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UNION SOLDIERS
Organized Labor Is Fighting for its Life.
And It's Got Some Brand-new Tricks up its Sleeves

Restaurant Business
November 20, 1994

A well-heeled party of four emerges form the posh Box Tree restaurant on Manhattan's East Side. Stepping onto the street, they walk smack into a burst of jeers hurled across a police barrier five yards away. "Full bellies, empty heads," shout the hecklers. "Shame on you." The diners had received the same welcome when they went in.

This has not been a pleasurable dining experience.

But it may have been a lonely one. Striking member of Local 100 of the Hotel Employees and Restaurant Employees union (HERE) say Box Tree's business is off by as much as 70% since their strike began Dec. 16. And the evidence this Saturday night may support their claim. Of the few who did pull up at the place at $150 per head for dinner, reputedly Manhattan's priciest some didn't even make it past the front door.

The strike pits 35 members of the local against Augustin Paege, Box Tree's millionaire Bulgarian owner. Strikers accuse Paege of raiding the tip pool, ignoring seniority, and failing to provide promised medical coverage. Paege denies most of the charges, but the union presses forth nonetheless. And the old-style picket line is only a small part of its arsenal. HERE has taken to the courts and even the international political arena to press its fight against Paege.

Paege, however, isn't the only restauranteur on HERE's hit list; nor is New York the only place where the union will kick up dust. While casinos and hotels will remain the primary focus, HERE now sees the nation's restaurants as fertile recruiting grounds teeming with would-be members. Of its neglect of restaurant organizing, HERE's vice president and western regional director John Wilhelm says, "It's something to be righted."

For the parent union, organizing Box Tree and countless other restaurants, hotels, and casinos is a matter of survival. This has been a dispiriting 20 years for HERE. Falling membership, political defeats, and corruption investigations have raised serious questions about its relevance to the industry. Now, with a new organizing challenge emerging in the explosion of casino gaming, HERE faces a pivotal moment in its history. The Box Tree strike offers a glimpse of the innovative tactics organized labor developed during the anti-union Reagan-Bush years.

Outside the restaurant, striking waiters hand out negative reviews of Box Tree from Travel & Leisure. A maitre d' hotel, cellular phone in hand, offers to book diners into equally tony, union restaurants in town. "The other restaurants," he says, "have been extremely accommodating."

For two years, though, the real action has taken place far away from the picket line on East 49th Street. Local 100 has relentlessly investigated Paege, using often damaging findings sizable unpaid tax bills, building code violations to launch attack after attack. As Paege told the New York Observer. "They digged, and they digged, and they digged. And they caused me a lot of harm."

Under union pressure, Paege was kicked off the boards of the prestigious Richard Tucker Music Foundation and the American University of Bulgaria. HERE joined forces with Stephen Sondheim to halt Box Tree from expanding to an adjacent building and pursued Paege through the courts, where he was found guilty first of illegally firing two workers for union organizing and later of appropriating $30,000 in tips and overtime pay from his employees.

The workers met with the Bulgarian ambassador to the U.S., leafleted the VIP room at the Bulgaria's World Cup games, and won the support of Bulgaria's labor confederation. As Brooks Bitterman, research director at Local 100, says of the Paege campaign: "We're slaughtering the guy."

The times have nonetheless taken their toll on the union. HERE is cagey about its size and tends to exaggeration, but its membership ranks have dramatically declined. According to the AFL-CIO, the robust HERE of 1975, which had 421,000 members, had shrunk to an anemic 258,000 last year. Wilhelm says the losses "came primarily in restaurant in a number of major cities." Many old-time fine-dining spots of yore union shopshave disappeared. But members were also lost after a combination of hotel overbuilding and recession led to a drop in occupancy rates and ultimately in jobs.

HERE's run-ins with the law didn't help. A 1984 report by the Senate Permanent Committee on Investigations found evidence of extensive criminal infiltration in the union. The report painted a picture of a deeply corrupt organization run as a lucrative personal fiefdom by general president Ed Hanley, whose own ascent was arranged by Chicago mobsters. The report also alleged that health and welfare plans were raided or mismanaged, and that the union's payroll was padded with friends and relatives of union leaders, including criminals. Hanley and a slew of others took the Fifth at those Senate hearings, and Hanley remains general president to this day.

It's nice work. Hanley pulled down a princely $310,062 last year in salary and expenses as head of a union whose members often struggle to make ends meet. Those immediately below Hanley also did well. John O'Gara raked in $246,270 as general vice president. He also happens to be Hanley's cousin, the Senate committee points out. Hanley's sone Thomas made $248,785 as a union director. Together with the $283,244 haul of treasurer Herman Leavitt, HERE's top four men earned over $1 million last year.

Politics also played a role in dampening whatever prounion ardor may once have existed. Organized labor know it was in for trouble when Ronald Reagan was elected, and his crushing the air traffic controllers' strike confirmed it. Since then, the union says, the balance of power has tipped decisively in favor of employers. Labor views the National Labor Relations Act as a toothless tiger that employers can flaunt almost at will. "American labor laws are completely useless," argues HERE's Wilhelm. "It's a ludicrous process getting the union accepted as a bargaining agent."

HERE stays away from the National Labor Relations Board whenever possible. Instead, it has developed its own plan of action, based on three basic tenets: Organize, cooperate where possible, but know your enemy and use that knowledge against him. The West has been HERE's testing ground, starting with the giant money machine in the desert. Wilhelm came to Las Vegas in January 1987, three years after a vicious 61- day hotel strike, complete with mass arrests and imported strikebreakers. "The 1984 strike was very bad for the industry and the union," he says. "It polarized management and union in a way that doesn't work in a service industry, where the workers determine the customer experience."

The organizers called in to rebuild Las Vegas' Local 226 did well enough that by 1989, they were able to win unprecedented terms from the major casinos. The casinos agreed to stay neutral in organizing drives and to accept the union if a majority of workers signed union cards. Under the new contract, the union blossomed, succeeding in organizing four of the five new "mega-resorts" built this far. Membership ballooned form 22,000 in 1987 to 40,000 today, making 226 the largest local in the country.

The battle for Vegas had an important side effect in how the union does business. When it comes to a fight, "We spend a lot of energy looking at the corporate situation of a parent company, what its strengths and weaknesses are, where it is vulnerable," Wilhelm says. "Traditional union strategies developed at a time when ownership of the hotel and restaurant industry was local. The strategies that were appropriate and effective with local ownership make no sense when you are dealing with ITT."

It is a pertinent example. ITT Corp., whose Sheraton division operated the unionized Desert Inn, and hopes to build the Desert Kingdom, a mega-resort next door, says this time it will not accept the 1989 terms letting the union organize without opposition. Wilhelm's response: "Sheraton produces considerably less than 10% of the revenues of the group. If we are dealing with Sheraton in one city, we are nothing more than a gnat on the back of an elephant. But the Hartford Insurance Group is ITT's largest source of income, and it has a number of very interesting problems." In short, HERE has spotted a chink in ITT's armor:

But it is the fight over the $1-billion MGM Grand Hotel Casino and Theme Park that may prove the watershed for HERE in Las Vegas. Veteran union buster Bob Maxey has vowed to stop Local 226 from unionizing 5,000 workers. The face-off is already shaping up as a long struggle of the old stamp. True to form, the union is organizing from the outside and following MGM's plans elsewhere. "It has indicated an interest in a casino in Toronto," says Wilhelm of MGM. "The union movement is very strong there."

For the union, the stakes are high. Las Vegas is booming. Its population doubled between 1980 and 1993, and its gambling base is growing just as fast. Local 226 can't afford major breached in the wall in its flagship "union town." Already, Wilhelm says, casinos in contract talks are looking for three-year, rather than five-year deals. "They say the climate is changing so fast, they want to see how the industry develops," he says. "There is some logic to that. But the real reason is they want to see what happens at MGM."

For all the tough talk, Wilhelm says the union's major achievement in the last eight years is to have "persuaded the majority of the industry we are here to stay, and that it can be productive relationship for all concerned." He cites Local 226's support for the employer line on workers' comp reform in Nevada, because "the whole system was going to crash." He also mentions the frequent legislative collaboration between the union's Washington lobbyist, Bob Giuliano, and employer groups.

"If you've got people who are honest and who are part of an industry that is growing and is as large as ours, 80% to 90% of the issues you can work together," Giuliano says. Bill Fisther, executive vice president of the National Restaurant Association, calls Giuliano "a man of integrity," and says the two have found common ground on issues including business meals deductibility.

Wilhelm says the idea that labor and management might benefit from bile-free dialogue is spreading. San Francisco, home of a famously militant restaurant local, is hardly the venue you'd expect for a revolutionary exercise in worker-boss cooperation, but times are tough. Sas Local 2 president Sherry Chiesa says: "The last five years were exceedingly difficult for the hotel industry. There were lots of cutbacks and dining room closures. We were losing a considerable amount of jobs, and they were having problem." Indeed, Chiesa says membership has tumbled to about 10,000 from 16,000 in the 10 years following a disastrous 1984 strike against 41 city restaurants.

Stuart Korshak, labor counsel for the San Francisco Hotel Multi-employer Group, says: "The hotel leadership had to make some very significant changes to survive. And they also realized they couldn't accomplish it by war."

The result was a five-year pact covering 4,000 workers at 12 major hotels, It provides for regular meetings of joint problem-solving teams, with the authority to change elements of the contract as it runs, and a new mediation system. The pact also provides a big boost for employee training, with employers putting up $15 per worker per month, and the union, buttressed by a fat, well-managed health insurance fund, shaving $70 to $80 per employee per month from the employers' contribution. Hotels also promised not to subcontract food and beverage outlets and to provide severance pay and retraining if a hotel is sold and employees are not rehired.

Korshak concedes that eight hotels opted out of the pact, including Hilton, and that the industry will have to be convinced this deal can work before trying it in other jurisdictions. Still, he believes the pact signals a dawning recognition on the industry's part that change must come.

New York's Local 100 is said to be free of mob influence

As they gaze across the U.S., organizers see wide swathes remaining fiercely anti-union. And HERE's influence over the restaurant industry continues to wither as it diverts its funds elsewhere.

Elsewhere means the new river boats and gambling houses opening all over, as well as hotels. "It takes as much in resources to organize a 400-person hotel as it does for a 40-person restaurant." Chiesa says. "It's a question of resources."

Ed Miller knows about resources and the lack of them. As HERE's coordinator for the South and Southwest, he presides over an area that, with the exception of South Florida, is a wasteland for the union. In Houston, the nation's fourth largest city, there isn't a single HERE-organized restaurant or hotel. In Dallas, the seventh largest, there is one union hotel and no union restaurant.

"How's it going?" says Miller. "Slow. They're putting the effort in other parts of the country right now. They're gonna come back here later." He adds of the new gambling outlets. "If we let them open up and run, they're gonna test us somewhere else. But if we succeed in organizing them, especially in the South, the hope is that it will catch on."

Miller says the union's poor showing is the result of poverty, lack of education, and the high number of immigrant workers. But Southern states are also right-to-work states. Workers get the same benefits whether or not they join the union a big obstacle to recruitment.

Richie Jackson, executive vice president of the Texas Restaurant Association, argues: "Employers do a good job of meeting employees' expectations."

Miller says the new Orleans river boats are a prime target for HERE. "There's going to be a battle there," he says. And once the 10 New Orleans river boats and the upcoming land-based casino are organized, Miller hopes to go after restaurants by showing workers their unionized counterparts do better in wages and benefits.

Restauranteurs are taking no chances. Earlier this year, the Louisiana Restaurant Association held a seminar described as "a refresher course in the basic principles of union avoidance." As executive vice president Jim Funk said: "It's about taking care of your people in a way that stops the union getting in. We are trying to remind our people not to forget their responsibilities as good employers."

Anti-union drives around the country have led the labor movement as a whole, and HERE with it, to a crucial stage. Will the movement rally, or is it doomed to a position of even less consequence? Lobbyist Bob Giuliano isn't optimistic. "I believe unions are going to have a minor role," he says. "There are predictions that by the end of the century only 7% of the workforce will be unionized."

If HERE is to counterattack, particularly where restaurants are concerned, it is cities like New York that will raise the standard first. Wilhelm says, "The most intereting work in the union regarding restaurants is happening in New York, with Henry Tamarin and Local 100."

That in itself is a remarkable turnaround. In October 1992, federal prosecutors charged that "since its inception [in 1983], Local 100 has been infiltrated by organized crime." When the international named Tamarin trustee, membership had fallen from 20,000 to about 4,000. As many as 142 collective bargaining agreements, out of 400 or so, had expired when he took over.

The problem of mob influence has been corrected, if not forgotten. A July 21 report on Local 100 by court-appointed officer Mary Shannon Little concluded there was no longer "even a hint of organized crime's influence."

Tamarin, distracted by the huge job of stabilizing membership, righting the local's finances, and organizing elections, has done little restaurant organizing so far. Asked when he might begin, he offers a "no comment," leaving the impression that a drive might be starting as we speak.

He has already formed the Local 100 Restaurant Council, comprising 70 restaurants, with the aim of negotiating a single industry-wide contract. That will not be easy. And even if Tamarin succeeds, it would hardly signal a revival of restaurant organizing nationwide. But the evidence of the Box Tree strike suggests the industry would be unwise to write off HERE quite yet.

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