Union Busted

Alex Tabarrok.

"The International Longshore and Warehouse Union (ILWU) just filed for bankruptcy because it lost a case with a port operator in Portland. The back story is amazing.

The ILWU is one of the most powerful unions in the United States. Since bloody riots in 1934 it has controlled all 29 seaports on the west coast of the United States, giving them monopoly power. The ILWU’s 22 thousand workers are known as the “lords of the dock” and they earn an average of just over $200,000 in salary and another $100,000 in benefits, a bit more than the typical CEO. Some ILWU foremen take home half a million a year.

The ILWU has a lock on dockworkers but there are other rival unions. In Portland, for example, there were two jobs for reefers–electrical workers who handle special refrigerated containers–that since 1974 had been held by members of the International Brotherhood of Electrical Workers. The ILWU, however, wanted control of these jobs and in 2012 one of the heavies of the union, Leal Sundet, threatened the manager of the port operator that if he didn’t help him to take these jobs from the Brotherhood and give them to the Longshoremen he would create havoc. When the port operator didn’t comply–it wasn’t clear even that they could comply as the jobs were not under the port operator’s control–the ILWU followed through on its threat. Repeated shutdowns, slowdowns and discovered “safety violations” disrupted port operations so badly that the entire port closed.

The port operator, however, took the ILWU to court, arguing that the labor actions were illegal. The jury agreed giving the port operator an award of $93.6 million for its losses, later reduced to $19 million. The Union doesn’t have the $19 million, hence the bankruptcy.

Thus, the union has been bankrupted, the port closed, hundreds of millions of dollars lost and shipments slowed all because of a dispute over 2 jobs.

In related news, the just approved ILWU contract raises wages for ILWU workers and ensures that there will be no serious automation of the ports for at least another six years, again putting the United States behind the rest of the world in efficient shipping and logistics.

I am reminded of the day Ronald Reagan fired the air traffic controllers for their illegal strike."