Behind-the-scenes White House arm twisting got ILA wage deal done

If the Biden administration did indeed force the tentative contract deal ending last week’s longshore strike, how exactly did it happen?

In other words, what did the White House chief of staff tell ocean carrier group CEOs on a conference call at 5:30 a.m. Washington time on Oct. 3 that within hours resulted in a substantial increase in the wage offer made to the International Longshoremen’s Association (ILA), ending the strike after three days?

Some have speculated that specific issues were raised that persuaded at least some of the group CEOs to direct their representatives on the United States Maritime Alliance (USMX) to boost their offer of a pay increase from 50% to 62% over the course of a new six-year contract.

The White House has leverage to deploy, such as being able to increase scrutiny of or even reject foreign acquisitions of US marine terminals. The Department of Justice for decades has made no secret of its dislike of ocean shipping alliances, including the remnants of antitrust immunity, chiding any vote by the Federal Maritime Commission (FMC) that allows massive vessel-sharing agreements to take effect rather than seeking a federal injunction to block them.

Relief for White House, Harris campaign

Whatever was said on the call was enough to get the wage increase offer high enough for the ILA to call off its strike and, to the relief of the White House and Kamala Harris, take the issue off the table as a liability for Democrats in the presidential campaign.

The Washington Post reported that White House chief of staff Jeff Zients delivered a “stark ultimatum” to the carriers, saying he planned to inform President Joe Biden that a deal had been reached, even though the carriers had agreed to “no such thing.”

In doing so, he placed the ball squarely in the carriers’ court to either go along with the “deal” Biden would soon announce to end the strike or to publicly contradict him.

The latter was not an option. It would have put the carriers in the risky and ultimately impossible position of being an active player in the election just over a month before the vote.

Refusing to give the ILA the raise it wanted to end the strike, with the result that the stoppage continued and economic damage piled up while Biden and the Harris campaign took the blame, could possibly, depending on how the cards fell, have resulted in the carriers themselves being blamed for determining the outcome of the election.

That is the last thing a group of non-US based ocean carriers, who have few political friends in the US to begin with, would want. A senior carrier source said container lines would not want to be seen as meddling in any way in US politics.

Taking the logic further, with Democrats making the case that the election of Donald Trump could spell the end of democracy in the US, getting anywhere near such a radioactive issue — if Trump prevailing was indeed the outcome — would be to step into dangerous territory indeed. Carriers wanted no part of it.

Carriers live to fight another day

In the end, they had no choice but to accept their fate by giving the union an historic wage increase and living to fight another day. That day could come soon enough; carriers have called the deal “provisional” pending resolution of other issues including automation, royalties and job jurisdiction that will still need to be negotiated ahead of the new Jan. 15 deadline.

But the ILA at the very least got most of the increase it was seeking, validating a political strategy set into motion months ago by the union, which walked away from negotiations in June and never returned. Biden, in announcing the reopening of the ports, said “collective bargaining works.” But in reality, at no time since June — up to and including the moment the deal to end the strike was announced — did USMX and the ILA meet face to face despite repeated attempts by the USMX to do so.

The ILA calculated correctly that Biden, an overtly pro-labor president, would never invoke the Taft-Hartley Act to force the union back to the table, which would have gone against his values and history and alienated organized labor in the heat of the presidential campaign. They also reasoned, correctly, that Biden and his team would bring intense pressure to bear on ocean carriers by conveniently assigning blame to them for any strike-related port congestion and inflation, as had been done during the pandemic.

In the end of round one — pending resolution of the other issues — the winners were the union, the White House and the Harris campaign. The price will be paid by carriers and, to the extent they can pass the higher costs along, US importers and exporters.

“I want to thank you for what you did for my union to help us achieve record wage success in negotiations [with the USMX],” ILA President Harold Daggett wrote to Biden on Oct. 7. “The ILA is grateful for your words and deeds.”

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