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Reviews | Expired labor contract at West Coast ports could further aggravate President Biden’s inflation concerns

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If President Biden’s dedication to organized labor and his commitment to fighting inflation come into conflict, which side will he choose?

It’s a choice he’d probably prefer not to make, but he might have to soon. This is because the employment contract of 29 ports on the west coast, which covers 22,000 dockworkers, expired during the weekend.

For now speak Continue. But if a major work stoppage or slowdown results, it could wreak havoc on the country’s already fragile supply chains, with potentially catastrophic consequences for inflation and the economy.

Also, of course, for the Democrats’ midterm chances.

It is not a remote risk. The last time this contract was renegotiated, from 2014, talks broke down and work slowdowns led to costly shipping delays. The Obama administration had to to intervene. Labor disruptions (strikes, lockouts, slowdowns) have also occurred West Coast Port Contract Negotiations in 2002, 2008 and , 2012.

Today, the stakes are even higher, with inflation at its highest level in 40 years. Both parties to the negotiations presumably know that further port disruptions could be disastrous – a reality that strengthens the position of workers. Truckers, retailers, farmers and others who depend on these ports for their livelihoods are already deeply worried on the prospect of more traffic jams.

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And it’s still unclear how Biden might react if things go wrong. He said tackling inflation was his “top national priority.” So, will he still support his longtime political allies if they play hardball and take actions that make inflation worse?

Biden often promises to be the “most pro-union president in American history,” including during a recent speech to the AFL-CIO. He touts his support for organizing efforts among members of congress and the workers of Major companiesand his efforts to pass the Protection of the Right to Organize Act, among other attempts to improve working conditions and wages for American workers.

Biden also often mentions his debt of gratitude to the work organized for accompany him over the years. Like him said almost all time he speaks in front of union crowds, including audiences of tank tops“People, there’s an expression where I come from: ‘You go home with those who brought you to the dance.’ You all took me to the ball.

At times, there is no tension between Biden’s support for unions and his efforts to lower the cost of living. For example, his efforts to lower drug prices would help most Americans, including union members.

But in recent times, as might be the case in the event of a port explosion, these goals have often been at odds. Almost every time, the Biden administration has sided with the workers.

For example, unions generally want more trade protectionism, including Trump-era tariffs on steel and aluminum, washing machines, solar panels and Chinese consumer goods. Unions have also pushed for tougher “Buy America” requirements, which require the government to source goods and services from American suppliers, even when they are significantly more expensive than foreign-made alternatives.

Both types of measures end up increasing prices. The Peterson Institute for International Economics recently valued that a package of “doable” trade liberalization measures, including measures such as the repeal of tariffs and the relaxation of “Buy America” ​​requirements, could reduce inflation by up to 2 percentage points.

So far, however, Biden has chosen to keep President Donald Trump’s tariffs in place, or swapped them for different trade restrictions. He also has tightened Buy America requirements.

There are other tools the administration could deploy to modestly reduce price pressures. However, these are also things that unions vehemently oppose; so far (coincidence or not), the administration has chosen not to prosecute them.

These include, for example, the suspension of the Jones Act, which requires that all ships transporting goods between US ports be built, owned, crewed and fly the US flag. Due to the shortage of these vessels, the restrictions increase the prices of maritime transport – including, by the way, oil and petroleum products. JPMorgan recently estimated that suspending the law would reduce approximately 10 cents per gallon on gasoline prices.

Similarly, the administration could resolve bottlenecks in the legal labor-based immigration system or increase the number of seasonal visas available to employers. Both of these measures could help alleviate labor shortages, which contribute to inflation. Again, unions generally opposed increasing employment-based visas.

To be clear: we don’t necessarily know that the administration chooses not to use these inflation-fighting tools. because it is to rely on organized work. Biden officials might have other motivations (political or political) for these actions.

But if the port negotiations go south, the choices Biden faces — between an important political ally and a broader economic crisis — could be far more difficult and painful, for him and for the country.