Port Strike: Massive Political & Economic Ramifications
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📌PORT WORKERS STRIKE DAY 3: THE FIGHT AGAINST AUTOMATION AND THE POTENTIAL IMPACT ON INFLATION
After vowing revenge for the killing of several top terrorist leaders, Iran launched approximately 180 ballistic missiles at Israel on Tuesday. Sirens rang over the entire country, sending millions of Israelis into bomb shelters. No Israelis were killed or seriously injured, while one Palestinian man in the West Bank was killed by Iranian missile shrapnel that fell on him.
President Biden said the attack appeared “to have been defeated and ineffective” adding that “the United States is fully, fully, fully, supportive of Israel." Israeli officials have now vowed to retaliate for the attack.
WHAT HAPPENED
US and Israeli intelligence flagged the attack hours before, however Iran used their most advanced missiles and launched them in a barrage, appearing to try to overwhelm Israeli air defense systems.
Israel’s defense system, which includes the “Iron Dome” anti-projectile system, as well as Arrow defense units, intercepted many of the incoming missiles. Some landed in central and southern Israel, however.
President Biden’s National Security Adviser, Jake Sullivan, said there was “meticulous joint planning in anticipation of the attack.”
The US Navy helped take down about a dozen Iranian missiles.
US officials said Jordan allowed American forces to fly over its airspace to shoot down Iranian missiles.
Iran's Revolutionary Guard Corps said the assault was in retaliation for recent Israeli killings of terrorist group leaders like Hezbollah’s Hassan Nasrallah. Iran is falsely claiming to have hit 90% of its targets. It appears they actually didn’t hit any of the Israeli military sites they claimed to have targeted.
FLASHBACK: Back on April 13, Iran launched about 300 drones and cruise missiles at Israel. Israel, the US and other allies shot them down before they could do damage.
Iran said the drone attack was retaliation for an Israeli strike near the Iranian consular building in Syria that killed two Iranian generals and five officers.
Israel’s counterattack— striking limited targets in Iran— was mostly symbolic.
Most analysts say Israel’s response will be more consequential this time around. Why? Yesterday’s missile attack from Iran was more severe, with Iran using ballistic missiles that could inflict serious damage. It’s also now the second time Iran has attacked Israel directly.
Israeli Prime Minister Benjamin Netanyahu at his security cabinet meeting after the attack said that Iran made a “big mistake… and it will pay for it.” Here’s more of what he said:
“The regime in Iran does not understand our determination to defend ourselves and our determination to retaliate against our enemies.”
“They will understand” that “whoever attacks us, we will attack him… We will do everything necessary to continue this trend, to achieve all the goals of the war, primarily the return of all our hostages, and to ensure our existence and our future.”
What’s next: The US is still trying to urge restraint and prevent a wider war, but at this point, Americans have been pretty ineffective. Iran, up until now, has been trying to play both sides: Be the big player in the Middle East with its terrorist proxies (Hezbollah, Houthis, Hamas), but also not start a full-fledged war.
It’s not clear how Israel will respond. Some possibilities: Given that no Israelis were killed, Israel could, like in April, respond with a target strike that’s more symbolic. Israel could also take military action against an Iranian oil facility or military installation. Or, Israel could go even further, potentially striking Iran’s nuclear facilities.
About 45,000 East and Gulf Coast dockworkers, or longshoremen, head into their third day on strike Thursday, as they call for pay raises and try to prevent automation and robots at major ports.
No negotiations are currently scheduled between the two sides: The International Longshoremen's Association (ILA) workers union and the United States Maritime Alliance employer group, which represents the foreign ocean carriers.
President Biden has vowed NOT to intervene, despite labor laws that give him the power to do so. With the election just over a month away, and the economy the top issue for voters, the White House is making a political calculation.
AT THE HEART OF THE ISSUE
Right now, striking workers can earn up to $39 an hour at the ports. They are asking for a 77% raise for this next six-year contract, but also want to prevent the ports from going fully automated, which means a dockyard could run with fewer humans present. The employer group offered a nearly 50% increase over six years, but workers said it’s not enough.
$$: Dockworkers want to raise salaries by $5/hour for each of the six years of the new contract, putting them at $69 an hour in the final year.
A 2020 report on longshoremen in New Jersey and New York showed the median annual pay was around $160,000 with help from bonuses for container fees. That means workers could make well over $200,000 with the raise.
West Coast dockworkers, who negotiated a new contract last year, can make up to $60.85/hour by 2027.
Workers say the container shipping industry has been making major profits since COVID, and it’s time workers get a cut of that wealth.
"They made incredible profits, over 800% profit since the pandemic, and the owners are making tens of millions of dollars from this," Biden told reporters on Wednesday. "It's time for them to sit at the table and get this strike done."
Automation: The other layer to the strike is that technology exists so that operating cranes and moving containers, two of the main jobs at ports, can be done with fewer workers and increase productivity and efficiency.
Of the approximately 1,300 container terminals around the world, only 63 had advanced automation by 2022. Of those, Los Angeles and Long Beach are the only cities in the US with the capacities— they process about 40% of US shipping container imports.
A study from UC Berkeley researchers, commissioned by port operators and shippers, concluded that when the LA ports adopted some automation in 2015 to 2021, dockworkers were paid 11.2% more. However, a 2022 report financed by the West Coast dockworkers union found automation eliminated several hundred jobs (about 5% of roughly 13,000 jobs).
Europe, the Middle East and Asia are way ahead of the US on automation—allowing their ports to operate much more efficiently and quickly—and making items cheaper for producers and consumers. The industry says that if the US does not keep up with automation, shippers will send more cargo to Mexican or Canadian ports with automation, then get to the US by rail or truck. Efficiency = Money.
An issue for the union: It already allowed for some semi-automation, with limitations, in their last contract, which expired. The U.S. Maritime Alliance, the group that represents the port terminals in contract negotiations, is looking to keep the current language. The union now wants much more limited language when it comes to automation. They see it as a threat to jobs and the union. After all, robots don’t pay union fees.
THE POLITICS
Biden has called himself the most pro-union president of all time. Vice President Harris is taking his lead and also backing the workers, saying it is “about fairness.”
Much of the media coverage on the strike has focused on the potential economic impact: Every day ports are closed the US economy is losing billions of dollars, analysts say.
With that, there is the possibility of price spikes or shortages before the presidential election where inflation has been a central issue.
More than 75% of bananas Americans consume come through East & Gulf Coast ports, along with nearly 90% of imported cherries, 80% of chocolate, and 80% of imported beer, wine, whiskey and scotch.
Say hello to Napa wine and freeze some bananas in the meantime 😉
Don’t fret yet, companies accelerated shipments in recent months for key goods in preparation for a potential strike.
Inflation Concerns: Some economists are warning that if they reach a deal for a significant wage increase, it will lead to higher prices. Essentially, someone needs to pay the additional costs for port workers, and it will likely be passed on to the importers, and then along to the consumer. It comes as the Federal Reserve has recently declared victory on taming inflation and price increases over the last couple years.
⏳ SPEED READ
🚨NATION
📌 Biden travels to the Carolinas to survey catastrophic damage from Hurricane Helene as death toll rises to 175 (CBS NEWS)
📌 Prosecutors say they may bring additional charges against New York City mayor and indict others (AP)
📌 Betting on US elections can resume after legal freeze, appeals court rules (CNBC)
📌 Chemicals used in many popular food and drink products now banned from California public schools (CNN)
📌 Bank of America customers report account outages, some seeing balances of $0 (USA TODAY)
🌎 AROUND THE WORLD
📌 Israel says eight soldiers killed in clashes with Hezbollah in Lebanon (REUTERS)
📌 Russia captures key eastern Ukrainian town, exposing Kyiv’s critical vulnerabilities (CNN)
📌 Bomb dropped by U.S. in World War II explodes at airport in Japan, causing runway damage and cancellation of 80 flights (CBS NEWS)
📌 North Korean defector steals bus in bid to return home from the South (NBC NEWS)
📌 A Cambodian reporter who exposed scams is charged over online posts (NPR)
📱BUSINESS, SCIENCE & TECH
📌 Striking Boeing union asks CEO to 'truly engage' after workers' health coverage cut (REUTERS)
📌 OpenAI raises $6.6 billion in largest VC round ever (AXIOS)
📌 Elon Musk’s X is worth nearly 80% less than when he bought it, Fidelity estimates (CNN)
📌 Walz-Vance VP debate draws over 43 million viewers, down from 2020 (THE WRAP)
📌 A court blocks a couple from suing Uber over a crash, citing terms and conditions (NPR)
🎬 SPORTS & ENTERTAINMENT
📌Lauryn Hill sued by Fugees bandmate over fraud on tour (ABC NEWS)
📌 Doctor pleads guilty in death of 'Friends' star Matthew Perry (REUTERS)
📌 Jennie Garth shares she had two consecutive miscarriages with husband Dave Abrams after getting married (PEOPLE)
📌 Ticketing platform under fire over scalping of Coldplay tickets (NBC NEWS)
🗓 ON THIS DAY: OCTOBER 2
1955: The first edition of ‘The Guinness Book of Records’ is published in the UK, originating as a record book to settle friendly disagreements at pubs, and be given away for free to promote the Guinness brand.
1990: West Germany and East Germany ended 45 years of Cold War division.
1995: In one of the most sensational trials in US history, a jury in Los Angeles found O.J. Simpson not guilty of murdering his ex-wife Nicole Brown Simpson and her friend Ronald Goldman.
On this day 13 years later, he was found guilty of robbing sports memorabilia dealers in Las Vegas and subsequently sentenced to prison.
2003: ‘School of Rock,’ starring Jack Black, premiered in theaters.