While unions and management in different industries have basically the same legal rights to strike or lock workers out, the real bargaining power each side has depends on the specific structure of their industry.
This is just one of the lessons in labor economics we’re seeing in the dispute that closed the West Coast ports.
Unions are in a strong position when they can seriously hurt the earnings of employers who have at least some degree of monopoly in what they do. But having too much muscle in a highly visible sector can be dangerous because it attracts public attention and invites government action.
In any industry, management possesses the power to deprive workers of their earnings by locking them out of the plant. Since the early years of the Reagan administration, management also has had the de facto legal right to hire replacement workers.
Unions always can strike and that hurts company profits, particularly when fixed costs are high and interest must be paid on expensive machinery standing idle. But the degree of hurt inflicted by a strike also depends on what competitive pressures affect the employer.
Both the management and union in the port dispute know they enjoy some degree of monopoly. Much of our commerce is with Asia. All 29 ports on the West Coast are involved. Small quantities of cargo can be rerouted through Mexico or Canada or through the Panama Canal to Gulf Coast or East Coast ports. But these do not have the capacity to take over much West Coast business, and costs would be substantially higher in any case.
This degree of monopoly power puts both sides in a different situation than what occurred in some familiar Minnesota strikes. When Local P-9 struck Hormel in Austin, Minn., in the late 1980s, or when various unions struck or threatened to strike Northwest Airlines, it was apparent that if either side was too recalcitrant, the company involved could lose significant market share in the short and long run.
But on the West Coast, both the port operators and the dockworkers know that they can dig in their heels and not see the business go somewhere else. It then comes down to which side can take the pressure longer — the ports and shippers that have to pay interest on expensive infrastructure or the workers who go without paychecks. The fact that this has been a lockout rather than a strike may be some indication that management is willing to take some hits. Or it may just be a tactic to give that impression.
Government intervention is the wild card here. In contrast to the strike in Austin, which had no impact on the national economy, the port lockout affects many other businesses and households.
That invites government intervention such as President Bush’s invoking the 80-day back-to-work order of the Taft-Hartley Act. As the media have noted, the act has not been used for 25 years, although similar orders under other statutes were used against locomotive engineers and airline pilots in the Reagan and Clinton administrations.
In the case of the West Coast ports, public opinion ultimately has some weight.
The workers are well paid, which diminishes public sympathy. With average earnings higher than $100,000, they are not downtrodden Norma Raes. But the fact that they are seeking guarantees of union status for new jobs rather than higher wages may help them. And, the fact that the work stoppage was the result of a lockout rather than an overt strike also puts some of the onus on management.
© 2002 Edward Lotterman
Chanarambie Consulting, Inc.