The UAW agreed to a tiered-wage system for workers at the Detroit 3 in 2007 among a host of concessions meant to keep the automakers financially viable.
The reasoning at the time was that starting new employees at a much lower rate would allow the companies to continue hiring and investing in products without adding the labor costs of legacy employees.
“The union had a choice: Do you protect your existing workers fully and have these newer, younger workers getting paid half as much, or do you say ‘everybody has to share the pain’ so the older workers take a pay cut and the younger workers won’t have to come in at such a low wage,” Steven Rattner, who headed the Obama administration’s auto task force that steered GM and Chrysler through bankruptcy, told Automotive News. “That was, in effect, a decision the union made as much as management.”
When the tier system went into effect, new hires made around $14 per hour while longtime workers made $28 per hour. There was no path for those new hires to reach the $28 rate.
By 2015, the union demanded change. One of its key slogans in contract talks that year was “bridge the gap,” partly referring to the two different pay scales.
The two sides ultimately negotiated an eight-year grow-in period for new full-time workers to reach top wages. UAW leaders hailed it as a way to eventually end the tier system, although many workers said the union did not push hard enough.
Tiers also were an issue during contract negotiations in 2019. The union won a truncated four-year path for workers already on the payroll, though the eight-year path remained for all new hires.
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