Labor costs helped topple Mory’s

An unfavorable economic climate and declining revenues were not the only factors involved in Mory’s abrupt December closure. High labor costs — especially hefty benefit packages paid to unionized workers — also played a significant role, an aspect of the iconic eating club’s troubles that officials had not previously discussed publicly, a club official said this week.

“Very expensive” labor costs, coupled with other external economic factors, made it impossible for Mory’s to break even, said Christopher Getman ’64, president of the Mory’s Board of Governors. Getman said he hopes to reach an agreement with the union to reduce these costs, which included compensation packages for the club’s management as well as wages and benefits for members of the worker union, UNITE HERE Local 217, as part of a larger business plan to reopen the restaurant in the fall.

After a century as a Yale icon, Mory’s closed over winter break, citing financial difficulties.
Charles Francis
After a century as a Yale icon, Mory’s closed over winter break, citing financial difficulties.

“The labor costs were onerous,” Getman said in an interview. “My suspicion is it would be hard for us to open under exactly the same circumstances by which we retired.”

According to tax forms, the 160-year-old institution paid over $850,000 in labor costs in 2007, up from about $820,000 in 2006. Getman pointed to insurance benefits such as health care and dental care insurance as the major culprits behind the steep costs.

In mid-December, as Mory’s struggled to stay afloat financially, the club’s management asked union employees to vote on eight concessions to their union contract, which will expire in 2011, said Leonard Nalencz, the state director for Local 217.

At that meeting, the approximately two dozen employees present approved only two of the concessions, Nalencz said. These measures included a freeze on all of Mory’s contributions to their pension plans in 2009 as well as the removal of three cashier positions. The three workers who had those positions have been offered other jobs at the restaurant, Nalencz said.

Nalencz said an attorney from the New Haven-based law firm that has been representing Mory’s, Wiggin and Dana LLP, estimated that the two concessions would have saved Mory’s a little more than $100,000 in labor costs this year.

But a few days after the employee meeting, Mory’s announced that it would be shutting its doors for an indefinite time period in order to rethink its operating policies and membership recruitment. While the club fired all management staff except controller Robin Soltesz, the union employees were put on temporary layoff, much to the surprise of some of them. When the club reopens, they will be able to assume positions with comparable seniority and benefits, Getman said.

As the Board of Governors tries to solicit funding and put together a business plan that will allow the club to reopen, representatives from Mory’s and the union have been staying in touch about the club’s financial status. “We had a chat with them after we closed,” Getman said of the discussions. “And we’ll have more chats with them.”

But one union member said he thinks the concessions already made by the union are unfair. “By making these demands, … [Mory’s management is] taking too much away from us,” said Lucas Vicente, a cook and the union’s chief steward at Mory’s. “It is not our fault that we have to give these benefits for them to stay open.”

After the Board of Governors informed employees of the closure in December, Vicente said, the entire staff went up to the club’s President’s Room to say their goodbyes.

“We have been there for a long time and we are more than friends,” said Vicente, who said he is not currently employed. “We are more like family, and hopefully we will get back together again someday.”

“But then again,” he added, “we don’t know if we are going to get together again.”

Both Getman and Nalencz said the relationship between the restaurant and union has been amiable. The Local 217 union has represented Mory’s cooks, waiters, pantry workers and dishwashers since the 1970s.

“We had a very good relationship with our workers,” Getman said. “We felt, to put it delicately, that they were well-compensated.”

But Nalencz stressed that the cost-cutting required to keep Mory’s profitable must come not only from belt-tightening of union benefits, but also from increases in membership fees and other structural changes in the club’s management.

Comments

  • Pierson '90

    "High labor costs — especially hefty benefit packages paid to unionized workers — also played a significant role"

    Glad to see the Daily News had the guts to report this. Those high union labor costs are what sunk the US auto industry, and if continued to go unchecked, may just destroy our entire economy.

  • Self ingestion

    Health care is the hyena in the middle of the room which is eating its own intestines.

    If Obama doesn't solve the health care insatiable appetite (and Dashcle's demise is an omen he won't) Mory's will be only a harbinger of collapses yet to come.
    How can we put a man on the moon in a tenyear self-challenge, and allow health care costs to gobble up our econmy?

  • Union NO!

    Imagine that . . . another Rust-Belt business done in by rapacious Union labor costs.

    Let's break it down: if the business fails, it's because they didn't generate enough revenue to cover their costs. Thus, the Union (with all of artificial protections it gains from the State and Federal Governments) was able to charge HIGHER THAN MARKET RATES for their labor.

    If Mory's could have paid market rate, it would have had a far better chance of surviving.

    Unions served their purposes 100 years ago. Now, they need to wither away and die.

  • Recent Alum

    Beyond unbelievable that Unions could successfully destroy this longstanding Yale tradition. In the current economic climate, it is more than ever time to purge the Unions once and for all from our campus.

  • JasonM

    With results like this, who wouldn't want to be represented by a union?

    Local 217 is following in the proud tradition that has made Detroit what it is today.

  • Just Doesn't Get It

    But one union member said he thinks the concessions already made by the union are unfair. “By making these demands, … [Mory’s management is] taking too much away from us,” said Lucas Vicente, a cook and the union’s chief steward at Mory’s. “It is not our fault that we have to give these benefits for them to stay open.”

    It's not OUR fault.

    Yah, better to be JOBLESS in a SHRINKING ECONOMY than to accept a decrease in benefits. Good thinking!

    "You've always been an all or nothing kind of guy and, since you can't have it all, you get nothing."

    Thphhhhttt!

    Goodbye Mory's; HellllOOOO breadline!

    BTW: if Mory's goes bankrupt and reorgs under a new business entity, *I* would take a waiter job there for NO benefits!

    Beats eating snow…

  • Anonymous

    #2's got it right. It's not like the benefits have gotten a lot sweeter or the pay has gotten a lot better; health care costs have skyrocketed. The rancor of all the "screw unions" comments baffles me, but I guess it's an easier argument to make than "Our system of health care is great and working-class people just don't deserve any."

  • Spherical Cow

    The comments on this board are all the more reason to pass the Employee Free Choice Act — now — before conservatives have a chance to gut unions. Using the fear from an economic downturn, they want to destroy the middle-class in America.

    Middle-class, WAKE UP. This is OUR country. There will be storms, and we will weather them. Stable families, secure marriages, cohesive communities — all of these rely of people having jobs that pay solid wages.

    As evidenced by some of the comments here, there are many who think that in times of economic opportunity, the wealthy should gain all the profits, and in times of economic depression, they should be protected from the consequences.

    The irony is that when we say this, we are accused of "class warfare." The reason there isn't class warfare to a large extent in this country is because there is a gradient from poor to rich, with a alrge middle class. Get rid of unions, lower wages, and hell, we'll have our revolution. That, or an educated elite surrounded by a huge working poor.

    Mory's went out of business. Businesses go out of business. Labor costs are a cost of business. Yes, eliminating labor costs would allow more businesses to remain open. So would paying 50 cents an hour. Maybe these Mory's sycophants could take the time to realize that the reason some of these workers aren't willing to accept lower wages is because they were already struggling to make ends meet, and these reductions would have made that impossible.

    I'm terribly sorry that you can no longer toast at Mory's. I here that Hades is offering discouts — why not try there?

  • Alum

    ##3,4,5 and 6: thanks for sharing your vitriol. I am no fan of the Yale labor unions but the one way you can assure failure in reforming them is to come on with the attitudes demonstrated in your sophomoric comments. I've been involved in both unionized and nonunionized businesses and had successes with each. I don't know the facts of the Mory's situation (something I'm confident I share with all of you), but nothing is to be gained by attempting to villainize the union. I expect that if Mory's is to be resuscitated, it will need to bring in a professional restaurant company. Why not drop the exclusivity of a club and just open to the public?

  • Alum

    Mory's failure to remain a viable business is not the workers' fault, but rather evidence of the fact that a business model based entirely on elitism and tradition is no longer viable in New Haven. It's not 217's fault that more people don't like lousy food and pathetically outdated ritual.

    That building could be used for so many more worthy things, by the way. How about a decent child care facility? Some office space for non-ladder faculty (who seem to have to hold their office hours at ABP)? At the very least, it should be used for retail that appeals to more of the residents of New Haven.

  • To #9

    Bully for you!

    Indeed, perhaps I WANT to "assure failure in reforming them," for then, as we are seeing, they will simply…fail.

    GM? Ford? Chrysler? (versus non-union shops such as Honda?) Who will survive?

    Mory's?

    Unions are succeeding in killing the golden goose all of their own selves--c'est la vie. These newly no-nosed folks can enjoy their pyrrhic vic until the unemployment runs out…

    *MY* employees--each and every one of them (myself included)--have agreed to pay and benefits cuts; why?

    We chose FULL EMPLOYMENT for ALL at reduced compensation over FULL EMPLOYMENT for SOME (a la, the union method). Mory's employees, it seems, chose the latter: too bad their "some" became the "none."

  • Matt

    I would work at Mory's for less than what I've heard their wages are. I would do their job for less, but the unions don't allow me to. The unions prevent me from becoming middle class by propping up the selfish old-timers. Let me work! Unions have no place in modern day america.

  • Recent Alum

    Spherical Cow: The Employee "Free Choice" [sic] Act is a misnomer that would have made Orwell proud. How can you defend a system in which thugs can pressure employees to sign cards? What exactly is wrong with a secret, free vote where employees are not pressured to vote against their own preferences?

  • Locomotive Breath

    "all of these rely on people having jobs that pay solid wages"

    all of these rely on businesses that make a profit to provide jobs

  • Spherical Cow

    Recent Alum,

    How can you defend a system in which businesses control how and when employees can vote? How can you condone a system in which workers are routinely forced into brain-washing sessions in which they are told that unionization will cause them to lose their jobs.

    "Secret" elections were put in place during the Red Scare, mid-century, in order to repress unions, and have remained there ever since.

    The Yale-New Haven Hospital fiasco is proof that businesses will go to great lengths to prevent unionzation, including breaking federal law, as long as that federal law has no teeth. If you are concerened about harassment, then make a law against harassment, instead of throwing the baby out with the bathwater.

    You still haven't addressed the fact that real wage increase in the U.S. have an incredibly close correlation with union growth. Don't say GDP to me: why should the middle-class care about GDP, unless it helps their families, too?

  • Darn Tootin'

    "There is a deep problem in Islam. It's a world whose values are different. A world in which human life doesn't have the same value as it does in the West, in which freedom, democracy, openness and creativity are alien. Therefore, the people we are fighting have no moral inhibitions."

    That about sums. it. up.

  • Darn Tootin'

    Rats: wrong forum!

  • Anonymous

    Has any of you defending unions ever OWNED a small business?
    In a downturn, the owner is the last to get paid. When things get tighter, everybody else gets paid EXCEPT the owner. When things are really tight for a few months, the owner ends up sinking his own money to keep the business afloat.
    I know, I haven't drawn a salary since September, and have been depleting my 2nd mortgage credit line into keeping the business going.
    So please spare me the "middle class blues"("all of these rely on people having jobs that pay solid wages"), there are a lot of small business owners out there sweating bullets and staking their all making sure their employees are still getting paid, at all.
    The "It's not my fault" comment from an unemployment check recipient is particularly galling. Perhaps him and his union colleagues would have felt a little different about Mory's failure if there was no unemployment check waiting.

  • ???

    "Secret" elections?

    Do you, similarly, support "open ballot" elections for public office?

    "Secret" ballot is the very ESSENCE of democracy, free choice, etc. Freedom from coercion is also essential.

    The "card check" so-called "neutrality" method (used so efficaciously by our own GESO goon squad) is far more "scary" than the "repression" of secret balloting.

    Sheesh. Seriously--one must really have a double-think, double-speak mindset to even ENTERTAIN such blatant and self-evident falsehoods.

  • jeff g

    I guess unions caused this financial mess were in at this time? Your complaining because labor cost are to high? What do you want to pay these workers $8.00 an hour with no benifits? Do you realize how expensive it is to survive in this country? A cook shouldn't be able to support his or her family?, but it is alright that an Ivy league grad should be paid millions on wall st. Unions did not cause the down fall of the us auto industry, it was poor management.Unions members only do as they are told, they are sheep being lead by wolves. They don't make major decisions top management does, if management can not control unions they shouldn't be in management. Take a good look at your Ups delivery driver, he is a union employee that is held accountable for his actions. I grant you that a lot of Yale union workers are slugs, but look who is leading them.

  • Gee Whiz

    Spherical Cow,

    How profoundly wrong you are. The ability to voice one's opinion in a secret ballot is the primary difference between having a choice and having to watch your back. If you were one of a few workers keeping a union from forming in a shop, you'd be pressured daily to fall in line until you caved in. Maybe your tires are flat one day, then again, maybe something happens to your spouse's car, etc. They don't have to outright threaten you to get your attention and vote.

    Unions can be formed anytime they are wanted if more workers want them than those that don't. Owners can freely advise workers of the benefits of not having a union and union bosses can lecture the other side. That makes the system work.

    Market pressures and competition raise wages. If the wages offered are too low to live on, no one applies or stays with the job. If the market is competitive, others companies raise wages to get better workers, etc. If a company can invest in a machine to do a job that they pay someone to do, the job will disappear. How does a union prevent jobs from disappearing when industries modernize?

  • Nola

    Is it just me or is this coincidental timing that the union is getting the blame right before Yale and the unions are about to start their new contract negotiations?

  • T.R

    As for the Hyena in the room, Health Care. Here is a hint. Could everyone take a walk down High Street and cross over 34 to the YNH Hospital and ask the doctors interns and nurses how much in Student Loans they are carrying on their backs or just ask their Mom's and Dads spent on said education, then perhaps mosey back to the Law Library and see how many future grads will be making aliving off the overburdend folks across Rt 34. Obama and Dachel ain't the answer their lawyers worse still their non parcticing lawyers.

  • Mike

    Good thing all businessmen are so benevolent and just by nature so as to preclude the need for unions, for surely America would be in a bad spot right now otherwise…

  • Recent Alum

    Gee Whiz, thanks for responding to Spherical Cow for me and saving me some trouble. I'd just like to add that the following comment from SC was pretty ironic:

    "How can you condone a system in which workers are routinely forced into brain-washing sessions in which they are told that unionization will cause them to lose their jobs."

    Aren't we discussing a case (Mory's) in which unionization did in fact cause the employees to lose their jobs?

  • Anonymous

    Oh, tut-tut stewards and waiters, we will no long enjoy our parbroiled beef with raspberry glaze…Smithers…break that union, post-haste!

  • josh

    It's sad to see so many people bashing Mory's labor policies when all they were doing was providing their employees with a reasonable wage.

    While the 'market wage' may be the most efficient way to run a business and way to elicit the most profit for the shareholders, that has nothing to do with what a reasonable and living wage for those working there is and thus shouldn't be the only factor taken into consideration.

  • ??

    Josh: then you really do not understand "market wage." If the wage were too low, then not enough ppl would take such jobs; wages would have to rise to elicit market supply.

    In this case, the "reasonable" wage you cite, in the end, caused ALL employees to lose ALL their incomes.

    Which would have been better: lower--but continued--wages (or, in this case, benefits, so "compensation" is more accurate than "wages") or… ZERO? No wages, no benefits, no NUTHIN?

    You do the math…

  • mae

    RE: High labor costs — especially hefty benefit packages paid to unionized workers — also played a significant role"

    And the self-satisfied rejoinder:
    Glad to see the Daily News had the guts to report this. Those high union labor costs are what sunk the US auto industry, and if continued to go unchecked, may just destroy our entire economy.

    EXACTLY WRONG
    It is the unions that made the economy, by providing a middle class to tap into the capitalist system that the glden parachute crowd ruined.

  • Ida

    Thanks to # 9,27 and 29 for standing up to this pitiful union - bashing.

    It is really a scary sign that so many bright young upstarts are so insecure as to have to keep the working man down with a minimum wage and no benefits in order to feel that HE is successful. Is the the Yalie we are creating?

  • The Contrarian

    To #10

    Since at present, you'd have to steal the building in order to turn it into a lovely child-care center, perhaps another building could be put to better use. Why not take the Afro-Am House and turn that into a pre-school paradise. Or the President's House -- just take down the Renoirs and sell them to put the money to even "better use".

    As to Mory's: Cast fake pearls before real swine. A Hooter's upstairs and a Leather Bar in the basement. Can't go wrong by giving the People what they want!

  • Anonymous

    #30:

    There's no need to bring your prejudiced class based socialist politics into this. Looking at the situation as an "us" vs "them" struggle is largely unproductive and only encourages both sides to dig their heels in. Last I checked… if you're working you're a working man regardless of how much you make or what you do. If YOU want to be the one who is so insecure as to make needless social distinctions and cling to them to justify economic suicide, so be it, but don't blame your own prejudices and their effects on others.

    What many decry is the ridiculousness of the situation. Unions almost always refuse to make necessary concessions. How is it better that everyone at the restaurant lost their job as opposed to benefits dropping slightly. Now, there are 15+ extra people drawing unemployment and that many fewer people paying in when, with some reasonable concessions, all 15 could still be at work.

    It is patently ridiculous that businesses which could make it through the hard times are forced to close because they cannot adjust all parts of their business to adapt to market conditions.

  • ??

    Sure, small businesses have it hard. But can we consider for a second that Mory's failed because it had a shitty business model? Seriously, I don't know anyone frequented Mory's when it was open. Being a Yale tradition is not always going to cut it.

  • For God and Money at Yale

    32 response? Every latent Republican has reared his/her ugly head for this trivial topic. My God--money reigs.

    I'm all for giving nurses and MD's forgiveness on every year they take out loans for every year they agree to work in low income neighborhood hospitals.

    Otherwise as thee population expands it will be maintained by an ever shrinking and ever more frustrated medical corps.

    Not every doctor or nurse is an Albert Schweitzer who can periodically leave Africa, give organ recitals all over Europe, and return with funds in hand.

    They have to work to pay back their loans.

    John Osbourne had it right: "The wrong people going hungry, the wrong people being loved, the wrong people dying! The injustice of it is almost perfect!" (Look Back in Anger) Add to that--"the wrong peoeple being subsidized."

  • T.R

    Recently my place of employment went into a deep slide with layoffs and buyouts. Being a Union member people asked could the union find you another position? do you have a pension? I wondered if they thought Jimmy Hoffa (SR) still running a union. The only union protection many members have are "bumping" privliges. Only in Detroit can you hang out in the union hall getting paid. All those join the union have job security is political nonsense. when an industry or business fails the union leadership can do squat about it. Union leaders better offer more input then holding the line on give backs they too need a new updated mission statement.

  • Anonymous

    Mory's may have lost its place, and maybe its business model is off if its not generating enough traffic.

    HOWEVER….

    The problem of union compensation packages driving its members into unemployment is not a new one.

    In order for a wage to be "fair", it has to be fair to the employee and the employer.

    Union workers work to get paid - so does everyone else. So why should a small business owner not get paid just because he's the manager?

    And for the one who said Mory's must not be managing it's union. WAKE UP. you cannot "manage" a union the way you suggest. That's why they have a union. It's a middle man between the employer and the employee, which in a lot of cases prevents needed changes from being made. Not to mention, a union is a business like any other…they are there to make money, and the more members they have, the more the union business managers and board members will make. Its just another corporation disguised as a banner for the middle class.

    Yale slugs…ever try and fire one for something legitimate (stealing, for example?) - good luck. The union holds this university's reputation hostage, and if a supervisor at Yale does attempt to fire a unpreformer, the joke is on them.

    And to be a little blunt:
    There are different levels of skill amongst the working public. If I went to school and learned a trade or acquired a skill that makes me more valuable to an employer, I should be paid more money. THAT is a fair wage. If all you know how to do is operate an automatic dish machine, then your wage should be lower than an engineer, sorry. Capitalism has its pros and cons.

    The social problems (like health care, unbalanced educational opportunities for childern, and minimum wage) in this country created communities like New Haven. The government needs to step in and level the playing field for people through education, and stop holding private business responsible for these flailing communities.

  • alum the bum

    I'm a young doctor and feel the need to make a quick comment about the cost of healthcare as a burden on everyone. Indeed it is! I have seen sooooo MANY 89 year olds with severe dementia who are kept alive on ventilators in the intensive care unit for weeks or months at astronomical costs (think ~$5-6,000 a DAY for an ICU stay) because their families don't want to "give up on them". I have also seen too many people come in to see the doctor for every cold and sniffle they have. I have seen too many people demand CAT scans and MRIs (and get them) when they are medically not indicated. All of this costs money and all of it adds up. All of it is bankrupting our system. Obama's plans to expand health insurance in the form of medicaid will not cut down on costs EVER because everyone knows that people's demand to utilize health care resources always grows to meet their availability. Look at old people. Their lives revolve around moving from doctor visit to doctor visit, just because they can.

    If you aks anyone to pay any small part of the total cost of what they are receiving, people absolutely freak out! Increase the copay on a prescription drug from $20 to $50 and watch them scream bloody murder. Increasing the deductible on their health insurance is like killing their first born.

    What people need to realize is that yes, health care costs are the single most important reason why our manufacturing base and our industries are failing. Corporations big and small cannot afford to pay for health care any more. We can either all pay a little more of the cost, or we can bankrupt our country so no one has anything. Let's not let our country got the way of Mory's.

  • Bad Whiffenpoof

    Mory's schtick of athlete-on-fence photographs, geek harmonies and Welsh rarebit finally achieved total obsolesence. Like I care. Forget life-support; Yale should find some other use for Mory's handsome Federal style building besides contrived, repetitive nostalgia.

  • Unions?

    From the usually left-leaning US News & World Report:

    We estimate the effect of new unionization on the equity value of firms over the 1961-1999 period using a newly available sample of National Labor Relations Board (NLRB) representation elections matched to stock market data. … Event-study estimates using both close and large victories, however, show that new unionization is associated with at least -10% abnormal returns, equivalent to $40,500 per unionized worker. … An examination of the balance sheets and income statements of both sets of firms reveals that union wins are associated with relatively lower growth ..

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