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Ed Murray | NJ Advance Media for NJ.com
By Ted Sherman | NJ Advance Media for NJ.com
ON THE WATERFRONT, there’s a longshoreman on the books who washes trucks.
He gets paid $465,981 a year. To wash trucks.
Fired when his bosses discovered he wasn’t actually showing up when he claimed to be working, he nevertheless regained his job—after an arbitrator concluded it was not unusual in the industry for employees to be paid “without being expected to work all the hours for which they are being paid.”
The Port of New York Harbor is the busiest on the East Coast and the third largest in the nation. From the marine terminals in Port Newark and Port Elizabeth—where hulking gantry cranes that wait to load and unload ships from all over the world stand sentinel—to the terminals in Bayonne, Staten Island and Brooklyn, more than 6.7 million cargo containers came through the sprawling seaport last year. Ships carrying everything from food and clothes to furniture, machinery and coffee make port every day.
But labor costs here are the highest in the nation, making consumer goods more expensive and the port less competitive, officials say.
Part of the reason for those high labor costs, claim waterfront regulators and federal prosecutors, include $117 million in lucrative pay packages that go to more than 400 longshoremen in New Jersey and New York, some of whom are never, ever officially off the clock, every day of the year.
"Why do we have a port where special deals are made?"
— Walter Arsenault, executive director of the Waterfront Commission
The top 100 dockworkers alone at the marine terminals on both sides of the river each get more than $300,000 a year, according to salary data obtained through public records requests by NJ Advance Media.
One makes $516,996, based on an hourly rate that pays him 24 hours a day, seven days a week, through a formula of straight time, overtime, double-time, as well as weekend and holiday pay. Another, who works as a timekeeper, is paid every hour that any union member is working. He received $513,382 last year.
The pay scales are all set in the dockworker union's collective bargaining agreement. But in March, longshoreman Paul Moe Sr., who made $493,029 a year, was sentenced to 2 years in federal prison for submitting false timesheets. While he was also paid for every hour of the day, prosecutors with the U.S. Attorney’s office in Newark said he was required to at least be physically at the job at least 40 hours a week.
Investigators who followed him testified that he was often seen fishing on his boat in Atlantic Highlands, at the movies, at home or on vacation in Florida or Aruba when his timesheets indicated he was at work.
When a dockworker prepared to testify against him, a not-so-subtle message was left for him. A plastic rat was placed on his front porch, federal prosecutors disclosed in court.
Shipping containers stacked at Port Elizabeth. (Ed Murray | NJ Advance Media for NJ.com)
Policing the waterfront
Earlier this year, New Jersey moved to kill the Waterfront Commission of New York Harbor, the bi-state enforcement agency created by New York and New Jersey more than 60 years ago to police much of what goes on at the port—including who gets to work on the docks. It was the Waterfront Commission that gathered the evidence in the case against Moe.
The state's Democratically controlled Legislature argued the agency was a relic of the past.
But two weeks ago, U.S. District Judge Susan Wigenton—citing the need to reform corrupt and discriminatory hiring practices in the port, and continued mob influence there—said “it is in the public interest for the commission to continue its investigatory and regulatory work.”
In court filings, the Waterfront Commission officials, who challenged New Jersey's action, said the need for oversight was hardly over. They said the International Longshoremen’s Association, the powerful labor union that holds sway over the port, “still exerts control over hiring in the port, that waterfront employers have been forced to hire those that the ILA wants hired, and that the prime positions on the waterfront are given to those individuals with connections to the mainly all-white union leadership.”
In an interview, Walter Arsenault, the commission’s executive director, charged that the union’s ranks are replete with high-paying no-show or low-show jobs. Many, he said, go to insiders, relatives and friends.
“Why do we have a port where special deals are made?” asked Arsenault, a former assistant district attorney who once headed the Manhattan District Attorney’s elite special homicide unit. “That’s the question.”
ILA President Harold Daggett, at the podium, during a rally at Port Elizabeth. (Steve Strunsky | NJ Advance Media file photo)
'That's not a lot of money today...'
ILA officials declined comment. But during a 2010 hearing on hiring practices at the marine terminals, Harold Daggett, now president of the union, defended the salaries paid to his members.
"I wish all the members earned more than $400,000," said Daggett. "Forget about $400,000. That's not a lot of money today. These guys work their asses off out there."
Daggett himself makes more than $400,000. As president of the national union, he is paid $523,566, according to filings with the Department of Labor. As president emeritus of Local 1804 in New Jersey, he is paid another $156,781, for a total $680,347.
Working on the docks, though, can indeed be a dangerous job. In 2015, Judy Jones, 49, of Newark, was struck and killed by a fellow longshoreman while he was moving shipping containers around the docks at the APM Port Elizabeth terminal along Newark Bay. Later found to be drunk while operating a top loader, Victor M. Belo, of North Arlington was sentenced to three years in prison earlier this year for second-degree manslaughter. Earline Brundage, 47, of Phillipsburg, died in February 2012 after being pinned between two shipping containers at the Port Newark Container Terminal.
Those earning in excess of $300,000, however, are not typically the ones working on the docks, said Arsenault.
The ILA, through its spokesman, referred questions about its contract and salaries to the New York Shipping Association, which represents the marine terminal operators, stevedores and shipping companies that operate in New York and New Jersey—who do the hiring of the longshoremen under a collective bargaining agreement with the union. The industry group is currently in extension talks with the union and John Nardi, the association’s president, also declined comment, citing the ongoing labor negotiations.
A straddle carrier loads a container onto a truck in Newark. (Julio Cortez | AP file photo)
Special deals
At Paul Moe’s trial maritime consultant Joseph Curto, former CEO of Maher Terminals which loads and unloads ships and cargo at the port, testified that “there are no other ports that have that kind of structure or pay those kind of wages.”
Curto, who did not return calls or emails to his office, said in court that such deals developed over time. They were not the sole reason for the port’s high labor costs. Curto noted that $750 million in unfunded pension obligations play a role. So does the port’s unique practice of open-ended work shifts.
“In New York, unlike other ports, we don’t have a shift system,” he testified. “We have a continuous work system.”
"The market is here, whether expensive or not expensive..."
— Joseph Curto, former CEO of Maher Terminals
It’s known as a relief system, where everyone assigned to work gang is paid until work on a ship is finished—even those not at the terminal. At any other port in the country, longshoremen are paid in shifts. One works 8 hours and clocks out, and then the next person comes in, works 8 hours, and clocks out.
At the terminals in New Jersey and New York, three people may get paid at the same time that just one is actually working, for the normal 28 hours it takes to unload a container ship. The idea is that if a shift starts work at 7 a.m. and goes through 6 the next morning, there are enough people available to do the job. But Curto said it leads to duplication of personnel and paying longshoremen who are not there.
The port here also has many more supervisors than elsewhere, he noted, from dock bosses, chief clerks and foremen to shop stewards.
“And over the course of time, for a number of different reasons, some of the staff that I just mentioned is compensated very, very highly. That developed over time,” he told jurors.
Asked why the companies from around the world still want to ship their goods into New York, Curto shrugged off the question with a basic economics lesson. “The market is here, whether expensive or not expensive,” he explained. “The cargo has to come here, and shipping companies have to bring it here.”
Ship traffic at Port Newark. (Ed Murray | NJ Advance Media for NJ.com)
Change on the waterfront
It has been more than six decades since Marlon Brando worked the docks of Hoboken as Terry Malloy in Elia Kazan’s movie, On the Waterfront. The film was inspired by a series of newspaper articles by Malcolm Johnson in the New York Sun that exposed the corruption, extortion and racketeering in the days when longshoremen vied for jobs in “shape ups,” faced shakedowns for kickbacks, and violence was endemic.
Much has changed since then. The modern port system was created in Newark in April 1956, when a refitted oil tanker carried fifty-eight shipping containers sailed from Newark to Houston, launching the beginning of container shipping. Mechanization soon revolutionized the industry, dramatically cutting the number of longshoremen needed to load and unload a ship.
Where hundreds of men once labored for days with cargo hooks, slings and winches to load and unload the boxes, bales, burlap sacks, and lumber that would be stowed into the holds of ocean-going freighters, cargo is now moved in big metal boxes that become truck trailers for a ride out of the port.
Far fewer longshoremen are needed to move and stack those containers, using giant cranes or the straddle carriers that scuttle around like machines out of a Star Warsmovie, stacking the multi-colored boxes like so many towers of plastic Lego building blocks. And many of the terminals and warehouses that once dominated the waterfront in New York shifted over to New Jersey.
Even today, the scene continues to be transformed. At the Port Newark Container Terminal, construction continues on an expansion that saw the demolition of old warehouses and the assembly of new, larger cranes designed for bigger and bigger ships.
Members of the International Longshoremen's Association walk off the job in 2016. (John Munson | NJ Advance Media file photo)
Mystery over a walkout
Insiders say even with a sharp decline in the number of dockworkers at the port, the longshoremen’s union remains a formidable force.
Two years ago, thousands of longshoremen unexpectedly walked off the job without warning. Port officials were taken by surprise by the labor action, and were unsure exactly what precipitated it, but it served as a graphic example of the union’s power.
The walkout shut down the port terminals in New Jersey and New York, causing truck traffic to immediately start backing up throughout Port Newark and Port Elizabeth.
It is still not known today exactly what precipitated the labor action, and union officials said publicly that they, too, had been caught unawares that their members had been planning to walk off the job.
However, a spokesman said growing anger by dockworkers over what they see as a growing “intrusion into their livelihoods” by the waterfront commission, which registers longshoremen and controls who can work at the marine terminals.
There were never any consequences for whomever had ordered the walkout. When investigators from the Waterfront Commission served subpoenas on ILA rank-and-file members, they said learned little.
One longshoreman, subpoenaed by the commission, was asked during a deposition who gave the order.
“It was at the food truck,” he replied.
“Who was it?” he was asked.
“It was too dark to see anyone’s face.”
Daggett, the ILA president, took the commission to federal court in an effort to kill subpoenas ordering him to answer questions. When his suit was thrown out, he went to the Third Circuit Court of Appeals, where the case has yet to be decided.
The union also aggressively courts political support.
An examination of campaign filings with the New Jersey Election Law Enforcement Commission shows that the ILA and its members spend heavily to support candidates and party organizations.
In the past decade, $823,000 in donations large and small went across the state. In 2017 alone, the union contributed $253,175 in campaign donations—a considerable increase from years’ past, the ELEC reports show. Those funds included $35,000 checks that went out to the county Democratic committees in Essex, Mercer, Union and Bergen counties, and another $25,000 to the New Jersey Democratic State Committee that went out in September and November.
“They certainly can flex muscle, through contributions and the relationships with some of the state lawmakers,” said Brigid Harrison, a political science professor at Montclair State University and a close observer of state politics. “My sense is that they are adept at cultivating their friends. They know who the power brokers are in the state.”
A ghostly view of Port Newark after hours. (Ed Murray | NJ Advance Media for NJ.com)
Rules of the game
Changing the work rules at the port has been no easy task.
In recent years, there have been talks between the ILA and the shipping association to replace open-ended work shifts, according to Phoebe Sorial, the Waterfront Commission’s general counsel.
But both the ILA and the port shippers maintain that the implementation of the plan has been stalled by a tight supply of longshore labor—and both blame the Waterfront Commission. The union and the shipping association filed suit in 2013, accusing the enforcement agency of holding up hiring and threatening a labor shortage. They charged that the commission had overstepped its bounds by imposing stricter hiring rules on potential hires.
A federal judge ultimately dismissed the case.
Part of the case focused on efforts by the commission to increase the diversity in the hiring of dockworkers. According to Arsenault, the union has tried to evade those rules. He said when the ILA was pushed to put more veterans to work on the docks, the union sent up a waitress who had been in the National Guard for only a few months. She was not, however, without experience working around the docks, he noted drily. Before seeking to become a longshoreman, her job had been to serve breakfast at a diner each morning to Daggett, the ILA president.
Still, when the commission sought to hold public hearings on the lack of diversity, the New Jersey governor’s office pressured the agency to pull back, expressing concerns that all that talk underscored the potential possible labor disruptions and would be bad for business. According to emails obtained by NJ Advance Media, the commission was warned that such hearings would “put on display for the entire global shipping community to see the regulatory dysfunction that has characterized the port for too long and underscore the potential for labor disruptions in the port, inviting our cargo to hasten to other ports with less labor drama.”
A spokesman for former Gov. Chris Christie, reached by phone, did not respond to requests for comment. But former administration officials, speaking on background, said there had been a growing feeling that the commission’s aggressive stance was threatening commerce in the port because it could not find compromise with other players.
Huge cranes dominate the waterfront at Port Newark. (Ed Murray | NJ Advance Media for NJ.com)
Few friends
The Waterfront Commission, which has two commissioners—one from New York and one from New Jersey—has its critics beyond the union and the shipping association, which have long chafed under its oversight.
Nearly a decade ago, the New York Inspector General issued a highly critical report that found the commission to be riddled with internal fraud and abuse. The IG's report called the agency a “sanctuary of political favoritism, corruption and abuse.”
Citing favors to insiders, corrupt dealings, fraud and abuse, the 2009 report said the commission purchased a $170,000 patrol boat paid for by a Homeland Security grant that was supposed to be used to deploy officers "to high-risk target locations such as the NYC Passenger Ship Terminal and Cape Liberty Cruise Port in Bayonne." Instead, it was used to escort guests and VIPs during Fleet Week and other events.
It also found the commission's police department was forced to hire several unqualified applicants, including one who failed the required test twice and then scored the highest mark ever recorded on his third try after the applicant boasted that a commissioner had given him the answers.
The Inspector General also discovered the commission’s audit director was running a private tax preparation business at work and accessing pornography on his office computer. Its former general counsel helped someone keep his port business despite a federal racketeering conviction for storing illegally diverted international goods in his port warehouse.
The findings led to a major housecleaning at the commission, new commissioners, and the appointment of Arsenault as executive director.
But the commission’s renewed focus on enforcement gained it enemies.
Port Newark as seen from Bayonne. (Ed Murray | NJ Advance Media for NJ.com)
Killing the commission
Late last year, a bill to withdraw the state from the interstate compact that created the Waterfront Commission—once vetoed by Christie—was passed by the Legislature. The only person to vote against the bill was Assemblyman Jack Ciattarelli (R-Somerset).
“I’m always suspect when certain bills are being fast-tracked, particularly during the lame duck session,” he said. “This certainly was fast-tracked.”
The lawmaker said while supporters argued the commission was antiquated and overregulating the industry, he was not convinced.
“The signing ended a six-decade agreement on how to oversee the waterfront. In my mind, that warranted extensive hearings. We didn’t do that,” he said. “It smacked of a deal.”
The vote came just weeks after the union’s $165,000 in campaign contributions to five county and state Democratic political committees in the fall, according to ELEC records.
Why did the union contribute so much?
“The International Longshoremen’s Association Committee on Political Education supports pro-union candidates and pro-port development activities,” said ILA spokesman Jim McNamara.
New Jersey Senate President Stephen Sweeney (D-Gloucester), who was the prime sponsor of the measure that would effectively kill the Waterfront Commission, did not respond to repeated requests through his spokesman for an interview.
McNamara said it was the second time the Legislature voted to eliminate the commission.
“There was long time and strong support for this legislation from Democrats and Republicans,” the union spokesman said.
On his last day in office, Christie signed the controversial legislation.
The Waterfront Commission in January went to federal court to challenge the measure, leading to the temporary injunction that was issued by Judge Wigenton on June 1.
While the issue of whether New Jersey can legally walk away has yet to be decided, the judge left little question the state would likely not prevail.
"The commission has undertaken scores of investigations that have led to the conviction of hundreds of individuals who were conducting illicit activities in the port, including, but not limited to, drug trafficking, theft, racketeering, illegal gambling, loansharking, and murder. In addition to investigating criminal activity, the commission has also worked to expose the continued corrupt and discriminatory hiring practices on the waterfront and to implement measures to address them," she wrote.
Rejecting the state's argument that it could unilaterally withdraw from the agreement with New York that established the Waterfront Commission, the judge said interstate compacts that require congressional consent are not merely bi-state contracts, but also federal statutes.
"This court will not construe the compact in a manner that rewrites the agreement to include the right to unilateral withdrawal," she wrote.
Even at night, the lights are on at Port Newark. (Ed Murray | NJ Advance Media for NJ.com)
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