Expert: UAW talks could bring end to 2-tier wage system
The UAW could win the end of its second-tier wages through a phase-out period during upcoming contract talks, while tier-one workers could get a modest raise, one labor expert said Tuesday.
Kristin Dziczek, director of the Industry and Labor Group for the Center for Automotive Research, said she expects the UAW and Detroit automakers will agree to give first-tier employees who haven’t had a raise in eight to 10 years a small one, while entry-level workers would eventually become first-tier workers over a grow-in period.
Canadian auto workers have a 10-year system in which the hourly rate for entry-level workers progressively increases, and Dziczek expects the UAW to adopt a similar eight-year grow-in, which would help automakers keep labor costs down.
“I think the companies pretty much realize they’re going to have to give the first tier a raise and that the second tier will need to come up,” Dziczek said. “The eight-year grow in is not an agreed-upon thing going in; I think they know they have to do something about second-tier.”
The UAW has stressed that bridging the pay gap between entry-level and first-tier workers is a key to bargaining, as is getting raises for veteran hourly workers. Entry level or two-tier workers can earn up to $19.28 an hour, while first-tier workers earn about $28.50 an hour.
She said profit-sharing likely will remain unchanged, although the formula at FCA could be tweaked. Dziczek said it’s possible there could be a strike. That’s more probable at FCA, she said, because it has more entry-level workers than GM and Ford.
FCA and GM workers have the right to strike in this round of contract talks; GM and FCA agreed to a no-strike clause during 2011 negotiations.
Cathy Clegg, GM’s top negotiator, told reporters Monday she thinks a strike by GM workers can be avoided as the two sides will reach solutions.
“There are a number of issues on the table that are a concern to both parties,” she said. “There is concern on the part of the UAW — they’ve brought up bridging the gap. But they clearly understand just like we do, the best thing that provides the best security for all of our team members is a good agreement that is good for the business and good for our employees.”
Another way to alter the two-tier wage system is to reinstate caps on the number of second-tier workers for both GM and FCA. Ford has a 20 percent cap, and earlier this year had to transition hundreds of workers to a first-tier wage after it exceeded the cap.
If the caps are reinstated, new hires would bump up to the first-tier wage, but maintain entry-level health benefits. Dziczek said FCA’s labor costs under this scenario would increase $5 an hour to between $47-$52 per worker. Ford would remain unaffected, as would GM, which is under its cap at less than 20 percent.
Dziczek also expects to see the companies dole out vehicle commitments and to consider a health care pool for active employees like it has with retired employees. Last week, UAW President Dennis Williams said the union could explore pooling active workers to save on insurance costs.
The contract for some 135,000 UAW hourly workers expires in mid September. The union for the first time in Michigan, where about half the union’s Detroit three hourly workers are located, will have to contend with right-to-work issues and the possibility of members leaving the union.
Dziczek said other right-to-work states with Detroit three UAW workers — Indiana, Kansas, Tennessee and Texas — still have membership levels above 90 percent.
Jimmy Settles, vice president of the UAW-Ford department, said he’s not concerned about members opting out of paying their union dues.
“We’ll have some drop off; I’m not naive enough to think we won’t,” he said in an interview with The Detroit News Monday. “We have a few freeloaders, but I think it will make us stronger. Who wants to pay more for anything? It’s human nature. But at the end of the day people understand if you tell them what you’re getting.”
GM and FCA on Tuesday both officially announced dates of their handshakes with the UAW to kick off 2015 contract talks.
GM will kick off negotiations July 13 at the UAW-GM Center for Human Resources. GM CEO Mary Barra and UAW President Dennis Williams will attend, as well as Cindy Estrada, UAW vice president of the GM department and Clegg, GM vice president of North America manufacturing and labor relations.
FCA and UAW officials will meet the next day, July 14, at the UAW-Chrysler National Training Center. Glenn Shagena, FCA North America’s head of employee relations and Norwood Jewell, vice president of the UAW’s FCA U.S. department, will participate.
Ford previously said its kickoff to negotiations is scheduled for July 23 at Cass Technical High School.