Striking workers carry placards Tuesday at the Port of Los Angeles. (ROBYN BECK, AFPGetty Images )
Big, round numbers always get people's attention. Numbers such as $1 billion, which has been bandied about as the economic loss per day nationally from the eight-day strike that shut down most of the ports of Los Angeles and Long Beach.
That figure makes it sound as if several hundred port workers, members of Local 63 Office Clerical Unit of the Longshoremen's union, jeopardized the entire economy of Southern California, if not the entire nation. The corollary is How dare they?
So let's put that figure in some context. That's important because until you do, you can't put the strike — which shut down 10 of the 14 container terminals at the ports — in context. Late Tuesday night, union leaders were voting on a framework for an agreement. If the votes fail, federal mediators are on hand to oversee continuing talks between the workers and 14 shipping lines.
But the billion-dollar estimate of daily losses is bogus. Confusion over the value of cargo vs. the cost of the strike has been widespread in the news media, including The Times. It was also passed around by the National Retail Federation, a Washington lobby that urged President Obama to get involved.
Where the figure came from is hard to pin down, but it may be a misunderstanding based on an accurate measurement of the value of containerized cargo that comes into the ports every year. That value has been approaching $390 billion this year, which makes the per-day average, rounded off, about $1 billion.
But the cargo reaching Los Angeles/Long Beach over the last eight days hasn't been tossed into the sea as a dead loss. Much of it has been diverted to other West Coast ports or to the Panama Canal. The Marine Exchange of Southern California, which tracks vessel traffic, says 20 ships have been rerouted, leaving 13 container vessels at anchor as of Tuesday.
The idled vessels contain about $650 million in cargo, a port spokesman told me. Some cargo is still making its way across the Pacific, some at a slower pace ordered by shippers hoping to stall its arrival until the strike is over.
So what is the cost of the strike? So far, it's mostly localized, not nationwide. The strike has affected, in the first place, port workers who are idled because they're not crossing the local's picket lines or because cargo traffic has slowed to a trickle. Port officials say the lost wages have come to about $7 million a day among all workers in the ports' complex, including outside contractors such as truck drivers.
The affected port workers include as many as 5,000 longshoremen, who are paid about $41 an hour, and about 30 crane operators, who get about $100 an hour. The striking workers number about 450, out of the 600 members of the union local employed at the ports. (The other 150 work at terminals that were not struck.) The strike is cost them their $40.50 an hour as long as they stayed off work.
Then there's the economic ripple effect of shutting down more than two thirds of the largest container port in the nation. Port officials say the economists in their planning unit put that at $540 million a day, but their reasoning is cloudy.
Jock O'Connell, an expert on international trade who watched the strike closely, says that after the first few days of any such strike, the ripples start spreading and costs grow exponentially.
"Trucks without loads to deliver, warehouses without cargo coming in — as the number of boxes declines, the people there get sent home," he says. Also at risk are manufacturers who have made a cult of just-in-time parts deliveries; after more than a week without deliveries, their inventories become exhausted and shifts shut down.
The retail federation says most of its members stocked up for Christmas weeks or even months ago, but the work stoppage may have deprived some of them of last-minute deliveries of hot items.
Still, in terms of the national economy, $540 million is a tiny blip — each day at that rate is the equivalent of roughly 3 thousandths of a percent of U.S. gross domestic product, which is $15.8 trillion. That doesn't mean that some businesses and workforces haven't been more seriously affected.
That brings us to what has been at issue in this strike and how it fits into the ports' recent history. The short description of the work stoppage is that it has been an action by about 650 "clerks" making $160,000 a year. This is wrong on two levels.
First, the workers are classified as clerical staff, but they're not paper pushers out of a Dickens novel; it's more accurate to think of them as trained logistics managers who track cargo from its home port to these shores, then through customs and onto the domestic transport network.