Dec. 1 (Bloomberg) -- Los Angeles’s highest-paid city employees get three-day weekends, 27 vacation days annually and an ocean view from their workplace.
They are the port pilots, whose job is to guide ships in and out of the Port of Los Angeles, the number one container handler in the U.S. The 15 men earned an average of $323,000 last year, more than the mayor and the chief of police in America’s second-most-populous city. Harbor users, not taxpayers, pay their salaries.
Pilots from 23 organizations across the U.S. make an average of $406,700 annually, according to data collected by Dibner Maritime Associates LLC of Chestnut Hill, Massachusetts. Henry Mahlmann, president of New York’s Sandy Hook Pilots association, declined to say how much his 72 pilots earned last year. He said Los Angeles’s $323,000 average pay was “in the neighborhood.”
“There’s 7 billion people in the world and less than 10,000 who do this,” said Edward Royles, a Los Angeles pilot and head of its union. “We perform an important function and do it safely.”
Municipalities across the country have fired and furloughed workers, contracted out services and slashed overtime pay in the wake of the worst recession since the 1930s. Pockets of prosperity still exist among some groups of public employees, as data for Los Angeles’s port pilots show.
Pilot pay has come under fire from shipping groups who must pay fees for the service. The harbor guides make more than commercial airline pilots and air-traffic controllers and their “monopoly-like system” is a drain on the economy, according to a 2009 study commissioned by the Miami-based Florida Alliance of Maritime Organizations Inc., a shipping trade group.
The Port of Los Angeles collected $7.4 million in pilot fees from shipping lines for the year that ended in June -- $700,000 less than it cost to run the program, according to Phillip Sanfield, a spokesman for the port.
Taxpayers aren’t on the hook for losses in the pilot program, as revenue from other port operations subsidizes the cost. The port posted operating income of $102 million on revenue of $401 million for the year that ended in June. Those profits, by state law, can only be spent on port-centered projects, said John Holmes, the port’s deputy executive director. Because the pilots are beneficiaries of the Los Angeles City Employees’ Retirement System, the city is responsible for their pensions.
The neighboring Port of Long Beach contracts its pilot work with a private operator, Jacobsen Pilot Service Inc., and keeps 13 percent of the fees, for a profit of $1.6 million last year, according to Art Wong, a spokesman for the port. Tom Jacobsen, president of the company, declined to say how much his employees earn.
Pilots work in 12-hours shifts, three days in a row, said John Betz, a Los Angeles pilot for nine years. Like a firehouse, the pilot station must be continuously manned. A typical day involves two ship movements per pilot, which take about two and half hours each, paperwork included, Betz said.
On a recent Wednesday afternoon, Betz guided Yang Ming Marine Transport Corp.’s YM Plum, a container ship finishing a 12-day journey from Pusan, South Korea, into Los Angeles Harbor. It carried more than 2,400 containers, stacked six high, holding “clothes, shoes, computer supplies, everything,” according to its captain, Ku Wenan.
Betz, 57, holds a law degree and chose not to practice. As the Plum approached a small fuel barge moored nearby, Betz instructed the crew to reduce speed. While the official limit at the port is 6 knots (11 kph), Betz said, at that clip and distance the wake of the Plum could rock the barge hard enough for its fuel line to disconnect.
“No visiting captain would know that,” Betz said, as he guided the Plum up to its berth.
Pilots require years of experience and detailed knowledge of the harbor, working in dangerous conditions, Royles said in a telephone interview. Pilots must climb rope ladders to board ships, sometimes at night, amid heaving swells, miles from land, he said.
The Los Angeles pilots are negotiating a new contract with the city. Making contributions to their retirement health-care benefits, as other city employees have done, is one point of negotiation, Royles said, though he wouldn’t comment on discussions overall.
Los Angeles is unusual in having municipal employees for pilots, according to Forrest Booth, a lawyer who represents the San Francisco Bar Pilots Association. Most are independent contractors who work for groups like San Francisco’s.
Ship captains are required under state and federal laws to use pilots to guide them in and out of ports as a safety precaution, Booth said. Accidents involving ships, such as the Exxon Valdez oil spill, can cost billions of dollars to clean up and shut down facilities critical to the nation’s economy.
Shipping lines typically pay a fee to the pilot group, which distributes profits to its members, Booth said. Pilot fees are set by local port commissions, as in Los Angeles, or by the state legislature, which is how New York operates.
When activity at the Port of Long Beach slows, as it has for the past three years, pilots make less money, said Jacobsen, whose company contracts for pilot service there. That isn’t always the case in Los Angeles, where the bulk of pilots’ compensation comes from salaries, he said. His company did away with a traditional pension plan in favor of 401(k)s in 2005.
Consultants in the 1990s recommended outsourcing Los Angeles’s pilot service. Union opposition prevented it from happening, according to Jacobsen.
The Port of Los Angeles charges just under $2,000 to guide a 300-meter (980-foot) ship through its harbor, according to a tariff schedule on the port’s website. That is about 25 percent less than what Long Beach charges and one-fifth that charged by ports in Houston and in Oakland, California, according to a 2009 tariff increase request by Jacobsen in Long Beach.
Keeping pilot rates lower allows Los Angeles to be more competitive with other ports, Holmes said. Input from pilots was incorporated into a wharf expansion that allowed Los Angeles to pass Long Beach in 2000 as the top container handler. Together the two ports account for about one-third of all container shipments in and out of the U.S.
“You don’t have as much control of a contractor as you do an employee,” Holmes said.
Because of retirements, Los Angeles is operating with three fewer pilots than it had three years ago. It hasn’t replaced them, a cost-saving move made easier by a decline in port traffic, according Michael Rubino, the city’s chief pilot. He earned $373,957 last year. The remaining pilots earn a larger share of a bonus pool.
Rubino, 56, is the son of a doctor. He grew up in San Pedro, the Los Angeles neighborhood that includes the port. Working as a ship officer for Texaco 25 years ago, Rubino said he took a pay cut to return to work in his hometown. Unlike many ship workers, pilots aren’t required to spend months at sea.
“We’re sailors with a lunch pail,” Rubino said.
Los Angeles’s pilots are underpaid relative to other maritime workers, he said. The pilots joined the International Longshore and Warehouse Union in 1995 and went on a four-month strike for higher pay two years later.
Minimum Pay Grade
Since joining the union, the base salary for a Port Pilot II, the minimum pay grade for the city’s current pilots, has climbed to $227,000 annually from $102,000, according to copies of their contracts with the city. In addition, pilots began collecting an “efficiency incentive” based on cargo volume.
Union negotiations have served to bring Los Angeles’s pilots “up to industry standards,” Rubino said.
“We’re not the highest paid and we’re not the lowest paid, we’re the fairest paid,” he said. Considering the volume the port does, “you’re getting good value,” he said.
The San Francisco-based Pacific Maritime Association, which represents shipping lines and successfully challenged piloting rate increases in Hawaii and San Francisco in the past year, questioned the accuracy of Dibner’s income estimates in a filing with the Washington Board of Pilotage Commissioners, that state’s authority that reviews tariff requests.
The group accused Dibner of using “flimsy, unverifiable data at selected ports to push up pilot incomes nationally -- a game of leapfrog,” according to the filing.
Brent Dibner, founder of the consulting firm, defended his work in a telephone interview, saying it represented the most “factual, diligent and balanced research representing this aspect of shipping.”
“This is the market -- gee, to the average American it sounds outrageous,” he said. “This is an extremely demanding and skilled profession. This is not just a bunch of snowplow drivers.”
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--With assistance from Michael B. Marois in Sacramento. Editors: Jeffrey Taylor, Pete Young
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