Earnings Differentials of U'S' Dockworkers and Seafarers

1
Earnings Differentials of U.S. Dockworkers and
Seafarers

• Wayne K. Talley
• Maritime Institute
• Old Dominion University
• Norfolk, Virginia U.S.A.

2

• Containerization not only altered the designs of
  ships and ports but also radically altered cargo
  handling tasks, substituting capital for labor.
• Consequently, the demand for dockworkers
  dramatically declined in many countries with job
  losses ranging between 40 to 60.

3

• In the U.S. the dramatic decline in the number of
  dockworkers has surprisingly been accompanied by
  an increase in dockworker bargaining power in the
  shipping post-deregulation (i.e., the post-1984)
  period.
• Like U.S. dockworkers, the number of U.S.
  seafarers has also declined -- from 13,437
  licensed (40,539 unlicensed) seafarers in 1969 to
  4,054 licensed (9,392 unlicensed) seafarers in
  1987.
• However, unlike U.S. dockworkers, the bargaining
  power of U.S. seafarers has declined with the
  decline in the number of seafarers.

4

• While it is generally agreed that the bargaining
  power of U.S. dockworker unions has increased and
  that of U.S. seafarer unions has decreased in the
  post-1984 period, the comparative wages among
  U.S. dockworkers and seafarers for this period is
  unclear.
• If a significant union wage gap exists between
  the two occupations, the unions of the
  lowered-paid occupation and management of the
  higher-paid occupation may use this information
  in future wage negotiations.

5

• While the number of dockworkers declined, the
  productivity, wages and benefits of those
  dockworkers that remained dramatically increased.
• In the New York City metropolitan area, for
  example, there were 35,000 dockworkers in 1954
  and 2,700 in 2000.
• The ports cargo tonnage increased from 13.2 to
  44.9 million tons -- i.e., the productivity per
  dockworker increased 3,118 while the number of
  dockworkers decreased 95.

6

• Dockworker productivity at container ports has
  been enhanced from improvements in communication
  and information technologies, infrastructures and
  cranes.
• In 2002 the average annual salary of a full-time
  ILWU worker ranged between 105,278 and 167,122
  the average of the additional dockworker benefit
  package was 70,000.
• A contributing factor to the significant increase
  in dockworker wages has been the significant
  increase in dockworker bargaining power.

7

• The increase in bargaining power is attributed to
  the increase in demand for dockworkers (from the
  significant growth in container cargo) and the
  reluctance of dockworker employers to chance a
  strike (given the rising costs from disruptions
  in the utilization of expensive container port
  infrastructures and container ships and the
  potential lost of cargo to port competitors).
• Dockworker wages as a percent of a ports total
  cost have declined under containerization,
  thereby making the demand for dockworkers more
  wage inelastic.

8

• U.S. seafarer unions were established in the late
  1800s in response to the harsh treatment of
  seafarers by shipping companies, e.g., discipline
  on shipboard was absolute and seafarers on strike
  could be prosecuted for desertion.
• The bargaining power of U.S. seafarers has
  declined in the post-1984 period.
• This is attributed in part to the continuing
  decline in the size of the U.S. flag merchant
  marine fleet.

9

• In August 1987, the U.S. ocean-going merchant
  marine fleet consisted of 363 vessels, less than
  half the number in 1960 by 2003, this number had
  declined to 221.
• This decline occurred despite the continued
  growth in U.S. foreign commerce, preference
  cargoes (cargoes reserved by law, e.g., military
  cargoes, for U.S. flag vessels) and protected
  domestic trade (trade between U.S. ports that is
  reserved via the Jones Act for U.S. registered
  vessels).

10

• In 1986 the U.S. ocean-going merchant marine
  fleet transported 4.2 of the total tonnage of
  U.S. ocean-borne foreign trade by 2003, this
  percentage had declined to 2.0.
• The higher labor costs and more restrictive work
  rules of U.S. seafarers than those of foreign
  competitors have contributed to the decline in
  the U.S. flag merchant marine fleet.

11

• The collective bargaining power of and membership
  in most seafarer unions have declined -- not only
  due to the continuing decline in the U.S. flag
  merchant marine fleet but also to union rivalry
  (e.g., for military cargoes) and the growing
  reluctance by carriers to bargain with multiple
  unions.
• Union rivalry on occasion has been exploited by
  employers playing one union against another.

12

• Current Population Survey (CPS) data for the
  years 1984-97 are used to investigate the
  earnings differentials of port dockworkers versus
  seafarer captains/mates and sailors/deckhands.
• The sample includes individual workers who worked
  30 or more hours per week.

13

• For this study the CPS data have two
  shortcomings
• First, the data contain labor earnings, but not
  benefits ideally, one would prefer to analyze
  workers' total compensation packages of earnings
  and benefits.
• Second, the CPS survey typically does not collect
  information on respondents' employers
  consequently, the investigation is unable to
  control for firm characteristics.

14

• Hourly wage differentials of port dockworkers
  versus seafarer captains/mates and port
  dockworkers versus seafarer sailors/deckhands are
  investigated in separate estimations of the wage
  equation,
• lnHRWAGEij "1DOCKij "2UNEMij G"kXijk
  ,ij,
• where lnHRWAGEij is the natural log of the hourly
  wage in 1982-84 dollars of the ith worker in the
  jth year.

15

• DOCK is a binary variable equal to 1 for a
  dockworker and 0 if for an occupation, other than
  a dockworker.
• UNEM is the annual U.S. national civilian
  unemployment rate and is included to control for
  possible cyclical changes in the economy.

16

• X is a vector of control variables which includes
  a constant term as well as the variables years
  of schooling completed (SCHOOL) years of work
  experience (EXPER), approximated as age - SCHOOL
  - 5 years of experience squared/100 (EXPERSQ)
  and binary variables equal to 1 if the driver is
  white (WHITE), married (MARRIED), a male (MALE)
  or working in the Northeast (NORTHEAST), South
  (SOUTH) or West (WEST), as opposed to working in
  the North Central region of the country.
• The parameter "1 on DOCK measures the log hourly
  wage differential between a dockworker and an
  occupation, other than dockworker.

17

• Union Dock Parameter Estimates
• Captain/Mate Hourly Wage .1515 (3.95)
• Captain/Mate Weekly Wage .0673 (1.74)
• Sailor/Deckhand Hourly Wage .3321 (8.78)
• Sailor/Deckhand Weekly Wage .2707 (7.12)

18

• The DOCK coefficient estimates for the union
  pairings, dockworkers versus seafarer
  captains/mates and dockworkers versus seafarer
  sailors/deckhands, are positive and statistically
  significant.
• The DOCK coefficient estimates for dockworkers
  versus seafarer captains/mates indicate that the
  hourly and weekly wages of union dockworkers are
  16.4 and 7.0 greater than those of union
  seafarer captains/mates.

19

• For union dockworkers versus seafarer
  sailors/deckhands, the DOCK coefficient estimates
  indicate that the hourly and weekly wages of
  union dockworkers are 39.4 and 31.1 greater than
  those of union seafarer sailors/deckhands.

20

• Nonunion Dock Parameter Estimates
• Captain/Mate Hourly Wage .1096 (1.61)
• Captain/Mate Weekly Wage -.0015 (-0.12)
• Sailor/Deckhand Hourly Wage .2977 (5.29)
• Sailor/Deckhand Weekly Wage .2569 (4.66)

21

• The DOCK coefficient estimates for the nonunion
  pairings are statistically insignificant for the
  dockworker versus captain/mate pairing, but
  positive and statistically significant for the
  dockworker versus sailor/deckhand pairing.
• Alternatively, the estimates suggest that the
  wages of nonunion dockworkers and seafarer
  captains/mates are comparable, whereas the hourly
  and weekly wages of nonunion dockworkers are 34.7
  and 29.3 greater than those of nonunion seafarer
  sailors/deckhands.

22

• In summary, the estimation results suggest that
  the 1) union wages of dockworkers are greater
  than those of seafarer captains/mates and
  sailors/deckhands 2) the nonunion wages are
  comparable for dockworkers and seafarer
  captains/mates and 3) the nonunion wages of
  dockworkers are greater than those of seafarer
  sailors/deckhands.

23

• The estimates indicate positive union hourly and
  weekly wage gaps of 16.4 and 7.0 (39.4 and
  31.1) for dockworkers versus seafarer
  captains/mates (sailors/deckhands) the hourly
  and weekly wages of nonunion dockworkers are 34.7
  and 29.3 greater than those of nonunion seafarer
  sailors/deckhands.