Statement of Executive Director Walter Arsenault Before the New Jersey State Senate Labor Committee in Opposition to SJR36

April 28, 2014

Members of the Committee:

           In September of 2010, I was summoned to testify before the Senate Economic Growth Committee regarding the impact of the Waterfront Commission of New York Harbor on the competitiveness of the Port. Representatives of the International Longshoremen’s Association and the New York Shipping Association testified that the Commission was one of the biggest obstacles to the economic growth in the Port. Thomas Leonardis, who was then the President of ILA Local 1235, was one of the individuals who testified. Brandishing a longshoreman’s bailing hook, Mr. Leonardis dramatically proclaimed that the Waterfront Commission was “still living in 1953,” and was as obsolete as the hook, and interested only in perpetuating outdated stereotypes about organized crime in the Port.

           That day, I testified that not only did organized crime remain a major problem at the Port but, indeed, there would be indictments of individuals who were present in that stateroom. Less than four months later, Mr. Leonardis was arrested and indicted for conspiracy and multiple counts of extortion. He, along with numerous other ILA union officials, shop stewards and foremen, are scheduled to be tried in September in the New Jersey Federal District Court for racketeering and extortion of their own union members on behalf of the Genovese Organized Crime Family. It is not hard to understand the motivation for Mr. Leonardis’s testimony and that of the ILA.

            Today’s Joint Resolution advocates for the repeal of Section 5-p of the Waterfront Commission Act, which currently enables the Commission to regulate the size and diversity of the longshore workforce in Port. A repeal of 5-p would allow – and most likely lead to – an oversupply of available longshore labor in the Port, which is the environment most conducive to racketeering. The Commission’s ability to control the size of the labor force is a crucial weapon in the arsenal in our war against organized crime and labor racketeering. And, despite the industry’s protests, it is a very real war.

            The need for Section 5-p is supported by the federally appointed monitors for ILA Local 1588, once labeled by the appointment judge a “cesspool of corruption,” in Bayonne, as well as by the three New York City District Attorneys, whose jurisdictions cover parts of the Port. The objection of Richmond County District Attorney Dan Donovan, who is the son of a longshoreman and well acquainted with the realities of work at the docks, is particularly relevant. I have submitted their letters in opposition to the repeal of Section 5-p and incorporate their positions in my testimony today.

            In support of this resolution, the NYSA and ILA contend that the industry is capable of regulating itself, and that it can resist union demands to hire more employees than are needed. The Commission’s public hearings concerning unfair employment practices within the Port have put the lie to these claims. In March of 2012, the Commission released its Special Report to the Governors and Legislatures of the States of New Jersey and New York, detailing its finding on the public hearings that were held. I am submitting a copy of that Report as part of my testimony today.

            The hearings revealed that under the previous administration, which failed to responsibly enforce Section 5-p, the hiring, training and promotion practices of the industry have led to no-show and no-work jobs, favoritism and nepotism, the abusive and illogical interpretation of existing collective bargaining agreements, and the impact of such practices both on the competitiveness of the Port and on the morale and career prospects of decent, hard-working Port employees. Our Special Report details that such no-show and no-work positions, generally characterized by outsized salaries of up to $460,000 are overwhelmingly given to white males connected to organized crime figures or union leadership.

            These jobs still exist today, and virtually every terminal within the Port has “special deals” with connected union employees. Well over 100 employees collectively receive payments of millions of dollars each year for hours they never work. We have records of these special deals provided by the terminals themselves if you would like to examine them. Ask yourself, whether an industry that acquiesces to such deals is one that can regulate itself and resist union demands to flood the industry with excess labor?

            The revitalized Commission has pledged to aid any company in its efforts to fight the work practices and extortive behavior that would be unacceptable to any legitimate business. However, this change in culture will not come easily to an 3 industry with a long and intractable history of corruption and racketeering. Indeed, as then NYSA President Joseph Curto noted in response to the Commission’s Special Report, “[t]hese practices, many of which have been in place for more than fifty years, have made the port unnecessarily expensive and less competitive. Now is the time to address issues of excess staffing and hours of pay that are not commensurate with the work performed.”

            Without the Commission’s vigilant watch as allowed by Section 5-p, employers are helpless to determine the size of their workforce, and will be deprived of the ability to fairly recruit, hire, train and discipline their own employees. While there are many examples of this, the most notable is the well-publicized ILA slowdown after a terminal fired two employees who had not worked their assigned hours for months. Because they were well connected to union officials, the ILA engaged in a concerted four-day slowdown that resulted in massive delays in the Port and on the New Jersey Turnpike. And all for the simple reason that a terminal operator wanted to fire two employees who were not showing up for work.

            Last year, at a meeting called by the New York State Legislature, the NYSA argued that its members could handle their own businesses without government intervention. Those present were stunned to learn about the slowdown and even worse, that the terminal was forced to re-hire those employees. Mr. Curto could not reconcile his claim that the industry could stand on its own two feet when employers cannot even fire their own employees who don’t show up to work.

            Clearly, employers are unable to control their own workforce. It is this inability, not interference by the Commission, that has impeded the economic growth of the Port. Is this what the New Jersey Legislature wants to impose by statute? Because today’s Joint Resolution precisely demonstrates that desire.

            The NYSA and ILA have also shown that they have not been committed to diversity of its workforce. Our statutory mandate is to ensure fair hiring, which we consider synonymous with giving employment opportunities to everyone, especially those people who live in the towns and cities where the Port is located. A repeal of Section 5-p, which requires employers to certify their hiring is fair and non-discriminatory, would take away the Commission’s only means of doing so.

            Four years ago, in written testimony submitted to the Senate Economic Growth Committee, we reported that the composition of ILA locals was not representative of their cities’ demographics. Senator Cunningham asked us why 4 there was such a disparity, how long this has been going on and when we planned to investigate this serious issue. I testified that we were going to hold special hearings that following month. And indeed we did. The Commission’s subsequent Special Report details the industry’s disparate hiring practices, resulting in an incredible lack of diversity in waterfront employment, as well as an income gap among those minorities that are employed there.

            Shortly thereafter, we instituted a “pre-qualification” system for longshoremen, to ensure that there will be sufficient labor reserves when the economy revives and that the labor force reflects the diversity of the Port’s communities. This was our solution to overcome apparent ethnic and gender inequalities among the various types of registrants. The Commission invited members of the NYSA and ILA to meet with us to discuss the prequalification process, in an attempt to work together to promote equal opportunity, fair hiring practices, economic growth and prosperity in the Port.

            However, those attempts were not well received. The industry was not receptive to the thought of going to employment centers and other non-traditional sources to assemble a diverse pool of potential employees. Disturbingly, the ILA’s position was best summarized by ILA President Harold Daggett, who openly declared that the only people that he gets from the unemployment centers and projects are “garbage.”

            It became quickly evident that there would be no meaningful attempt by the industry to offer any strategy for diversification of the workforce. That did not deter the Commission. We partnered with the employment centers run by the New Jersey Department of Labor and Workforce Development and the New York City Department of Small Business Services, and assembled a racially diverse, prequalified group of men and women. And, when there was a shortage of labor, the Commission began to register them for work.

            The first time that the diverse group of new longshorepersons reported for work, the ILA stopped working in protest. The Commission was advised by a terminal manager that in order to resume operations he – and this unfortunate language is his, not mine – “segregated” the new workers in a room where they were not allowed work but would nonetheless be paid for the day. Only then did the ILA agree to go back to work. The Commission then had to force the NYSA to train the diverse group of workers at the same time as the ILA recruits.

            We are not talking about events from the Civil Rights era; we are talking about events that transpired less than three years ago. I am proud to say that those people that Mr. Daggett once labeled as “garbage” are now earning in excess of $100,000 working in the Port. This could only be accomplished under the Commission’s statutory 5-p powers.

            Notably, it was only when the Commission began actively moving forward with this initiative that the industry sought to become a part of the discussion on diversity. When we told the NYSA and ILA that they could each supply a diverse group of individuals for the employment pool, the NYSA – true to form – immediately surrendered all of their available slots to the ILA, claiming that they could not find anyone interested in becoming a longshoreman at that time. The ILA then submitted its idea of a diverse pool: 99 whites out of 100 people. 95 white males, 4 white females and one single African American male. That person turned out to be the brother of Jim Cobb, the NYSA’s Director of Governmental Affairs. And when he was selected to work, he declined the job saying he was not interested. The ILA’s “diverse” pool was effectively 100% white.

            In light of industry’s discriminatory hiring practices, the New York State Division of Human Rights has filed charges against the NYSA, ILA and ILA locals. Those charges are currently pending. I am submitting a copy of that Complaint as part of my testimony today.

            In this latest round of hiring, to combat such practices, the Commission asked that the industry implement a hiring plan that will result in individuals being hired in a fair and non-discriminatory basis – as is required of all other employers. In response, the NYSA has joined the ILA and its locals in a federal lawsuit claiming that the Commission has overstepped its statutory authority. A motion to dismiss the complaint in its entirety is now pending before the court, along with our request for sanctions for frivolous litigation. And, in a recent statement attacking the Commission’s efforts, NYSA President John Nardi staggeringly asserted that the ILA is “already a diverse workforce.” This is directly contradicted by the demographics of the only two ILA locals that have joined in the lawsuit, Local 1804-1 and Local 1814, whose registrants are less than 2% and 8% African American, respectively.

            At this time, the industry’s new hiring plan calls for 51% of the new workforce to be comprised of military veterans, while the balance will be NYSA referrals (24%) and ILA referrals (25%). In support of this veteran initiative, Harold Daggett indicated that, “[t]hose who served our nation should not have to battle for job opportunities at home.”

            Sadly, as Senator Pennacchio can confirm, the industry has fallen far short of their promise, and the hiring of veterans lags markedly behind. Over the past several months, the Commission has had to forcefully advocate on behalf of veterans whose background checks have been cleared and who are simply waiting for the NYSA and ILA to put them to work in the Port. This is unfortunate since, as expressed by Senator Raymond Lesniak at a recent press conference held by the NYSA and ILA, “[v]eterans should be at the front of the line, not the back of the line.”

            In March of 2013, the New Jersey Assembly passed a series of bills designed to help veterans obtain jobs. At that time, the New Jersey Department of Labor released statistics indicating that there were 19,000 unemployed veterans in the Garden State. New York Senator Kirsten Gillenbrand’s Office has released statistically similar figures for unemployed veterans in New York City and surrounding counties. Yet, the NYSA continues claim that they have been unable to find military veterans who want these lucrative jobs. Even more startling, given their inability to find these elusive veterans, is their staunch refusal to accept any assistance from the Commission, the Port Authority of New York and New Jersey, and the Adjutants General of both states to do so. In fact, the NYSA-ILA hiring plan specifically provides that no government agency will be used as a source for referrals.

            Without the Commission’s 5-p powers, there is no way for us to ensure fair hiring at the Port, and to guarantee that promises made by the ILA and the NYSA about diversifying the workforce or employing veterans are enforced.

            While the problems facing the Port are still serious, they are less apparent than they were in 1966 when Section 5-p was first enacted because, in the last 5 years, the revitalized Commission has properly used Section 5-p as a critical tool to combat organized crime from sinking its hooks even deeper into an industry that is inherently susceptible to its influence. As Commissioner Gilhooly testified, repealing Section 5-p would effectively hand the keys to the Port to the organized crime elements that we have been tirelessly working to overcome, and would take away our ability to ensure that hiring in the Port is done fairly and without discrimination.

            Since this administration was appointed in 2008, we have used Section 5-p to aggressively ensure fair hiring and a balanced workforce. No longer is the Commission, as it was in the previous decade, a regulatory body captured by the industry it was created to oversee. And now that we are doing our job, and doing it well, the NYSA and ILA have fought us on every front, from the filing of a baseless federal lawsuit challenging the constitutionality of Section 5-p, to massive lobbying attempts in efforts to have it repealed. The New York State Legislature, after holding hearings and carefully examining the arguments of both sides, has repeatedly determined that the continued need for 5-p is critical, in order to safeguard the workforce from mob exploitation and to ensure diversity in the Port. As detailed in the NYSA’s 2012 annual report, after meetings with members of the New York State Senate, “ . . . it became evident that there are a number of housekeeping issues that need to be addressed by the industry before serious consideration could be given to the amending section 5-p.”

            I submit that anyone who cares about diversity, the ability of employers to recruit, hire, train and discipline their own workforce, the security and mobility of the existing longshore workers, the reduction of organized crime influence, and the economic well-being of the Port could not, in good conscience, vote in favor of today’s Joint Resolution. To echo the sentiments expressed by Commissioner Gilhooly, the New Jersey Legislature should instead be focusing its efforts on the re-enactment of Section 5-p.

            Phoebe Sorial, the Commission’s General Counsel, will now address the NYSA and ILA’s claims that the Commission has been delaying the hiring of workers.