Score a win for the dockworkers.
"I just don't think the big problem in this country right now is workers making too much money or working conditions for workers being too good. They made a lot of progress," Transportation Secretary Pete Buttigieg told Yahoo Finance on Friday shortly after a two-day port strike wrapped up.
What was shaping up to be a debilitating hit to the flow of commerce five weeks before the presidential election — and as major retailers like Target (TGT) and Walmart (WMT) are gearing up for the holiday shopping season — has been averted amid pressure from the Biden administration.
The International Longshoremen's Association (ILA) agreed late Thursday to suspend its strike, which closed down key ports on the East and Gulf Coasts. The strike had commenced on Tuesday as 45,000 dockworkers sought much higher pay to compensate for their high-risk jobs. Fears of automation and job protection were also front-and-center issues.
Employers represented by the United States Maritime Alliance (USMX) have offered to hike wages by 62% over a new six-year contract. That's less than the 70%-plus increase the ILA was reportedly seeking but above the USMX's initial offer of about 50%.
"But I just want to be clear here that all of these gains for workers have been a long time coming," Buttigieg added. "They come after a decades-long stretch of widening inequality in our country, and they come at a time that these companies have become enormously profitable."
A prolonged strike by the union could've severely damaged the US economy.
JPMorgan analyst Brian Ossenbeck estimated the shutdown could have potentially delivered an economic impact of $3.8 billion to $4.5 billion per day.
"What's different about this strike on the East Coast and in the Gulf than the West Coast is the nature of the categories that are coming through," Walmart CEO Doug McMillon told me on Tuesday in his Arkansas-based office.
"There's a large percentage of the bananas that you brought into the United States that come through these ports that are impacted. And you obviously can't pull forward your banana flow. They actually have a ripening process. So there's some complications like that, and I certainly hope it gets settled quickly," he said.
Buttigieg said he sees minimal economic impact from the strike.
Now comes the critical task of clearing the backlog at the docks.
"Well, because it was ended in about three days, I think most consumers will not notice something like being unable to get goods that they were expecting. But I will say it takes more than one day's work to figure out the backlog from one day's stoppage," Buttigieg said.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.
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