Living Economics

Globalization has eliminated a lot of American blue-collar jobs by offshoring labor-intensive manufacturing jobs to lower-cost countries. But not all blue-collar workers have been adversely impacted. Strategically located at the chokepoints of global commerce, longshoremen have greatly benefited from globalization. At an average annual wage of $120,000, the 10,000-strong American longshoremen on the West and East Coasts are the highest-paid blue-collar workers in the U.S. (WSJ 7/26/2006).

Globalization means that the volume of trade has grown much faster than the growth of global output. In the decade ending in 1996, for example, the volume of trade grew at twice the annual rate of global output (Economist 11/15/1997). If longshoremen productivity at cargo handling stayed at the early 60's level, the cost of shipping would have been prohibitive and global trade would never have gone very far. But increasing labor productivity required the introduction of labor-saving equipment. The ability of unionized longshoremen to block labor-saving technological improvement meant that labor had to be compensated for the potential loss of jobs. The threat of job losses was real. For example, shipping cargo in standard-sized metal containers meant that ships could be loaded by a few dozen longshoremen using container cranes rather than hundreds.

The choke power of unionized longshoremen was also fatal. The 10-day labor lockout in October 2002 on the West Coast cost the U.S. economy an estimated $1 billion a day as ships idled offshore and trucks were backed up for miles on land (WSJ 7/26/2006). The lockout ended when longshoremen agreed to let management introduce labor-saving optical scanners, remote cameras and geo-positioning satellites to expedite the tracking of containers in ports and on the high seas. In return, longshoremen's annual pensions would rise by almost 60% to $54,000 after 30 years of service and their union would maintain jurisdiction over many jobs it feared would become nonunion (NY Times11/25/2002).

The fast growth of container volume made this trade-off affordable. The marine clerks that were displaced could be easily absorbed as crane drivers and operators of other equipment due to the larger number of containers that need to be tracked. In 2003, the net increase of longshore positions represented 6.4% of the ILWU (International Longshore and Warehouse Union on the West Coast) workforce (Journal of Commerce 4/12/2004).

The success of the longshoremen in getting a big piece of the globalization pie, however, cannot be easily duplicated by other blue-collar unions. Their unique advantages are due to the following reasons:

• They are located at the chokepoints of global trade;

• Longshoremen are organized over the whole shipping industry along the West Coast and East Coast;

• Intermodal transportation means that the trucking and the railway unions can lend moral support to the Longshoremen;

• The solidarity among longshoremen unions internationally also strengthens the bargaining strength of any domestic union;

• The fast growth of trade makes it easy to absorb the labor displaced by labor-saving technology;

• The huge improvement in labor productivity from labor-saving technology makes it affordable to pay the Longshoremen more.