, to force everyone back to work.
The strike may come to an end soon or last for several months. With elections looming, the dramatic situation at the ports could easily be viewed as a political show. A swift return to work undoubtedly benefits the ruling party, which will garner support. Conversely, a prolonged strike could spell political disaster and convince onlookers that the economy is fragile and failing.
The bigger question is why all of this is happening now. For decades, port operations have been smooth without any issues, yet suddenly there is significant worker anger demanding a new long-term contract with substantial wage increases.
There are key factors at play along with more minor ones. The primary factor is inflation, as workers’ wages have not kept pace with it. Adjusted for inflation, workers’ wages are essentially the same as they were in 2019. However, accurate data for adjusting inflation is lacking, as the U.S. Bureau of Labor Statistics does not provide this information.
In real-life terms, the cost of living a comfortable life has skyrocketed, far outpacing the pay of the average worker. Official inflation data does not account for rate hikes, misjudges healthcare costs, and fails to represent actual expenses like groceries, rent, or most other major expenditures. Thus, even with wage adjustments for inflation, workers’ real wages are lower than they were five years ago.
The unions state emphatically, “Inflation has completely eroded any raises and hourly wages. Everything is more expensive than six years ago. Our members struggle with paying mortgages, rents, car loans, groceries, utility bills, property taxes, and in some cases, children’s education, due to the greed of the United States Maritime Alliance (USMX), which deludes itself into profits exceeding those of the people.”
In an industry where salaries are negotiated by unions and management, high inflation inevitably leads to worker dissatisfaction, ultimately resulting in old-fashioned strikes not being surprising. The same issues are now affecting unions in all private sectors, such as those in the music industry.
The socioeconomic gap between workers and management has also sparked strong dissatisfaction. During the lockdowns of 2020-2021, workers were furloughed, relying on government aid to get by, but these funds were inadequate to cover their bills. Meanwhile, management continued to receive their full salaries, even obtaining hefty raises from the billions of stimulus funds received by corporations.
The lockdown world gave rise to the entire framework in which modern unions operate. They advocate for workers to unite, take collective action, and strike when necessary to prevent excessive concentration of power by management. At its core, the idea is that there is an inherent conflict in capitalist society, where capitalists extract surplus value from workers, who despite keeping the business running, do not receive their due rewards.
This is the fallacy of Marxism, generally not true. Labor contracts are voluntary agreements, and capitalists/business owners typically earn more profits because they take on more responsibility for outcomes. Capital must pay out wages and salaries long before the final product is sold and generates revenue, meaning all capital decisions are fundamentally speculative. The benefit for workers is having more security without shouldering enterprise risks.
All of this assumes a well-functioning, dynamic free market where both businesses and workers compete. Everyone works under terms of employment agreed upon by both sides, fostering cooperation. In U.S. history, the only time when unions gained substantial power over production was in the 1930s and 1940s when government intervention supported unions against managers and shareholders.
This is also how free markets operate.
However, what happened in 2020 and beyond has deviated from this model. All businesses suddenly fell under central planning constraints, where the rich and powerful enjoyed more privileges than workers and had their right to labor for their families stripped away. Meanwhile, another class of workers – here we may refer to them as “peasants” following Marx – found work in delivering goods, repairing infrastructure, and caring for the sick. The result has been stark class divisions, mirroring the Marxist model perfectly: elites versus workers, the privileged versus the marginalized.
In this scenario, the ancient Marxist lies about class conflicts become all too real. It truly is the ruling class against the workers, the rich against the poor, the privileged against the marginalized. Class conflicts have been imposed by top-down decree, accompanied by new terminology. For example, we use terms like “essential” and “non-essential workers,” “big businesses” and “small businesses.”
The consequences of this divide are severe and ongoing. Inflation exacerbates this issue, as the downward purchasing power significantly impacts workers living on wages, while the affluent see far lesser effects. Hence, these dockworkers are now focusing on the rise in their bills, food prices, rent, and insurance costs, noticing then the performance of management, igniting their anger.
One can condemn them, pointing out they earn more than fast-food workers, but when you consider the impact of a 30% to 50% decline in purchasing power over four years, the strike doesn’t seem unreasonable. Most laborers are powerless in the face of this, but union members have a choice.
The demands of the unions become a critical issue as shipping companies are facing real economic pressures after two years of disruptions, with the restructuring of global supply chains only adding to the financial challenges. In some ways, this strike is happening at the worst possible time, as management truly cannot meet all the union demands.
Dockworkers are also concerned that technology is reducing their hours and potentially displacing their positions. Many loading and unloading tasks can now be performed by machines, a fact union leaders are acutely aware of. While this concern is valid, rejecting technological advancements is not a practical long-term choice and is something that must be faced eventually.
We will have to wait and see how negotiations progress following their commencement, but shipping companies would do well to rethink their management labor costs. Without insight into the specifics of the industry, it is certain that the management structure is overstaffed and overpaid.
On the other hand, what is certain is that these unions are known to have a mix of characters, with the upper echelon living lavishly, owning Bentleys and yachts, while claiming to represent the interests of members who pay high membership fees. We are unsure to what extent this strike genuinely represents the members’ will. Things are always much more complicated than they appear on the surface.
Regardless of how one views this strike, what we are witnessing here is the ongoing aftermath of the catastrophic measures taken in response to the pandemic, disrupting regular business operations and injecting $6 trillion in fake currency to handle this disruption, ultimately leading to inflation and diminishing the actual wages of those working. Few can connect these dots, yet the logical trajectory is unmistakable.