Hotel and Garment Unions Settle on Breakup

The garment workers union will hang on to Amalgamated Bank and the hotel workers union will gain ownership of a 600,000-square-foot New York City office tower under terms of a tentative deal to end the bloody civil war that has raged between the two groups for nearly two years, sources on both sides said Monday, July 12.

As part of the deal, which still needs to be approved by the executive boards of both unions, the garment workers (Workers United) will also fork over a hefty amount of cash to the hotel workers (Unite Here). The total value of the deal to Unite Here, including the estimated $70 million, 28-story Seventh Avenue building, could be more than $150 million, according to sources familiar with the agreement. Unite Here will also regain control of some bargaining units that had flipped over to Workers United during the battle.

The trouble began almost immediately after the Union of Needletrades, Industrial and Textile Employees joined with the Hotel Employees and Restaurant Employees International Union in 2004 to create Unite Here, a 400,000-member group that presumably would wield dramatically enhanced clout. The relationship proved rocky from the start, as president Bruce Raynor of the garment workers’ side and president John Wilhelm from the hospitality side fought for power, virtually paralyzing the New York-based union.

The garment workers were a wealthy union, with holdings including real estate in New York City and Amalgamated Bank, which has nearly $5 billion in assets. The hotel workers had little in the way of financial assets, but added 250,000 members to the union’s ranks at a time when the dying textile industry threatened Unite’s membership.

When Raynor tried to annul the marriage, Wilhelm’s faction blocked the move. Some 100,000 of the garment workers then formed a breakaway union, Workers United, which affiliated with the powerful Service Employees International Union, led until recently by Andy Stern.

SEIU’s new president, Mary Kay Henry, was determined to end the fight and played an influential role in hammering out the tentative deal with Wilhelm, sources said. Its affiliate is paying a hefty price, but after almost two years of fighting that took time and resources away from organizing workers and a toll on the union’s reputation, leaders were anxious for peace, at whatever price.  

Filed by Daniel Massey of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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