Guaranteed income program could sink the port's recovery Dockworkers' benefit is at a crucial juncture

December 29, 1991|By John H. Gormley Jr.

Jim, a longshoreman who works for Universal Maritime Service Corp., is one of the lucky ones in the port. Despite low seniority, he works fairly regularly loading and unloading ships, logging about 15 to 16 hours of work a week.

But on those four or five days a week when Universal has no work for him, he shows up at the union hiring hall on Oldham Street in Highlandtown to try for more. The pickings are extremely thin.

On a recent Tuesday morning, there were only 65 jobs to be had for the approximately 600 longshoremen who showed up. That afternoon, when most of the others had gone home, Jim was still there on the slim chance that an odd job might show up. It didn't.

"There's just not enough work for the amount of people in this hall," Jim said.

The shortage of work is not just a problem for Jim and the longshoremen. The issue has serious consequences for the competitive posture of the port. That's because benefits paid to underemployed dockworkers account for more than 10 percent of the hourly cost of employing a longshoreman in Baltimore.

This guaranteed annual income program -- a kind of private unemployment insurance fringe benefit funded through an assessment on port employers -- is at a crucial juncture.

Because of changes in the longshoremen's contract, combined with normal attrition of the work force, the GAI program may gradually shrink and even disappear in the next few years.

That raises the prospect that the basic cost of employing a longshoreman in Baltimore could decline drastically, a change that would significantly reduce the cost of moving cargo across Baltimore's piers. But in the short term, the GAI fund continues to be under pressure, posing a threat of higher labor costs just when the port seems poised for a rebound.

"The GAI is still a problem," said Maurice C. Byan, president of the Steamship Trade Association of Baltimore Inc., the group representing employers of dockworkers. "For the number of hours [of work available], we still have 300 to 400 too many men."

Last year, the GAI paid out about $10 million in benefits. That represents a dramatic improvement from the year before, when about $13 million in benefits were paid. Most of the decrease was the result of stricter eligibility requirements agreed to in the contract reached a year ago by the International Longshoremen's Association and the port employers. Mr. Byan estimates those rule changes saved employers $2.5 million.

But despite those changes, the fund is still operating at a deficit. Mr. Byan refused to divulge the amount of the deficit, but based on total salary and benefit figures, the shortfall is probably about $1.5 million.

The port simply cannot afford to continue to run that kind of deficit much longer, Mr. Byan declared.

Employers currently pay into the GAI fund $3.75 for each hour worked by an ILA longshoreman in the port, bringing the hourly cost of employing a longshoreman in Baltimore to $35.40. That breaks down to $20 per hour in base wages and $15.40 in fringe benefits, including the GAI.

The port will be unable to reduce the $3.75 assessment in the near future "unless there's a dramatic increase in hours [worked] or a dramatic decrease in the number of workers," Mr. Byan said.

If business stays the same or drops off, the demand for GAI benefits could force the STA to increase the $3.75 assessment.

"Suppose the economy remains stagnant," Mr. Byan said. "That would certainly affect our GAI payout."

Faced with the choice of running a deficit for a few more years or raising the GAI assessment, the employers would have no choice but to raise the assessment.

That, of course, would hurt the port's competitive position, especially in respect to archrival Hampton Roads, Va. The Virginia ports also have a GAI program, but because there is full employment there, the demand for unemployment benefits is negligible. That means there is no need to assess employers to fund the program.

One of the most insidious aspects of the GAI program in Baltimore is that it tends to feed on itself. If the GAI assessment were raised and the port lost business as a consequence, unemployment on the docks in Baltimore would rise, increasing the demand for GAI benefits.

Demand for more benefits would increase the deficit in the fund, forcing yet another increase in the assessment.

The port seemed to be in just such a destructive spiral during much of the last decade.

From 1982 to 1987, the assessment went up every year as employment fell. In the contract negotiated

with the ILA in 1986, employers won some relief on the rules governing the payouts, and the amount of benefits actually paid took a big drop the next year. But by 1990 they were back to historic highs, and the amount of work available in the port continued to decline.

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