Union Fights Signal Danger Ahead For Bidenomics

Authored by Susan Crabtree via RealClear Wire,

Just a few hours before President Biden tied his political fate to the economy, embracing the term “Bidenomics” in a Chicago speech Wednesday, he was still trying to dispel worries about a looming recession. A reporter asked Biden, before he boarded Marine One, whether he believed the worst of inflation was over.

“Let me put it this way: I’ve been hearing every month there’s going to be a recession next month,” the president responded. “Two-thirds of economists and the major leaders in the banks think we’re not going to have a recession. I don’t think so either.”

The exchange underscores the fragile state of the economy that most Americans and independent analysts find concerning. Federal Reserve Chairman Jerome Powell said he expects more interest-rate increases ahead as inflation remains “well above where it should be.” Meanwhile, only 24% of voters believe the country is on the right track, with 38.3% approving of Biden’s handling of the economy, according to RealClearPolitics’ poll average.

The White House this week put a far glossier spin on its inflation record, asserting that wages have gone up during Biden’s tenure and that the inflation rate has been cut in half from where it was a year ago – lower than any other wealthy Group of 7 nation, according to Biden’s Council of Economic Advisers.

Republicans dismissed the claims as brazen gaslighting, pointing out that inflation spiked after Biden took office, rising from 1.4% in January 2021 to 5.4% by June 2021, and 7.5% right before Russia invaded Ukraine, peaking at 9.1% in June 2022 before demand slowly began to sink it to its current 4%.

While Democrats and Republicans spent the week debating whether Biden’s policies have helped or hurt the middle class, other economic signs were flashing red, warning of danger ahead. Biden has long blamed the spike in inflation on a temporary COVID hangover and bottlenecks that snarled supply lines, which he said have smoothed out over time as employees have returned to work.

Now several fights, led by the Teamsters Union’s aggressive new president, Sean O’Brien, could throw kinks into the nation’s shipping and trucking logistics in a matter of weeks. During his Wednesday remarks, Biden repeated his promise to be the most pro-union president in history and said that under his watch, Americans’ support for unions is at its strongest level in 60 years.

“We are making it easier to empower workers by making it easier to join the union,” he told the audience of about 200 supporters.

Earlier this month, the president held his first reelection rally in Philadelphia at an event hosted by the AFL-CIO and attended by 2,000 cheering union members. The massive AFL-CIO and 17 other unions, including the American Federation of Government Employees, announced their early endorsements of Biden’s reelection.

While continuing his pro-union drumbeat, regularly sprinkling his speeches with pledges to protect “good-paying union jobs,” Biden is pointedly avoiding discussing several looming union threats to disrupt crucial supply chains and likely upend progress on inflation. The Teamsters ramped up their rhetoric this week after voting to authorize strikes at two of the nation’s largest trucking fleets if new labor deals are not struck by the end of next month.

Teamsters working for shipping giant UPS are threatening to strike on Aug. 1 if their demands for better pay and working conditions aren’t met. If the current negotiations break down, some 340,000 warehousing, transportation, and delivery workers could walk off the job in what would be the largest U.S. strike in 60 years. UPS brown vans deliver more than 19 million packages a day.

The workers want higher pay; the elimination of so-called two-tier wages, where newer workers are paid less than older employees for the same job; the removal of surveillance cameras from delivery trucks; and more full-time positions. The rhetoric between the two sides escalated this week when O’Brien demanded that UPS provide a tentative contract agreement that its leadership can support within the next week after UPS reportedly returned to the bargaining table Tuesday without an updated counteroffer to present to the union.

“When we say the current contract expires July 31, that means we want a new contract in place starting August 1,” O’Brien said in a statement this week. “Not in six months. Not next spring. We demand a historic new contract August 1 with more money in our pockets immediately.” Warning that a nationwide UPS strike is imminent, O’Brien added, “UPS has wasted enough time and hoarded these record profits. Our members want what they have earned.”

Just two weeks ago, Teamsters at TForce Freight, representing more than 7,000 truck drivers and delivery workers nationwide, voted to authorize a strike with the same July 31 deadline for negotiations. TForce Freight operates in the less-than-truckload, or LTL, shipping market, which handles smaller loads that can be broken down into units less than 150 pounds.

At the same time, the union is battling another large LTL trucking employer, Yellow Corp., over a restructuring plan to modernize its operations to compete in the U.S. $58 billion LTL market. Yellow, which has struggled financially for years, says it needs to re-engineer its business plans and consolidate terminals to compete in an industry dominated by non-union companies. The need is particularly urgent because the company must refinance $1.3 billion in debts from loans maturing next year or face bankruptcy.

Nick Vyas, director of the Center for Global Supply Chain Management at the University of Southern California’s Marshall School of Business, said allowing the strikes to take place and Yellow to fail could have a devastating impact on the economy, particularly because the boom in online shopping and home delivery, which began during the pandemic, is still going strong.

Vyas worries that organized labor is focused on extracting short-sighted demands and resisting “transformative forces” while making their employers less competitive overall, even forcing some U.S. companies that have been in business for 50 or 100 years to fail or transition out of certain industries.

“The unionized companies that provide better wages, benefits, and a better lifestyle for their employers could disappear, and you will have a marketplace based on smaller non-unionized companies that will cater to consumer needs,” Vyas told RealClearPolitics. “At the end of the day, it’s like putting a rock in the middle of a stream of water. The water will find a way to go around … consumers are not going to slow down their demand for technological innovations and faster service.”

In 2020, Yellow received a $700 million pandemic relief loan in exchange for the federal government assuming a 30% equity stake in the company. A bankruptcy could leave American taxpayers with more financial burden from the company and a loss of 30,000 unionized trucking jobs.

The Teamsters have vigorously opposed Yellow’s plans to require some workers to take on additional dock work, loading and unloading freight, among other changes. After an eight-month impasse, Yellow filed suit against the Teamsters this week, arguing that it had the right under its labor contract to implement the restructuring plan. The carrier is seeking $137 million in damages for what it argues is a breach of contract. “Without these crucial reforms, which are standard practice in the industry today, Yellow will not survive,” the company said in a statement.

O’Brien fired back, accusing Yellow of filing a baseless allegation because its management has failed the company and can no longer live up to the contract terms it agreed to. “This lawsuit is a desperate, last-ditch attempt to save face,” said Teamsters General Secretary-Treasurer Fred Zuckerman.

The company argues it’s simply trying to stay afloat, repay its loans from the federal government and save the jobs of its 30,000 workers while continuing an undisrupted supply chain to hundreds of thousands of its customers across the country. “Driving Yellow out of business will badly damage the supply chain, lessen competition and raise the price of shipped goods and feed inflation,” the company said Tuesday in announcing the lawsuit.

“We do not take this action lightly, but the Union’s leadership has left us with no choice,” Yellow’s management said in a statement. “For many months, we have made good faith efforts to meet with the IBT to propose a path forward that works for all parties, but they refuse even to meet, let alone engage in honest talks.”

The complaint said the Teamsters had backed the company’s modernization effort for years and approved the first of the effort’s three phases. The union, however, reversed course when O’Brien became president and pledged to take a “militant approach” in blocking the restructuring. In the lawsuit, Yellow said it reached out to Biden to try to broker a deal, but O’Brien rejected the White House’s efforts. A White House spokesperson acknowledged engaging with both parties but declined to comment on the legal dispute.

“We are assessing any potential impact on supply chains and workers,” the spokesperson told RCP.

It’s a delicate situation for Biden, who would like to add the Teamsters to his roster of labor endorsements, but who rubbed some union members the wrong way for his role in brokering a deal to avert a disruptive rail strike just before Christmas last year. Some union members were disappointed by the negotiated terms and still hold Biden accountable.

While Biden wants strong union backing for his reelection, he’s also trying to lure more companies and manufacturing back to the U.S. after decades of businesses moving offshore for cheaper labor and less regulation.

“The president should tone down narratives about just being pro-labor,” Vyas argued. “Instead, he needs to show he’s doing the right thing to keep the country and its infrastructure and manufacturing base competitive.”

On Wednesday, Biden said his government investments in infrastructure, which most Republicans opposed, were already increasing manufacturing jobs here at home. Under his leadership, he said, U.S. products, such as semiconductors, and even whole industries that had moved offshore have started to return.

“We went from producing 40% of those chips down to 10%,” he told the crowd. “Not anymore. Bidenomics is going to grow those jobs and products right here at home. I mean it. It’s not a joke.”

In the coming weeks, as the Teamsters and trucking industry battles come to a head, Biden won’t so easily remain on the sidelines avoiding the political or economic fallout. The state of the economy often determines whether first-term presidents stick around for four more years. As it stands now, voters are skeptical, the economy is shaky, and the White House’s big “Bidenomics” embrace just tied the president even more closely to its trajectory.