DAVID BARKHOLZ

Ending Tier 2 will put UAW-GM deal over the top

GM CEO Mary Barra and UAW President Dennis Williams are waiting for the rank-and-file to finish their ratification vote this week.

After a decade of concessions and a declining standard of living, UAW-represented workers at General Motors generally are not happy with the tentative four-year labor deal that the company has presented them.

But I believe they will ratify the contract this week -- probably with a 55 percent margin -- grumbling and all.

You see, legacy workers who comprise 80 percent of GM’s 52,600 hourly workforce know this deal is a good one for their entry-level, Tier 2 cohorts scuffling along at $16-$17 an hour while they are earning $28 an hour.

The agreement, patterned after one ratified by workers at Fiat Chrysler Automobiles last month, ends the divisive two-wage system by putting Tier 2 workers on an eight-year ladder of annual raises until full pay is achieved.

It keeps a promise that veteran workers made to their Tier 2 colleagues going into this year’s master bargaining -- a promise that FCA hourly workers had to enforce by first rejecting a tentative agreement negotiated by UAW leadership that did not contain a pathway to full pay. And they achieved the victory on Tier 2 without a strike.

Which brings us back to the GM ratification vote. GM’s legacy workers know that rejection of the deal in front of them could result in a strike that would especially hurt the 10,500 Tier 2 workers at GM.

The $35,000 or so annually that they earn (without overtime) pretty much gets used up for housing, utilities, food and maybe school tuition without leaving much for savings.

Nobody wants to see a Tier 2 worker miss a mortgage payment or suffer some other hardship from a strike unlikely to yield much more compensation or anything else except lost U.S. plant investment.

That solidarity is what legacy FCA workers told me convinced them to eventually ratify their agreement, even though they thought it largely inadequate given the record profits being made at the Detroit 3 and the givebacks that the union made over 10 years.

They just couldn’t in good conscience reject again a deal that they saw as a winner for Tier 2 workers.

The truth is that each worker has a personal reason for voting the way he or she does. Some GM workers have home remodeling projects or car down payments in sight for the $8,000 signing bonus offered.

Others appreciate the premium- and deductible-free health care benefits they maintain in this year’s contract.

Still others, nearing retirement, are eying the $60,000 bonus available for retiring.

That said, nobody is doing cartwheels over the GM deal. For 10 years, legacy workers went without a pay increase. Inflation eroded their real earnings over that time by about 20 percent. That means the straight-time $58,240 they earned annually in 2005 is worth $46,592 today.

So the 3 percent wage increases negotiated for legacy workers in years one and three of the contract (with 4 percent bonuses in Year 2 and Year 4) still leave them short of where they started 10 years ago. They also lost their cost-of-living allowance along the way. They’ve gone backward, and this contract fails to catch them up.

But even with the carmakers making money by the truckload, they’re willing to bide their time a while longer so Tier 2 workers can get on track to full pay.

Look for ratification by week’s end.

You can reach David Barkholz at dbarkholz@crain.com -- Follow David on Twitter: @barkholzatan

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