Two Tiers, Three Tiers…

David Macaray

At its national bargaining convention, now taking place in Detroit, UAW president Dennis Williams announced that he is not only opposed to a “three-tier” wage format (rumored to be on GM and Ford’s agenda and aimed at MEMBERS engaged in the manufacture of auto parts), he is opposed to the two-tier configuration already in place.

For those unfamiliar with the two-tier, it works more or less like this. Union MEMBERS who are currently on the payroll and receiving decent (let’s call them “middle-class”) wages and benefits, will be allowed to keep those goodies if, and only if, they agree to saddle all future new-hires with lesser wages and benefits.

Management insists they need lower labor costs to remain competitive. Without these guarantees, they can’t stay in business. While senior people GET to hang on to what they have (the “top tier”), those who eventually replace them will be locked into a reduced wage structure (the “lower tier”). How reduced? They’ll be earning roughly half as much.

And with the UAW’s assembly workers presumably “comfortable” with the two-tier arrangement, the automakers are now looking to impose a third tier upon those who union MEMBERS who produce the parts—a job that, without a third tier, could be sent to low-cost Mexico. In fact, a small number of GM parts-makers are already receiving third tier wages.

So, on the ONE hand, you have the UAW president boldly telling a room full of delegates that he would like to see the two-tier wage format abolished (and according to reports, being greeted with a standing ovation), and on the other hand, you have the automakers drooling at the prospect of implementing a third tier.

Which outcome has the better odds of succeeding? The UAW forcing the Big THREE to adhere to an “equal pay for equal work” format and return to one tier, or the Big Three eventually implementing a third, fourth, fifth and sixth tier? Not to sound defeatist, but I think we know the answer.

When I was a union negotiator, a management person once posed this question: Why would a company pay its workers a nickel more than what they were willing to accept? Why would you pay them $20 per hour when you were absolutely, positively certain they would accept $15 per hour?

Anticipating I’d say something about “fairness” or “loyalty” or how “good wages attract the most COMPETENT people,” he offered an example of buying a used car. If you were certain the seller would accept $5,000, why would you pay the $6,500 he was initially asking? It’s not about fairness, and it’s not about loyalty. To quote from The Godfather, “It’s business, Sonny.”

Speaking of cars, it’s disappointing how many people are willing to criticize the UAW for being a bunch of greedy bastards, as if making the top-tier rate of $28 per hour ($57,000 a year) is somehow un-American. As if they themselves, if given the opportunity, wouldn’t want to be part of the middle-class.

To those who think unions are “bad” for the country, consider this quote from John Sweeney, former president of the AFL-CIO: “Anything that can be digitalized can be outsourced.” He’s not saying unions can necessarily prevent it. He’s saying that unions are the only institution capable of collectively resisting it.

There’s a reason THE STOCK MARKET continues to soar even as the middle-class shrinks. It’s because we’ve become an “investor economy.” The good news is that as more U.S. jobs are exported to low-wage nations, investors in those oversees ventures continue to profit. The bad news is that Detroit ain’t where it stops. Your job is next.