US: study shows how two-tier wage system impacts the labor market image

According to a new research material that comes just as United Auto Workers officials are scheduled to meet in preparation for their contract wage negotiations with the Detroit Three, GM and Ford have higher labor costs than Fiat Chrysler US.

The 2014 labor costs study done by the Center for Automotive Research (CAR) shows that, for example, GM’s US unionized auto workers have on average wages that are 21 percent bigger than their peers at cross town rival Fiat Chrysler Automobiles US. The FCA counterparts have in turn a much higher percentage of lower-paid, entry-level workers. Ford’s average hourly labor expenses stood at $57, immediately below GM’s $58 and FCA’s employees earned $48 per hour. The difference comes from the two-tiered pay range implemented back in 2007 during the United Auto Workers labor negotiations with the Detroit Three. The agreement allowed GM, Fiat Chrysler and Ford to have new, entry-level workers that gain less than what veterans average.

In regards to other automakers, Daimler AG’s Mercedes-Benz factory in Alabama has the steepest US auto labor costs, averaging $65 an hour. Workers at German factories of Volkswagen and BMW are at the bottom of the list, according to CAR, earning $38 and $39 per hour, respectively. Of the others automakers, Japan’s Honda Motor employees gain on average $49 per hour, Toyota pays $48, Nissan just $42 and South Korea’s Hyundai and Kia stand at $41. The averaged per hour labor cost also takes into account payments to “temporary” workers which usually come from outside agencies but mainly work full-time alongside directly employed workers. Japanese automakers have the highest tally of such employees, allowing them to further trim labor costs.

Via Reuters