Are you ready for a fiscal cliff? The union bosses of an estimated 14,500 workers at 15 ports are preparing to send the economy plunging back into recession over productivity and efficiency rules changes. You read that right. Much more on that in a moment. But first, here's what's at stake.
The International Longshoremen's Association's (ILA) grip extends from Boston to Texas to Florida and all points across the Atlantic and Gulf Coasts. The New York-New Jersey ports -- which handle cargo valued at $208 billion -- could come to a standstill. National Retail Federation executive Jonathan Gold issued a desperate statement: "The last thing the economy needs right now is another strike, which would impact all international trade and commerce at the nation's East and Gulf Coast container ports. This is truly a 'container cliff' in the making."
Retailers have begged Big Labor-lovin' President Obama to intervene. Good luck with that. The cozy White House powwow with union bosses immediately after Election Day tells you all you need to know about which side Obama champions.
The United States Maritime Alliance (USMX), which represents 14 Atlantic and Gulf Coast ports, has been bracing for a union-spearheaded shutdown since the summer, when labor negotiations fell apart. The ILA's current contract expired on Sept. 30. Federal mediators granted a 90-day extension that ends on Dec. 29. ILA President Harold Daggett won a unanimous green light earlier this month to call a strike if industry leaders don't give in completely to the union's demands. According to my sources, despite overwhelming industry concessions on wages and benefits, port watchers view the likelihood of a strike at "probably 70 to 85 percent now."
Don't believe the union sob stories. ILA members are among the highest paid union workers in the country. Starting pay for dockworkers is $20 an hour, with a top straight-time pay rate of $32 an hour. Longevity and overtime bonuses are generous, with ILA members earning an average of more than $124,000 a year in wages and benefits.
The sticking points of the heated ILA-USMX talks are "container royalties" (a fee per ton of containerized cargo that carriers pay to ILA members) and "customs and practice." On the New York-New Jersey waterfront, union racketeers have turned archaic work rules into a corrupt system of patronage tied to organized crime. Reporter Carl Horowitz of the National Legal and Policy Center broke down the container royalty dispute this fall: "In 2011 these royalties amounted to $232 million or about $15,500 per worker at Atlantic and Gulf Coast ports. This arrangement was established in 1960 when New York Longshoremen sought to protect themselves against job losses resulting from the introduction of automated cargo container weighing. It's been a ticket for inefficiency."
In other words, it's a ridiculously outdated surcharge on business to cushion the blow of modernity to workers. Unions, of course, siphon off a large chunk of the royalties -- more than $20 million last year alone, according to the Supply Chain Digest. The trade publication points out that "ILA workers receiving those hefty checks today have no real connection to the perceived threat from container traffic to manually loaded freight and handling work that started the whole program in the 1960s."
USMX hasn't even called for eliminating the outdated fees. It just wants to cap them. Under the industry's contract proposal, ILA's average hourly rate would increase to more than $55, including overtime and container royalty. Workers would still not be required to pay premiums on their health care plans like most private employers now require their workers to do.
But the union won't budge, and it is screaming bloody murder over attempts to rein in other inefficiencies.
The additional "customs and practice" that the ILA seeks to preserve are a recipe for corruption. Don't take industry's word for it. This was the conclusion this year of the Waterfront Commission of New York Harbor. Decades of favoritism, nepotism and Mafia-friendly hiring practices have bred inefficient and criminal conditions that benefit "a privileged few." The union protects no-show and no-work jobs, 24-hour paid work for 8-hour-a-day-or-less clerks, and unlimited paid vacation for shop stewards. ILA has demanded that multiple crane operators be paid for the work of a single operator. And the commission's hearings exposed ILA bosses tied to mobsters and family members being paid more than $400,000 a year for up to 27 hours a day.
Union bosses and their Occupy Wall Street henchmen will be ratcheting up their rhetoric about "greed" and "fat cats" as they move to ring in the New Year by bringing the American economy to its knees. Now you know the rest of the story.