As tonight's midnight deadline approaches for the Detroit automakers and the UAW to finalize their quadrennial contract, the one issue that is not going to hold matters up is the two-tier wage structure. This structure, which has got a lot of press in recent days, was put in place four years ago to bring labor costs of the domestic automakers in line with their foreign counterparts. Under this structure, new workers get paid half as much as their senior comrades for the same work.
UAW President Bob King is reportedly trying to boost the wages of the new workers in the negotiations. But Kristen Dziczek, a labor analyst at the Center for Automotive Research, told me over the phone that even if he fails, she doesn't expect this issue to become a deal breaker for the rank-and-file. That's because, she noted, 95 percent of the UAW workforce are senior, first-tier workers. And they are ultimately not interested in sacrificing their own paychecks to boost the wages of the new hire next to them on the assembly line. One senior worker told the New York Times yesterday that he'll happily give up regular raises "to get these guys up." But he is not representative of general worker sentiment, she maintained.
The two-tier structure certainly represents a double standards. But there is nothing morally wrong with it because it gives new workers job options that they otherwise wouldn't have. In fact, reports the New York Times:
What was once seen as a desperate move to prop up the struggling auto industry is now considered an integral part of its future. The demand for $14-an-hour manufacturing jobs is providing Detroit's Big Three automakers with a ready pool of eager new employees. Last year, Chrysler was flooded with inquiries about the jobs here. It froze the list after receiving 10,000 applications.
The new workers certainly hope to move up eventually, although, under the terms of the bailout deal, automakers don't have to promote them till 2015. But right now their paramount concern is job security. "Everybody is appreciative of a job and glad to be working," said Derrick Chatman to the Times. He makes $14.65 an hour putting tires on Jeeps after being laid off at Home Depot, working odd construction jobs and collecting unemployment.
I couldn't be happier for Chatman and others like him. But the UAW has filed a grievance against Ford for overpaying its management, including CEO Alan Mulally who got $56 million in stock options in March. The UAW contends that if Ford paid its management less it might be able to pay its union workers more. But shouldn't that logic apply to the UAW itself too? Do we need another union to close the income disparity within the UAW's own ranks?
Post Script: Mulallay's accomplishment in turning Ford around after his predecessor, Bill Ford, systematically ran it aground is genuinely spectacular. Still, $56 million? Is it me or is that a tad obscene?