February 25, 2021

Working for Less: In Detroit, Two Wage Levels Are the New Way of Work

Nothing distinguishes them from other workers at the Jefferson North plant, except their paychecks. The newest workers earn about $14 an hour; longtime employees earn double that.

With the economy slumping and job creation once again a pressing issue in the White House and Congress, the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries. The new jobs, which are seen as long term, are being watched closely by economists, executives in other industries and Washington policy makers eager to increase employment in manufacturing and other areas.

For many, the opportunity for steady employment is welcome, even at a lower wage and with no certainty when it might increase.

“Everybody is appreciative of a job and glad to be working,” said Derrick Chatman, who makes $14.65 an hour putting tires on Jeeps after being laid off at Home Depot, working odd construction jobs and collecting unemployment.

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 companies say the two-tier wages are paying off. Despite the disparity, there is no appreciable difference in the Grand Cherokees produced on the shift dominated since last fall by the lower-paid workers, the plant manager says. At General Motors, savings from its two-tier workers are crucial to production that began last month of an inexpensive, subcompact car in suburban Detroit.

Two-tier wage systems have been tried in the airline industry and others with spotty success. Usually the lower wages disappear rather quickly when the economy picks up. But the arrival of vastly different wage rates in auto factories is a seminal event in an industry long influenced by a powerful union devoted to equal pay regardless of seniority.

“This is not going away,” said Kristin Dziczek, a labor analyst at the Center for Automotive Research in Ann Arbor, Mich. “It has allowed the Big Three to reduce labor costs without cutting the pay of incumbent workers. Is it good for the health and competitiveness of the companies? Yes. And is that good for job security? Yes.”

Four years ago, the United Automobile Workers agreed to allow Chrysler, G.M. and Ford to pay lower wages to new hires to help close the cost gap with foreign carmakers. Now the two-tier arrangement is at the forefront of labor talks between the U.A.W. and the Detroit companies.

The union’s president, Bob King, has made an increase in entry-level wages a top priority in negotiations for a new national contract to replace the current agreement, which expires Wednesday.

So far, about 12 percent of Chrysler’s 23,000 union workers earn the lower wage, and over all, 4,000 or so of the 112,000 U.A.W. members are second-tier hires. Those numbers are expected to grow — and in fact can increase significantly even under the current contract. The jobs are central to the contract talks because they are viewed as critical to the industry’s continued recovery.

Some benefits for the lower-tier workers are scaled back as well. They get the union’s traditional medical benefits, but a maximum of four weeks paid time off a year, versus five for the longtime workers. And instead of the guaranteed $3,100-a-month pension a full-paid worker receives after age 60, the new hires have to build their own “personal retirement plan” based on contributions from the company of less than $2,000 a year.

The gap in wages between regular and entry-level workers has created dissent in U.A.W. ranks. Some long-term employees have demonstrated against the two-tier system and called for it to be abolished. Mr. King, however, has focused on getting meaningful pay raises for the lower tier rather than eliminating it.

At the big Labor Day parade in Detroit, union activists chanted “equal pay for equal work,” and some full-paid workers said they were willing to forgo a wage increase in the new contract to help the lower-tier employees.

Nick Bunkley contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=f321e8559bbe962eabf896bd60e31359

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