UAW wants quicker path to top wages

Four years ago, the creation of an eight-year "grow-in" period for new hires to earn top wages was celebrated as a victory in the UAW's quest to eliminate the two-tier wage system that many workers despised.

Now, General Motors' resistance to letting workers attain full pay faster is seen as one of the reasons the union has been on strike since mid-September. UAW members today argue that eight years is too long to wait, especially as the automakers amass record profits and dole out lucrative bonuses to executives.

Labor experts say there's recent precedent for quicker paths to earning top dollar, making it an issue on which the two sides could find compromise.

"The UAW is determined to make headway, in part because the notion of equal work for equal pay goes to the very heart of the union," Harley Shaiken, a University of California at Berkeley professor who studies labor issues, told Automotive News. "Their motto is solidarity forever, and this gnaws at that. Some major movement here is going to be necessary to get a deal ratified."

On Tuesday, the UAW said it rejected GM's latest offer and made a counteroffer. 

"This proposal that the Company provided to us on day 15 of the strike did not satisfy your contract demands or needs," Terry Dittes, director of the UAW's GM department, said in a letter to members. "There are still many important issues that remain unresolved."

The offer "came up short" in many key areas, such as health care, wages, temporary employees, skilled trades and job security, Dittes said.

UAW leaders have been trying to undo the two-tier wage structure since shortly after the membership agreed to it in 2007 as a means of helping the Detroit 3 save money and stay in business during the Great Recession. It divided plants' work forces into legacy workers making around $28 an hour and new hires making as little as $14 an hour.

It's a practice that has become increasingly common among unions. The Teamsters, which represents UPS drivers, last year implemented a two-tier system, despite protests, that caps certain "hybrid" drivers below the $40 made by standard drivers.

During the last round of bargaining in 2015, UAW workers at Fiat Chrysler Automobiles rejected a tentative agreement that called for the so-called "second tier" workers to get raises but still top out at a little over $25 an hour, not quite as much as those hired prior to 2007. The two sides went back to the negotiating table and came up with the eight-year path to equal wages, which was approved at all three companies.

"It was a start," said Tim Duplanty, a member of UAW Local 598 at Flint Assembly. "That was what we could get at the time, but we're in a different time now."

Some union members, including Gary Walkowicz, a bargaining committee member at Ford Motor Co.'s Dearborn Truck Plant, contend that workers should reach top wages almost immediately.

That's not just a pipe dream; it's how the union used to operate.

In the 1960s and 1970s, workers achieved top pay within 90 days of being hired. It was a common practice among other industries, including food processing and grain milling, according to Art Wheaton, a labor expert from Cornell University.

"That was the norm, not just in the auto sector but in manufacturing in general," he said.

The union eventually switched to a three-year path, which stayed in place until being supplanted by the two-tier system. Workers would start at 70 percent of top pay and receive regular pay increases until maxing out after 156 weeks.

But faced with a looming recession that ultimately led to bankruptcy filings for GM and the pre-FCA Chrysler, the Detroit 3 turned to the union for some relief. The two-tier system to which workers reluctantly agreed allowed the companies to save on legacy costs while continuing to hire new workers at considerably lower pay.

"Everything changed in 2007," said Art Schwartz, a former GM negotiator who's now president of Labor and Economics Associates. "The only way the companies could get any wage relief was to have this grow-in period. All the new hires from that point were Tier Two."

While proponents of shortening the 8-year path can point to historic pay scales, those in favor of keeping the status quo can look north.

Unifor, Canada's auto union, has a 10-year path to top wages that stayed in its most recent contract with the Detroit 3 in 2016.

Colin Lightbody, a former negotiator with FCA who's now president of a consulting firm, said the grow-in period helps automakers save money while largely giving the union what it wants: equal pay for equal work.

Although the UAW listed a shorter path as a stated goal in bargaining this year, Lightbody said he would be "surprised" if the union prioritizes the matter over other sticking points such as temporary workers and health care, considering that a minority of its membership would stand to benefit from a shortened pay scale.

"It's not a really efficient use of potential labor dollars since it applies to a small percentage of the UAW population," he said. "There's typically a finite pool of cash available and it would likely be better spent on wage increases or lump-sum payments."

But Shaiken said he believes the union could make up some ground in these talks both on the wage grow-in period and in giving temporary workers a clear path to full-time status. He said the difference in pay wasn't eliminated in 2015 because the pain of the recession was still fresh in the minds of both the automakers and union negotiators.

"The union didn't want to do something that would jeopardize all that had been accomplished to date," he said. "But they were determined to set a precedent that they could narrow in future negotiations. We're at that future."