US: UAW’s two-tier pay system is hot debate issue image

Union auto workers in the US were divided – in the wake of the near collapse of the auto industry after the Great Recession – in two segments, with different pay privileges for the new hires and the veterans.

The so-called Tier 2 wage earner, which accounts for at least 30,000 persons in the US, earn about half the pay that the 50,000 Tier 1 colleagues do. The classification came to be back in 2007, when the United Automobile Workers opted to cut wages instead of letting people go to help Chrysler, Ford and GM as the economy slowed and sales collapsed. The contracts protected the $28-an-hour wage of the workers that were already in factories, but those who started would only get $14 and then slowly go up. Now, after the auto market has boomed and all three Detroit giants are well and profitable, the UAW will raise the issue of the Tier 2 workers to all three this summer as contract negotiations are closing in. “I often listen to companies talking about being competitive,” commented UAW President Dennis Williams back in December. “The only thing they talk about in public is doing it on the backs of the workers.”

Back in 2007 when the UAW had to agree to the $14-an-hour starting wage, the US automakers were close to bankruptcy and the competitors were busy constructing rival plants in the South – where nonunion workers are favored by law – and in Mexico. According to the US Bureau of Labor Statistics calculator, adjusted for inflation, the new salaries were equal to what Henry Ford paid his employees back in 1914.

Via Bloomberg