April 15th, 2015 2 Minute Read Report by Diana Furchtgott-Roth

Held Hostage: U.S. Ports, Labor Unrest, and the Threat to National Commerce

Executive Summary

America's economic growth depends on ports for a competitive edge in exports and for the flow of imported goods that bolster Americans' paychecks. The costs incurred during slowdowns at U.S. ports, recent and otherwise, highlight the considerable importance of ports to the U.S. economy and the need to reform U.S. port labor law. Indeed, if America is to reap the benefits of the two major new free-trade deals currently under negotiation, the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP), U.S. ports must be open for business.[1]

At present, port employers—container carrier operators, marine terminal operators, shipping associations, and port associations—are represented on America's 29 West Coast ports by the Pacific Maritime Association (PMA); and on the country's 14 major East and Gulf Coast ports by the U.S. Maritime Alliance (USMX). West Coast port workers are represented by the International Longshore and Warehouse Union (ILWU); and on the East and Gulf Coast by the International Longshoremen's Association (ILA).

With international trade now a substantial and rising component of U.S. GDP, port slowdowns and shutdowns present a growing threat to national commerce.[1] During the West Coast port slowdown of 2014–15, apple farmers lost $19 million per week, while certain foreign companies had to air-freight goods into the United States.[2] In 2002, an 11-day West Coast port lockout cost the U.S. economy $15.6 billion.[3] Slowdowns prevent shippers and truckers from operating, which raises costs for U.S. importers and exporters. Higher costs are passed on to U.S. consumers and make American exporters less competitive. Further, when foreign clients replace U.S. exporters with cheaper, more reliable alternatives, it can be difficult, if not impossible, to later restore such relationships.[4]

In 1926, Congress passed the Railway Labor Act (RLA) to ensure that commerce was not disrupted by labor disputes between railroad employee unions and management. The House of Representatives' Committee on Interstate and Foreign Commerce noted that the law would "insure to the public continuity and efficiency of interstate transportation service, and to protect the public from the injuries and losses consequent upon any impairment or interruption of interstate commerce through failures of managers and employees to settle peaceably their controversies."[5] In 1936, Congress expanded the RLA to cover unionized airline employees. Today, when disputes in the U.S. railroad and airline industries arise, they can be resolved rapidly without loss to commerce. For example, in a 2011 dispute between railroads and employees, President Obama set up a Presidential Emergency Board that successfully negotiated an agreement.

Ports are no less critical to U.S. infrastructure and trade—and should be governed in the same manner as America's railroad and airline industries. Congress and the president should not allow millions of jobs and hundreds of billions of dollars in income to be held hostage when labor contracts expire. It is time to update U.S. labor law by putting the country's ports under the RLA's jurisdiction.


Are you interested in supporting the Manhattan Institute’s public-interest research and journalism? As a 501(c)(3) nonprofit, donations in support of MI and its scholars’ work are fully tax-deductible as provided by law (EIN #13-2912529).