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Worker pay gap to be cut ever so slowly

by Bill Cawthon on

According to reports in the Detroit Free Press and Bloomberg News,  the new FCA-UAW contract includes raises for both Tier 1 (pre-2008) and Tier 2 (low-wage) workers.

The agreement will remain confidential until it has been reviewed by local and national union officials. Members could vote on it as early as next week.

Workers-Vote-Web

According to the leaks, workers currently making $28.31/hour (“Tier 1”) would see their rate increased between $0.74 and $0.84 in two steps in the first and third years. This would bring their hourly pay to between $29.06 and $29.15 per hour, a raise of around 2.6% to 3.0%. Adjusted for inflation, the rate would be around $32.50.

“Tier 2” workers would fare better, eventually. They currently get a starting wage of $15.78/hour and can move up to $19.28 after four years. Under the new agreement, the starting wage would, over eight years, gradually rise to more than $17/hour, with a final rate of over $25/hour. This would help to close the gap between the tiers, a goal shared by UAW President Dennis Williams and Fiat Chrysler CEO Sergio Marchionne.

UAW and FCAThe reports did not mention any agreement to end the cap on the number of Tier 2 workers, set at 25% in 2007 but waived for FCA and GM in 2009.  Nearly 45% of FCA hourlies are in Tier 2, partly due to the high expansion rate of FCA in the United States.

Bloomberg wrote that the signing bonus for the new contract will be $3,000, lower than in 2011 because of the wage increases. The stories did not mention any commitments for keeping or adding jobs, which could be crucial in winning members’ votes.

One of the UAW’s overriding concerns is convincing workers that the contract is worth remaining in the union. Michigan laws now let hourly workers opt out of union membership, which weakens the union in both bargaining power and dues revenue.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


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