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Why these Hilton workers see losing their jobs as a gift, and what it says about unions

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MIDTOWN (PIX11) – The New York Hilton Midtown, on Sixth Avenue, has hosted a wide variety of celebrities and dignitaries, “from every U.S. president since John F. Kennedy to the Fab Four (in town for the Ed Sullivan Show),” according to its website.  Room prices start at $250 a night, and room service has always been assumed to be part of the hotel’s luxury.  Starting on August 20th, however, room service at the hotel is ending, and so are 55 jobs, including that of chef Guy Montgomery.

He doesn’t talk about the change in a negative way, though.  Instead he speaks in neutral, perhaps even upbeat, terms about his proposed severance.

“The package wouldn’t have been beneficial for me,” Montgomery told PIX11 News.  “I would’ve only gotten $55,000.”

For many hospitality workers — and other workers, for that matter — in the Tri State, $55,000 would be a significant lump sum payment, especially if they could look for other work while receiving it.  In Montgomery’s case, however, he’ll have the security of being given another job in the Hilton, and therefore retaining his seniority.  Also, the lump sum payment he could have gotten pales in comparison to others being received by some of his co-workers.

“I worked very hard to convince peoiple to take the package,” Montgomery told PIX11 News, “because the package was phenomenal.  There was people there walking away with over $100,000,” he said, adding, “After taxes.”

Of the 55 room service employees, 43 chose severance packages.  The other 12 were mostly younger or less senior workers.  They, like Montgomery and his co-worker Alain Jorge, got new jobs elsewhere in the hotel.

“It was good for me and my family,” Jorge, 32, said.  “So that’s why I decided to stay.”

Of the workers who accepted the enhanced severance, as their union, the New York Hotel Trades Council, calls it, 16 received more than $100,000 each.  It was the result of a compensation formula agreed to by the union and the hotel chain that the union president, Peter Ward, calls generous.

Each worker received 19 days’ pay for each year they’d worked at the hotel.  With one employee having worked up to four decades at the 50 year-old hotel, that translated into a $199,000 pay day.

And while his case was premium, he was by no means the only Hilton worker who did well.  “If you were a tipped employee,” Peter Ward, the union president, explained, “a worker who works for tips, you got double” the 19 days’ pay.

While Ward said that Hilton was a willing partner, he also said that the outcome did not have to turn out this way.  “None of that would have happened it they didn’t have a contract.”

Asked to elaborate, Ward pointed out that if the same situation had existed in a “right to work” state, where union membership in most jobs is not required, “I don’t think there is any doubt the hotel would have restructured, given pink slips and been done with it,” Ward said.

Instead, Hilton, which has a strong union relationship in New York, provided an addition to the enhanced severance packages, according to the union.  For each year that a room service employee worked, the hotel chain paid one day’s pay into a union medical fund.

For it’s part, Hilton only confirmed what workers and union management had told PIX11 News.  “The affected employees either chose to take alternate positions within the hotel or the severance packages that were offered to them,” a Hilton Worldwide spokesperson said in a written statement.

It was made in response to an inquiry PIX11 made while trying to determine if the $4.5 million payout that the Fortune 500 company was making could cause other hotels to think twice about ending room service.

The conclusion:  probably not.  Despite the one-time, seven-figure payout, Hilton ends up saving money not just in the long run, but in the medium run as well, by not having to pay wages and benefits now.

More important, it can now install a far less labor-intensive cafeteria-style, grab-and-go restaurant to replace its room service, which was an amenity that had fallen out of vogue with the type of guests Hilton is trying to attract.  In fact, at many of Hilton’s trendier competitors, room service was long ago replaced by doorknob delivery, in which a customer orders from the grab-and-go menu, and a waiter leaves the order in a bag hung on the guest’s door.  The New York Hilton Midtown will now have a similar service.

Employees like chef Guy Montgomery will prepare the food for that type of new room food delivery system.  He had worked at a hotel near Ground Zero before moving to the New York Hilton 13 years ago, and told PIX11 News that he knew firsthand how much better his current situation is than what many hotel workers received downtown after 9/11.

“A lot of people downtown weren’t organized [into unions], and unfortunately they lost their jobs,” he said.