The New Deal: A Closer Look
The tentative agreement includes a 62% wage increase over six years, up from a previous offer of 50%, which comes as a significant win for the union. The increase will bring the base hourly wage from $39 to $63 for the average dockworker. Given that many dockworkers currently earn over $100,000 annually, this new agreement could potentially push their total annual compensation even higher, depending on overtime, bonuses, and specialized work rates. This represents a major concession by port operators, considering the union had initially demanded a 77% increase.
The agreement will temporarily extend the current contract through January 15, 2025, while the two sides continue to negotiate on more complex issues, including port automation and efficiency standards. This extension is crucial as it avoids immediate further disruptions and gives both parties a window to resolve more contentious aspects of the labor agreement.
Impact of the Strike: Numbers and Economic Stakes
The strike, which began on October 1, 2024, involved tens of thousands of dockworkers, effectively paralyzing some of the nation’s busiest ports. These include New York-New Jersey, the Port of Virginia, the Port of Houston, and others that handle a large proportion of U.S. imports and exports. The ILA strike affected the shipment of critical goods such as:
- 100% of U.S. car parts
- 75% of banana imports
- 55% of poultry byproducts and paper waste
- 74% of U.S. soybean exports
- 97% of tire imports
For context, the East and Gulf Coast ports together handled over 58% of all U.S. containerized imports by weight as of July 2024. Any prolonged disruption in these supply chains would have led to significant shortages and cost increases across industries ranging from automotive to food and agriculture.
Wage Disparities and Regional Differences
The wage increase will be applied uniformly across ports, but significant disparities exist among ILA workers in different regions. Workers in high-volume ports like New York and New Jersey often earn over $250,000 a year, while those in lower-volume ports in Virginia, Florida, and Texas struggle to clear $70,000 annually. In the fiscal year 2019-2020, more than half of the 3,726 ILA workers at the Port of New York-New Jersey earned over $150,000, with 665 earning more than $250,000 annually.
The highest-paid positions, such as crane operators, can reach $300,000 per year or more due to special wage agreements, tonnage assessments, and container royalty fees. These payments reflect the complexities of the ILA’s wage structure, which often includes various add-ons and bonuses based on work conditions, seniority, and the skill level required for specific tasks.
Financial and Political Implications
The cost of the wage increases will primarily fall on cargo owners and shipping lines, such as Denmark’s A.P. Moller-Maersk and China’s Cosco Shipping, who manage many of the terminals and boxships that operate along the East Coast. With many of these companies having reported record profits during the pandemic—collectively earning over $110 billion in 2021 according to marine consultancy Sea-Intelligence—the new labor costs may be absorbed in the short term. However, shipping lines will eventually pass these costs on to their customers, which include some of the nation’s largest retailers, manufacturers, and agricultural exporters.
The strike also comes just five weeks before the U.S. presidential election, adding a political dimension to the negotiations. Both President Biden and former President Trump have courted union voters, with Biden’s administration opting to apply pressure on employers rather than breaking the strike with federal power. Vice President Kamala Harris and other top officials had been in close contact with the port operators to facilitate an end to the strike.
Broader Industry Context and Future Risks
This deal follows the Pacific Maritime Association (PMA) agreement on the West Coast in 2023, where longshore workers received a raise to $52.85 per hour. On average, West Coast longshoremen earned close to $233,000 annually when factoring in overtime and other incentives. Comparatively, the new East Coast agreement places ILA workers on a similar wage trajectory, although local wage scales and the volume of port traffic still play a decisive role in actual earnings.
With automation remaining a sticking point, the ILA is wary of moves to implement technology that could eliminate jobs, similar to proposals seen on the West Coast. The ongoing negotiations over port modernization and technology integration could become a flashpoint in future talks, especially if employers push for more automation to offset the higher labor costs.
The ILA’s successful push for a 62% wage increase is a victory for the union, but it sets the stage for further clashes over port efficiency and technology. The tentative agreement stabilizes the immediate situation, but unresolved issues could lead to new disruptions if negotiations stall. For now, the return to work ensures the flow of goods resumes, averting supply chain disruptions that could have cascaded through the broader U.S. economy during the critical holiday shipping season.
