KANSAS CITY, Kansas (Reuters) - For United Auto Workers union members Jermaine and Akema Austin, a two-tier wage system at General Motors Co (GM.N) is not just business, it’s personal.
GM has two classes of UAW workers – long-time “first-tier” employees, who earn about $28 an hour, and “second-tier” workers hired after 2007, who earn about $16 to $19 an hour. The Austins are on opposite sides of the divide.
Detroit automakers, which pushed for and won the two-tier system in negotiations with the union, say the freedom to hire workers at lower wages has helped them recover from near-death in the recession and add thousands of U.S. jobs in recent years.
But as the Detroit companies and the UAW head into contract talks this summer, the divisions the two-tier wage system have created among workers – and even within families – are among the most contentious issues on the table.
When Jermaine Austin, a first-tier worker at GM’s car plant in Kansas City, Kansas, put in for a transfer to GM’s factory in Arlington, Texas, where the company builds large sport utility vehicles, he assumed his wife, a “second-tier” Kansas City worker would have no trouble moving, too.
But when Jermaine Austin’s transfer came through, the family learned that his wife’s status makes transferring harder for her. As a second-tier worker, she has no preferential standing in applying for a job at the Texas plant, and if she were offered a job, she would lose the seniority she has built in Kansas City, resulting in a cut to her $16.66 per hour pay.
The family decided that Jermaine Austin should take the job, which is nearer to relatives, and hope that his wife and their five daughters, ages 2 to 17, would be able to follow somehow.
Both husband and wife say they love making cars for GM. “The company has done our family well,” Akema Austin said. But they find living apart difficult.
“I thought once we were both working at the same place, if we move again, we both go,” Akema Austin said.
The Austin family’s dilemma is an emotionally charged example of why UAW President Dennis Williams is under pressure from rank-and-file union members to overhaul the two-tier wage system in contract talks this summer with the Detroit Three automakers.
For decades, the UAW fought to get comparable pay for union members doing similar work. But in 2007, as the Detroit automakers were starting to bleed cash, UAW leaders agreed to create two classes of workers – in effect, protecting current members at the expense of future ones. Those hired after 2007 would be paid as much as 45 percent less and have less generous benefits as well as limited transfer rights.
The Detroit manufacturers will be reluctant to make major changes to the current wage structure, which has narrowed the cost gap with non-union auto plants run by foreign automakers in the southern United States. They point out that the lower labor costs have enabled them to add jobs. GM, for example, has hired 3,650 new UAW workers since 2011 when the current UAW contract was signed.
But as the number of second-tier workers has increased - they now account for about 20 percent of the union members working for GM, 29 percent of those at Ford Motor Co(F.N) and 45 percent of those at Fiat Chrysler Automobiles NV(FCAU.N) (FCHA.MI) - their clout has increased. Rank-and-file UAW workers are pushing for the gap to be addressed in this year’s negotiations, saying that since the automakers are profitable, the two-tier wage system should go.
Williams has vowed to narrow the gap between the classes of workers, but has cautioned that it may take more than one multi-year contract to accomplish that.
One thing the second-tier workers would like to see is a clear path to first-tier wages and benefits.
“There is something fundamentally wrong with having two people doing the same job making grossly different wages,” said Mike Young, a second-tier worker at GM’s Kansas City plant. “It’s one thing to think, ‘I could work here five years and get to what she makes’ rather than ‘I could work here for 30 years and never make what she makes.’ ”
Travis Werths, 32, who is also in the lower wage group at the GM Kansas City plant, says the union leadership needs to make significant gains in eliminating the two-tier system.
“If it goes bad, I think there’s going to be a lot of people who drop out of the union,” said Werths. “I think there’s enough people who have had enough to where they don’t feel like they’re getting a fair shake.”
Williams and UAW leaders have said they want to “bridge the gap” to the point that second-tier workers are happy with the result of this year’s talks.
General Motors, in a statement, said the company is prepared to “look at a range of options with our UAW partners on solutions that lead to an agreement that benefits employees and improves GM’s competitiveness.” Ford executives have made similar comments. Fiat Chrysler Automobiles NV chief executive Sergio Marchionne has said he wants to eliminate the two-tier system, and peg more of a worker’s pay to the company’s performance.
Reporting by Bernie Woodall; Editing by Joe White and Sue Horton