Labor strikes reveal strengths, weaknesses

In the end, the labor strike was just eight days long, but for the ports of Los Angeles and Long Beach, an eight-day strike idles a large number of workers and ties up a lot of cargo. The dispute largely centered around the alleged outsourcing of jobs, an accusation brought by the International Longshore and Warehouse Union Local 63 Office Clerical Unit.

The group claimed that, through attrition, its jobs were being transferred to lower-paid employees in other states and other countries. At first blush, it seems that these workers a paid handsomely; it has been reported that their compensation averages $165,000 per year. Transferring these jobs to people who would settle for a little less pay makes sense. Dig a little deeper, and it comes to light that these aren’t run-of-the-mill clerical jobs. These are specialized, logistics-oriented positions. Considering the take-home pay is less than $85,000 per year, and factoring in the cost of living in Southern California, the pay seems like it’s respectable but not lavish.

In any case, it wasn’t about the pay; it was about job security. The strike has been settled, a new contract is in place and awaiting ratification, and it doesn’t allow outsourcing.

Where did the clerks’ leverage come from? Two sources. First, their 800-member union was backed by the 10,000-strong International Longshore and Warehouse Union, which shut down the majority of the berths. Second, the Los Angeles and Long Beach ports move the equivalent of 7.9 million and 6.1 million shipping containers (a quantity of goods formally known as a TEU, or twenty-foot equivalent unit) every year, for a total of 14 million annually. The strike meant the stoppage or re-routing of more than 38,000 TEUs per day. How much is that in dollars? About $1 billion worth of cargo moves through the ports every day.

The workers at Hostess Brands, maker of the venerable Twinkie snacks and Wonder Bread, weren’t quite so lucky. The strike conducted by the Bakery, Confectionery, Tobacco Workers, and Grain Millers’ International Union (BCTGM) apparently was the last nail in the coffin for the company, which was financially unhealthy for some time; it emerged from the longest bankruptcy in U.S. history, five years, in 2009.

Obviously the baked goods industry is much more competitive than the transportation industry (although some would argue that there is no substitute for a Twinkie, thereby granting the company monopoly status). It’s hard to make much money with competitors breathing down your neck, and company management claimed it was burdened by legacy costs and restrictive work rules.

However, reported 75- to 80-percent pay increases for Hostess executives in 2011 didn’t exactly reinforce this position, and eventually the workers walked out. Management wasn’t just bluffing; the company was financially too weak to withstand a strike. The company went into bankruptcy on Nov. 16 and it is planning to liquidate.

Any discussion of a labor strike these days conjures up the Professional Air Traffic Controller Organization (PATCO) strike in 1981.  The union was still new, just 11 years old, when it called a strike. It sure seemed to be in a strong position. The union had backed Ronald Reagan’s campaign to win the presidency; they thought he’d back their efforts to bargain for better working conditions, better pay, and a shortened workweek. It goes without saying that directing aircraft is an extremely specialized skill, sort of an all-or-nothing trade with no real skill spillover from any other industry. Who would replace the striking air traffic controllers?

Despite holding the high cards, the striking controllers were in violation of the law, and Reagan wouldn’t stand for it. When he ordered them back to work, about 90 percent held out, but Reagan didn’t blink. The union was decertified and the striking workers lost their jobs and any chance of future employment with the federal government.

It’s fair to say that decades ago unions did quite a bit to transform the American workplace. They bargained for improvements in worker safety, working conditions, workday length, compensation, and job security. Many of the critical issues are now a matter of law, and union membership has dwindled over the decades, sapping unions’ power. The few issues still up for negotiation concern pay, benefits, and job security. As global competition chips away at formerly secure jobs and good pay, unions should be careful about ordering a strike, a powerful but occasionally clumsy tool. The combination of specialized workers in a reasonably lucrative field with some bargaining power worked out for the logistics employees; not-so-specialized workers in a competitive industry walking off the job when the unemployment rate is around 8 percent was a bad idea. But you don’t have to take my word for it—just ask any former Hostess employee.