"Clearly the biggest issue this time around will be the second-tier," said Arthur Schwartz, a professor of labor relations at Wayne State University and a former general director of labor relations for GM.Ībout 900 delegates from more than 800 local unions representing workers at more than 1,500 employers this week will debate a common collective bargaining strategy to meet goals of the UAW's roughly 400,000 members who work in auto, aerospace, agricultural implement, public service, health care, higher education and other sectors.
The current contracts expire in September.
For legacy workers who haven't had pay raises in several years, boosting pay may be more important than profit-sharing.Īccording to UAW automotive locals surveyed by The Detroit News, getting rid of the system is a top concern for the upcoming contract negotiations this summer. They may not want to see bonuses lowered or eliminated in exchange for bridging hourly wages between the two pay levels of workers. The second-tier workers rely more on bonuses and profit-sharing checks more than the traditional hourly workers. "If they want to go ahead and want to talk about wages, I am more than happy to sit down and talk about their salaries," he told reporters in December.Īnalysts speculate it was easy to implement the two-tier structure, but it will be much more difficult to eliminate, as the workers themselves have different priorities. He says that the days of automakers arguing that union labor costs make them uncompetitive are over, as the pay gap between CEOs and the rank-and-file grows. Williams has said he does not consider the entry-level wages acceptable for the work. UAW members have said the two-tier system has caused divides on factory floors, as workers doing the same job are being paid differently. Ford, capped at 20 percent, recently maxed out and announced 300-500 workers would move up from the second-tier to top wage status after Ford exceeded its cap. But those were suspended at GM and Chrysler as they emerged from government-backed bankruptcies in 2009.Īt the end of 2014, less than 20 percent of GM's hourly workforce was entry-level, and about 44 percent at FCA US. Initially, there were caps on the number of lower-wage workers at all the Detroit automakers.
Tier 2 workers can make a base wage up to $19.28 an hour that's an increase from the $15.78 they earned in 2011. But those entry-level workers make substantially less than Tier 1, or legacy, employees who earn about $27 an hour. plants and hire thousands of new employees. The two-tier wage system has allowed Detroit's Big Three to invest billions into U.S.
GM, Ford and FCA US are the only automakers whose U.S. "They've been able to expand employment at lower wages in this upturn of the market," said Kristin Dzicek, Center for Automotive Research director of the Industry & Labor Group.ĭetroit automakers established separate wages and benefits for new and legacy employees as part of their 2007 contract negotiations with the UAW in order to become more competitive with foreign counterparts. That was largely because strong auto sales caused them to hire more entry-level workers. The report concludes the majority of automakers cut labor costs during the three-year period. The estimated wage costs include everything an automaker spends on temporary and direct employees - from pension and health care contributions, to hourly wages and paid time off. FCA US, formerly Chrysler Group LLC, was sixth on the list at $48, down $4 from 2011. That was followed by General Motors Co., up $2 to $58 and Ford Motor Co., down $1 to $57. Mercedes-Benz had the highest labor costs, at $65 per hour, up $3 from 2011.
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