Published: March 7, 2010

Against the backdrop of a sputtering economy, and with a new chief negotiator doing the bidding for the city's residential building owners, talks will kick off this week over a new four-year contract to cover 30,000 doormen, superintendents and porters.

Negotiators from the workers' union, 32BJ SEIU, say they will acknowledge that 2009 was a tough year for the real estate industry, but they will argue that one bad year should not serve as the foundation for a deal that will be in effect long after the economy recovers. The landlords will counter that they are dealing with “unprecedented economic times” and need to contain costs at the 3,200 buildings covered by the contract, according to lead negotiator Howard Rothschild, the new president of the Realty Advisory Board on Labor Relations.

The union will present a proposal Tuesday that calls for annual cost-of-living increases in the new agreement, which will replace a 2006 deal that is set to expire April 20. And they'll make a case that the city's real estate industry remains relatively healthy, despite the recent downturn, which has whittled away at rents and sale prices in the past year.

Real estate values grew

“Even with the worst economic slump in decades, the value of residential real estate grew by 28% over the past four years,” says Matt Nerzig, 32BJ's chief spokesman. “The New York real estate industry, which is one of the wealthiest and most stable in the world, surely has the capacity to ensure that the workers who maintain their apartment buildings and help residents can support their own families.”

Union officials cite Department of Finance data that show the total value of all residential real estate in the city is $584 billion, up from $456 billion in 2006—though there's often a lag in assessed property values during recessions. And they point to an analysis by real estate brokerage firm Marcus & Millichap that shows New York City has the lowest vacancy rate and highest rental rate for residential buildings in the nation. They calculate that labor represents only 4.5% of a building owner's total expenses and contend that workers need raises to keep up with the rising cost of living in the city.

“This contract campaign is about keeping our city a place that working families can still afford to call home,” says 32BJ President Mike Fishman.

Mr. Rothschild insists that building owners have been fair to workers, citing an 8.5% raise over four years in the 2006 contract. The workers make $19.47 to $21.50 an hour, plus benefits like employer-paid family health care, sick days, vacation time and pensions. The RAB president says that employers spend $68,600 a year for each porter or doorman.

“While other people in New York have been hit hard, 32BJ members' wages and benefits have gone up in each year of the agreement,” he points out. “When you have building owners who can't get the rents they were getting and co-op and condo owners who have been laid off or had their wages frozen or cut, this is not just business as usual.”

Average rents in Manhattan declined 17.6% on three-bedroom apartments, 12.4% on two-bedroom apartments and 12.1% on one-bedroom apartments from 2006 to 2009, according to rental brokerage firm CitiHabitats. In the same period, the median sale price of a Manhattan apartment rose 2.4%, to $850,000, according to data from appraiser Miller Samuel and brokerage Prudential Douglas Elliman.

After hearing the union's proposal on Tuesday for the contract that covers building service workers in Manhattan, Brooklyn, Queens and Staten Island, Mr. Rothschild and his team of negotiators will respond with one of their own a week later.

No strike since 1991

“This is not going to be a typical negotiation where we lay out increases,” he says. “We need cost containment and cost control.”

The two sides have been able to avert a strike in every negotiation since 1991—when workers walked off their jobs for 11 days. This time around, in addition to the slumping economy, the presence of Mr. Rothschild is a wildcard that could make for tougher negotiations.

He replaces James Berg, who died of cancer last November. Over a span of 30 years, Mr. Berg led negotiations for the RAB, gaining the respect of union officials because of his willingness to seek common ground. He developed a strong relationship with Mr. Fishman that led to years of labor peace.

But Mr. Rothschild says the negotiations won't come down to personalities, and that while Mr. Berg's “calming influence” will be missed, his absence won't “be an overriding factor” in hammering out a new deal.

“It's a business decision from both points of view,” he says. “The union has to do what they think is acceptable to their membership, and we have to do what we think will be acceptable to ours.”