Economic impact of strike still in question

EAGAN, Minn. (AP) — News that the pilots’ union at Northwest Airlines may idle the carrier with a strike at the end of August has set off a flurry of speculation on who might be hurt or helped by a walkout.
While a Northwest strike would cause major headaches for some businesses, the overall economic impact to the state is an open question.
State officials worry that a strike would threaten economic activity. Gov. Arne Carlson reminds both sides that Northwest is the state’s fifth-largest employer, with 20,000 Twin Cities-area workers, and supports about 30,000 other jobs at firms that supply the airline with goods and services or do business at the airport and with nearby businesses.
Further, he has said the airline’s annual economic contribution to the state can be measured in billions of dollars.
But that doesn’t necessarily mean that billions are at stake in the event of a strike.
“Trying to estimate that sort of thing is very tenuous,” said Ed Lotterman, regional economist at the Federal Reserve Bank of Minneapolis.
Consider the case of a threatened American Airlines strike last year.
When making the case for White House intervention — which came a few minutes after pilots went out on strike in early 1997 — American estimated that the cost of a strike would be $100 million a day. The U.S. Department of Transportation said daily losses were more like $30 million to $60 million.
“Certainly the American Airlines estimate was very self-serving,” Lotterman said. “I would think that any estimate like that is going to make some heroic assumptions and should be taken with a grain of salt.”
Tom Stinson, Minnesota state economist, said forecasting the economic fallout of a strike involves many judgment calls.
How many seats and how much cargo space will be available from Northwest competitors? What happens to the cabdrivers who take people to and from the airport, and the food, gift-shop and shoeshine concessions at the terminal? How much would Northwest employees spend during a strike? What’s the loss in the tourist industry?
Maybe even harder to estimate are the effects on businesses outside the airport industry.
Take the Mall of America, for example. Mall officials estimate that about 3 million shoppers fly every year to the Twin cities to visit the Bloomington mall. They spend $200 apiece — twice what local shoppers spend on an average trip.
It’s far from certain how many fliers would make their megamall trips later and how many would cancel altogether if Northwest strikes, however.
Hotel operators have trouble measuring the magnitude of the lost business they could face as well.
“We’re sitting on the edge of our seat, hoping the strike will be settled,” said Peter Straude, general manager of the Hilton Hotel at the Minneapolis-St. Paul International Airport.
At least 60 percent of the Hilton’s 300 rooms typically are filled by people flying into the airport, and most of those customers come on Northwest planes, Straude said.