Longshoremen Strike Highlights Deep Problems with American Organized Labor
The American "enterprise union" model incentives corruption and contentious fights. There are better paths for both business and workers.
The last four years have turned out to be somewhat of a golden age for organized labor. Workers have won tough organizing campaigns against Volkswagen and Amazon, bold new contracts have secured better wages in dozens of industries, and a labor union-friendly administration has cracked down on wage theft and restrictive employment agreements.
Since 2020, the long decline in America’s union membership has plateaued, while polls show that unions are viewed more positively than ever in decades.
But the winning streak could face a major test with the International Longshoremen’s Association's decision to close many of the country’s most important ports.
The ILA strike, which commenced on Monday night, shutting down port operations across the East Coast, from Houston to Boston, not only threatens economy-crippling inflation and disruption. Just a month before the election, the ill-timed strike may also showcase the hubris and corruption that still bedevils some corners of organized labor – factors that may turn moderates away from unions and against the needs of blue-collar workers.
The ILA is calling for curbs on implementing automated cranes and other technological improvements that are now ubiquitous at ports worldwide. ILA leadership also turned down an employer offer for 50 percent wage hikes over six years. The ILA initially demanded 77 percent. Longshoremen in the ILU already earn upwards of $100,000.
Harold Daggett, the ILA president, is the strike's face. In a widely circulated video, Daggett threatens, “In today's world, I will cripple you and you have no idea what that means.”
The menacing words, juxtaposed with what appear to be unreasonable strike demands, have invited scrutiny over Daggett’s record.
Daggett was paid a combined salary of over $1,049,416 in 2023, which he drew from a local New Jersey chapter of the ILU and its national office. Harold’s two sons, Dennis Daggett and John Daggett, are employed in leadership roles at the ILU and collected $685,877 and $642,631 in income that year.
The $2.3 million annual family income, from as little as 20 hours a week of union responsibilities, belies the demands of striking longshoremen this week, who carried placards titled: "Profit Over People Is Unacceptable: Support ILA Workers.”
The Telegraph reported on Daggett’s luxurious lifestyle and alleged mob ties:
He previously owned a 76-foot yacht, the Obsession, and has been spotted by his members riding in a Bentley, according to The New York Times. The Justice Department, which has reportedly lost two cases against Mr Daggett, has accused him of being an “associate” of the Genovese crime family — one of the infamous “Five Families” of the US Mafia. Charged with racketeering in 2005, Mr Daggett, took the witness stand and portrayed himself as a mob target, despite evidence against him from a turncoat Mafia enforcer saying he was under the mob’s control, the New York Times reported.
During that trial, one of Mr Daggett’s co-defendants, a renowned mobster named Lawrence Ricci, disappeared. His decomposing body was found in the trunk of a car outside a New Jersey diner several weeks later, with the killing still unsolved. Despite his union serving as a historic symbol of the grip of organised crime on union members, as depicted in the 1954 film “On the Waterfront”, Mr Daggett was acquitted in both cases.
The details of the DOJ case against Daggett are staggering. U.S. Attorneys alleged that Genovese mob figures, including George Barone, who had killed at least ten people in mob-ordered hits, fixed ILA elections to keep Daggett in power while exercising control over the union for a variety of kickback schemes. In 2012, well after Daggett was acquitted, a Waterfront Commission of New York Harbor report found that the ILA widely engaged in the practice of “no show jobs” that paid as much as $400,000 for little to no work.
The report found that the union continued to employ many family members of known mob figures, including a nephew and two sons-in-law of the late Genovese mob leader Vincent Gigante, who each took home $400,000 a year as a longshoreman union officials with no clearly defined duties. Daggett, in response to inquiries about the roles, testified that $400,000 was “not a lot of money today.”
But it doesn’t have to be this way.
The International Longshore and Warehouse Union, representing port workers across the West Coast, Hawaii, and British Columbia, avoided a strike and signed a new contract last year that secured 30 percent pay raises and special bonuses. The ILWU contract does not call for a halt to automation. Instead, the contract secures union jobs for workers to repair automated cranes and oversee other robotic equipment.
In contrast, Willie Adams, the president of the ILWU, was paid $341,273 in 2023, almost a third of what the ILU’s Harold Daggett was compensated that year. The ILWU is famously more democratic and transparent with its finances than its counterparts on the East Coast.
Many of the more successful unions in recent years have cleaned house of old leadership and old pay structures. After decades of scandals at the United Auto Workers, which featured the embezzling of millions of dollars and lavish spending by union leadership, a new guard came into power. Under the new leadership of Shawn Fain, who takes a more modest salary of $228,872, the UAW has revitalized its push and won a string of contracts for workers.
What’s more, the contentious strikes and petty corruption are grim reminders of the failures of the American model of organized labor. The so-called “enterprise union” approach, which is highly adversarial and organizes unions based strictly on dues-paying incentives, has fared poorly compared to other systems.
In Europe, countries such as Sweden and Germany operate under codetermination and sectoral bargaining rules. Under codetermination, larger companies are required to allow workers to elect their own representatives to the board of directors so decisions are made collaboratively between management.
Take the German port operator and shipping company Hapag-Lloyd. The firm boasts four worker representatives on its board and has enjoyed relative worker-management harmony and decent pay. Workers' representatives are generally less hostile when they are integrated into the company's leadership and have a stake in every decision. Hapag-Lloyd is barreling ahead with the latest innovations, including automated ports and smart shipping containers.
Labor unions in the U.S. generally do not push for co-determination. They prefer a system that keeps unions independent organizations operating in an adversarial relationship with a host company. Under this system, union leaders can detach themselves from a business or an industry entirely. But that means decisions from the union based solely on membership dues can sap the future viability of a business. Take the decade-long fight by newspaper unions to force large news organizations to continue delivering paper in physical form in order to protect dues-paying deliverymen jobs. That helped save a few jobs for a short period, but ultimately bankrupted many news outlets.
There is also a long history of labor union hubris in America. The Biden administration's friendly, pro-union disposition — President Biden has already stated that he will not invoke the Taft-Hatley law that allows him to end the ILA strike forcibly — has perhaps encouraged unions such as the ILA to take an absolutist bargaining stance, wagering that with such welcoming political dynamics, any high-stakes bet will be rewarded.
That mindset has not always worked out for America’s workers. In many cases, unions have overplayed their hand, resulting in less political power for organized labor and less benefits and pay for ordinary workers.
In 1978, then-Sen. Ted Kennedy worked with his union allies to kill President Jimmy Carter's universal health care plan, believing that doing so would provide a political opening to pass a more comprehensive plan under a future Kennedy administration. That gambit failed as Kennedy lost his bid to replace Carter, and Ronald Reagan was swept into the White House.