Bridging pay gaps and raising wages appear to be the top priorities for United Auto Workers President Dennis Williams heading into 2015 contract negotiations with Detroit automakers.
Williams said it’s time for the union’s nearly 139,000 members at General Motors Co., Ford Motor Co. and Chrysler Group LLC to be rightfully rewarded for their work and the sacrifices members made during the economic downturn. He said the days of automakers arguing that union labor costs are making them uncompetitive are over, as the pay gap between CEOs and the rank-and-file has grown.
“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,” Williams said Monday morning when talking with news media at Solidarity House, the union’s headquarters in Detroit.
The remarks echo those from the UAW’s 36th Constitutional Convention in June, when Williams was elected to lead the union. The slogan “It’s our time” was plastered on T-shirts supporting solidarity among members, many of whom haven’t received raises in nearly a decade.
Williams said the union, however, will “not repeat the sins of the past.” He said automakers can stay competitive even if they bridge pay gaps between the rank-and-file and executives as well as its own members under the current two-tier wage system.
“I often listen to companies about being competitive, and the only thing they ever talk about in the public is being competitive based on the backs of workers,” Williams said. “That’s not the only way to do it.”
The two-tier lower-cost wage system has allowed Detroit automakers to invest billions into U.S. plants and hire thousands of new employees. But those entry-level workers also make substantially less than Tier 1, or legacy, employees who earn about $27 an hour. Tier-two workers can make a base wage up to $19.28 an hour; that’s an increase from the $15.78 they earned in 2011. The current contract expires in September.
Williams said he does not consider the entry-level wages acceptable for the work. About 17.5 percent of GM’s hourly workforce is entry-level; approximately 23 percent at Ford; and about 44 percent at Chrysler.
Bridging or eliminating the pay gap between its two tiers of members, while appeasing the Tier 1 with higher wages may be difficult. The second-tier workers rely more on bonuses and profit-sharing checks more than the traditional hourly workers. They may not want to see bonuses lowered or eliminated in exchange for bridging hourly wages between the two pay levels of workers. For legacy workers who haven’t had pay raises in several years, boosting pay may be more important than profit-sharing.
“The more difficult issue is going to be the Tier 2,” said Art Schwartz, a professor of labor relations at Wayne State University and a former general director of labor relations for GM. “How much of the gap are you going to bridge?”
Schwartz said raises for Tier 1 workers shouldn’t be as difficult as significantly bridging the gap between the two tiers. He said it’s “doubtful” the union will be able to eliminate the two-tier system in 2015 negotiations.
UAW hourly members surveyed by The Detroit News said getting rid of the system is a top concern.
“We are very aware that the need to balance the wages is very important to our membership,” Williams said. “None of it is going to be easy, but I have committed that we are going to start bridging that gap.”
After the UAW spent millions under former President Bob King to fight Michigan’s right-to-work law two years ago, Williams said the anti-union law is not a top five priority heading into 2015 — the first negotiations since the law took effect in March 2013.
“Now that right-to-work is here, we’re focused on communicating with our members; educating our members; making sure that they can get the best service they possibly can,” he said.
In other right-to-work states, Williams said the union has not experienced a significant “fall off” of members.
In June, UAW members approved the first dues increase since 1967 — a 25 percent hike — to replenish the strike fund that had fallen to about $600 million. Union leaders said they needed a healthy strike fund so companies would take seriously the threat of a work stoppage.
Williams said striking is not something the union looks to do when entering negotiations with any company, but it has to be prepared for the worst.
“Striking is a failure on both parties’ part,” he said. “We don’t plan on failing, but we’re going to be prepared.”
The 2015 contract talks are the first since 2007 in which workers at GM and Chrysler have the right to strike; the UAW gave up that right for the 2011 talks as a condition of the government bailouts of GM and Chrysler.
Schwartz said striking is “always a threat,” but he doesn’t believe it’s something the union or automakers want to happen.