The two largest US automaker, General Motors and Ford, could negotiate with the United Auto Workers union the creation of another – third – tier of workers that get low payments for their domestic factories.
The report comes from Bloomberg, which cited sources that have knowledge of the matter – though they remained anonymous due to the sensitivity of the subject. The new tier would slot below the current UAW two-tier system that has entry-level employees with wages topping out at $19.28 per hour and a better paid, veteran tier that get salaries of up to $28-an-hour. The third tier would be sought by the two carmakers even as the union – which is heading into contract negotiations later this year – is increasingly considering the two-tier wage system should disappear or at least get a major payment hike. According to the report, the third wage system would be only available to certain lower-skilled jobs.
A recent study of 2014 labor costs by the Center for Automotive Research (CAR), showed the two automakers, GM and Ford, had an average hourly labor cost of $58 and $57, respectively. That’s far higher than Detroit rival Fiat Chrysler US, which averages $48 because it has a higher base of workers still at the lower-paid, entry-level wage. Introducing a third, even worse paid system for the lower-skilled jobs would assist the companies in better competing on the labor market by driving the costs down, as Asian and European competitors with US factories pay less at their non-union facilities.