West Coast ports dispute poses trouble for Obama

Progress being made in port strike talks
Progress being made in port strike talks

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Progress being made in port strike talks 03:06

(CNN)President Barack Obama is grappling with yet another surprise threat to an economic recovery that's finally turning a corner.

A months-long contract dispute between dockworkers and their employers has escalated to a standoff, crippling major West Coat ports that serve as critical thoroughfares for U.S. imports and exports.
While labor fights are relatively common, the stakes of the West Coast disagreement are particularly high for the administration this week. The massive congestion at 29 ports has already sent ripples across industries and could do more serious damage if the conflict drags on.
It's also a highly charged moment for Labor Secretary Tom Perez, whose intervention is the administration's first major public involvement in the ongoing feud.
    "Anyone who's called in to convene a meeting about this, particularly with the prestige of the White House, ought to be able to bring the parties together without a need for legal intervention," said William Gould, former chairman of the National Labor Relations Board. "This is something that the United States government takes seriously given the enormous economic losses."
    The dispute centers around contract negotiations between the Pacific Maritime Association, which represents shipping companies and port operators, and the International Longshore and Warehouse Union, which represents West Coast dock workers. The two parties began talks in May but were unable to reach an agreement and have been operating without a contract since July.
    The standoff reached fever pitch this month when the PMA halted loading and unloading of vessels in West Coast ports for four days, exacerbating congestion problems that were already plaguing the ports.
    In meetings with the PMA and ILWU, Perez urged both parties to "come to an immediate agreement to prevent further damage to our economy and further pain for American workers and their employers," his spokesperson said Tuesday, citing "tremendous progress."
    Perez also spoke by phone with elected officials in cities and states whose economies are hit by the labor dispute, including Govs. Jay Inslee of Washington and Jerry Brown of California, and the mayors of Los Angeles, Seattle, Long Beach, Oakland and San Francisco.
    Representatives for both the PMA and ILWU declined to comment, citing the federal mediator's request to refrain from discussing the ongoing talks.
    The Obama administration has pointed to bright spots in recent economic data as signs of the recovery gaining real strength. Any event that can hit the brakes on economic growth will be unwelcome news.
    While it's difficult to put a number on the total damage resulting from the labor dispute, analysts agree that it's already having far-ranging consequences for the broader U.S. economy.
    According to one study commissioned by the PMA and released last April, around 9.2 million workers were supported by cargo that moved through ILWU terminals on the West Coast in 2013 and those workers received some $380 billion in wages. That cargo created "a total economic value of $2.1 trillion throughout the United States" in 2013, according to the study conducted by Martin Associates, a firm specializing in seaport economic impact studies.
    Individual ports are releasing their own estimates. The port of Oakland warned that imports in January fell 39 percent from the previous year, while exports were down by 26 percent.
    And the headache won't go away when the two sides reach middle ground.
    Getting members of the PMA and ILWU to approve the deal and ratifying the agreement could take several weeks. And port authorities have warned business groups that clearing out the backlog of cargo currently clogging the ports could take an additional 45 to 60 days.
    "Retail, manufacturing, farming, agriculture, transportation -- anybody who relies on the ports to move their goods both inbound and outbound are being impacted," said Jonathan Gold, president of the National Retail Federation, adding that NRF members are "nervous about what's going to happen in Q2 and Q3 and for the rest of the year."
    Intervening in a major labor dispute will require delicate political maneuvering by the administration. Organized labor has historically butted heads with Democratic administration on issues like trade treaties, and Obama himself has not been known to have a particularly cozy relationship with labor unions.
    "Presidents, even Democratic presidents, are always in the business of juggling multiple competing considerations," said Bill Galston, a former policy advisor to President Bill Clinton and a senior fellow at Brookings. "Sometimes that balance will come down in labor's favor and sometimes it won't."