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After Bailouts, New Autoworkers Make Half As Much As Veterans In Same Plant

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http://www.washingtonpost.com/wp-dyn/content/article/2010/07/24/AR2010072402386.html

DETROIT -- Among workers building the Jeep Grand Cherokee here, there are few obvious distinctions. Clutching lunch sacks and mini-coolers, they trudge together through the turnstiles at the plant's main gate each day to tinker with the same vehicles, along the same assembly line, performing the same tasks.

Yet they fall into distinctly unequal classes: About half make $28 an hour or more, while the rest, the recently hired, make $14.

This oddity, which could become the norm in much of the domestic U.S. auto industry, arises from the jury-rigged labor agreement that the United Auto Workers, U.S. automakers and the federal government reached during the industry's near-death experience last year.

Now the revival of the U.S. industry depends on a compromise that some on all sides quietly acknowledge is divisive, among other things, and probably cannot last.

"How would you feel if you were on the line humpin' and bumpin' all day and the guy next to you gets twice the pay? How would you feel toward that person?" asked Dale Hunt, a veteran tradesman at the plant and former president of the union local. "Of course there is going to be animosity."

What factory workers should earn became a central part of Washington's prolonged debate over the bailouts of General Motors and Chrysler, pitting the advocates of the free market against those for a "fair wage." Although cutting labor costs was viewed by many as essential to the companies' recovery, the issue was never fully resolved.

Under pressure from the federal government and the companies to reduce compensation, the United Auto Workers refused to lower the wage rate for its then-current members. But it allowed all new hires to be paid the reduced rate, along with lesser health and retirement benefits.

At this Chrysler plant in a blighted section of Detroit -- which President Obama is scheduled to visit this week-- the company is handling demand for its Jeep Grand Cherokee by hiring its largest single contingent of "second-tier" workers, the first time such hiring has unfolded in the industry on this scale. Other companies said they will make similar workforce expansions, and two-tier factories are expected to become more common as they do.

After an eight-hour shift attaching oxygen sensors, Jay Johnson, a new hire and a 33-year-old father of three, winced when asked about the pay gap.

"It's all mental," he said after a long pause. "If you think about how much the other guys are making, well, it's not going to work for you. I don't think the $28 an hour will ever come back. But growing up around here, I just know I'm blessed to have a job."

With that, Johnson was echoing the feelings of many co-workers. Several said they were content, for now, to simply collect a good, regular paycheck, regardless of whether the levels within the factory were set equitably.

More at the link.

It's the animosity recovery.

The short termism of the Unions here beggers belief. What do they think the long term consequence of this will be? So the lower paid get to subsidise the higher paid workforce.

Surely tensions on the shop floor will become too great?

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The short termism of the Unions here beggers belief. What do they think the long term consequence of this will be? So the lower paid get to subsidise the higher paid workforce.

I think you'll find that the people on $14 are the new, YOUNGER workers, and those on $28 are the existing OLDER workers.

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Guest sillybear2

The short termism of the Unions here beggers belief. What do they think the long term consequence of this will be? So the lower paid get to subsidise the higher paid workforce.

Surely tensions on the shop floor will become too great?

It's exactly what the unions have done in the UK over pensions, "I want my readies, f**k everyone else.... solidarity! Up the workers!"

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I think you'll find that the people on $14 are the new, YOUNGER workers, and those on $28 are the existing OLDER workers.

I know but they aren't going to retire in the next 6 months are they? The animosity is going to grow on the production line especially if the "recovery" detoriorates and costs need to be cut again on the production line.

Is the Union going to protect it's old members at all costs?

Would you like to be a Union rep talking to the new members saying your going to have to have your wages cut by 30% to ensure those earning $28 an hour can keep these perks?

At some point those boomers are going to have to face reality.

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While I enjoy union-bashing as much as anyone else, it's interesting to note the incredible incompetence of the bosses - it seems clear that they have been paying their workers twice the market rate :blink:

I wonder how that came about? Where the unions really that strong? In that case, could GM/Chrysler not shift more production elsewhere in the US (e.g. the midwest, where the japs deliberately sited their factories to keep away from the unions) or even outsource it to their European subsidiaries?

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Guest sillybear2

While I enjoy union-bashing as much as anyone else, it's interesting to note the incredible incompetence of the bosses - it seems clear that they have been paying their workers twice the market rate :blink:

UAW is (was) very powerful, they got their workers a good deal back in the day, unfortunately that meant when the Japanese manufacturers set up shop in the southern states with highly automated production lines and non-union workers they totally undercut them.

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I think you'll find that the people on $14 are the new, YOUNGER workers, and those on $28 are the existing OLDER workers.

No. $14ph workers are NEW HIRES and $28ph ones are just a little bit longer employed, since at least 2009.

Age is not a factor here. Being employed and UAW member back in 2009 was a decisive (and now a divisive) factor.

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Guest sillybear2

I know but they aren't going to retire in the next 6 months are they? The animosity is going to grow on the production line especially if the "recovery" detoriorates and costs need to be cut again on the production line.

Is the Union going to protect it's old members at all costs?

Would you like to be a Union rep talking to the new members saying your going to have to have your wages cut by 30% to ensure those earning $28 an hour can keep these perks?

At some point those boomers are going to have to face reality.

Also, if the second class workers form the majority then a strike by the rest would basically be pointless, nobody would notice.

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At least the union and GM had to end their notorious "jobs bank" when they were bailed out last year. Countless thousands of people paid their full salary for doing nothing at all.

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They can't change the salary of existing workers, but they can change it for new workers.

Given about $900 on every new Ford car made goes on paying for healthcare/pensions it's no wonder they're trying to cut the cost of hiring new people and prevent being in the same position in future.

You want the job ? Accept the terms, otherwise find another job.

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Given about $900 on every new Ford car made goes on paying for healthcare/pensions it's no wonder they're trying to cut the cost of hiring new people and prevent being in the same position in future.

You want the job ? Accept the terms, otherwise find another job.

Damn' right, my man!

Better get meself off to a big city someplace, where I won't need a car to get to all my part-time jobs. Because I won't be able to afford one, or even run one.

Oh, neither will the new guys either. Wonder how they'll get to the plant on time for that critical graveyard shift?

Edited by Wario

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This is also coming to a job near where you are now.

Two tier working systems have been happening on the quite for a while now , the new workers get less than the older workers.

Problem is the new won't be able to spend money and create demand for goods and services like the old. Short sighted cost cutting is the better term for it.

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I'm surprised this is a news story, because the same is happening in my own workplace right now. I'm on the older contract and doing very well thank you very much. Unfortunately anyone new starting, doing exactly the same job, is paid one third less.

Of course I'm probably living on borrowed time, because this situation can't go on forever. Look at BA for an example. Older staff paid a load while the newbies get utterly shafted. It leads to trouble.

I count myself lucky to make the money I do, but I feel sorry for the new employees. It's very unfair :ph34r:

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Problem is the new won't be able to spend money and create demand for goods and services like the old. Short sighted cost cutting is the better term for it.

Alternatively you can weigh yourself down by your inflated healthcare/pension obligations, become uncompetitive with Asia, and go out of business where nobody has an income at all.

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Whatever job did the newbie expect the same pay as the guy with 25 years experience? Don't they expect an annual increase in pay as their experience grows?

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Alternatively you can weigh yourself down by your inflated healthcare/pension obligations, become uncompetitive with Asia, and go out of business where nobody has an income at all.

Including the shareholders and management.

Why go to work under those conditions at all?

Even if we did "become competitive" with Asia, it'd be five minutes before the directorial orders were whining "those ******* Asian slaves are too expensive! They want bloody rations and everything. We have to make them "competitive" with , er, ... Zimbabweans, or something."

Asia can ****** off and die. Can't afford their garbage any more. On account of being all "competitive" and "outsourced" and all. I guess we'll muddle through without it somehow, not like it's the staff of life or owt.

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And some here wonder why I am in the deflation camp. The auto industry has had remarkable, nearly unbelievable progress in productivity over the last 20 years even. They use only 1/3rd the labour to build a car as just 20 years ago I read!

So capitalism working; workers 3 times as productive.. should mean wages are triple right? From 28$ per hour all the way up to 84$? Wrong wages FELL to 14$ per hour because of the surplus of labour - the old supply and demand.

And btw what would be wrong with 84$ an hour if they are that productive?

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Alternatively you can weigh yourself down by your inflated healthcare/pension obligations, become uncompetitive with Asia, and go out of business where nobody has an income at all.

Alternatively we could cut our wages to the bone have no healthcare/pension , paid sick , holidays and we will still never be competitive with Asia where they work all the hours for next to nothing and have no social welfare of fabric in their societys. Similar to us in the Victorian times .

Let's not go back to that.

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Whatever job did the newbie expect the same pay as the guy with 25 years experience? Don't they expect an annual increase in pay as their experience grows?

No but the chance that when he had learnt and got the experience of the one that had been there longer , which would not take 25 years he had the oppotunity to earn the same, but that is the bit that has been taken away.

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Whatever job did the newbie expect the same pay as the guy with 25 years experience? Don't they expect an annual increase in pay as their experience grows?

I've been doing my job for a few years, no more. Newcomers will not earn the same as me, though they do the same job.

This development is completely due to my company taking advantage of a horrendous job market during the recession, nothing else.

Nothing to do with more experienced staff paid more for their knowledge.

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Guest sillybear2

Including the shareholders and management.

Why go to work under those conditions at all?

The Asian plants are now paying more than new workers in the highly unionised "they took err jerbs" 'merrycan plants :-

"But in negotiations before and during the bailout debate, the auto manufacturers, seconded by Sen. Bob Corker (R-Tenn.), emphasized the virtues of market forces, and a wage that would allow the U.S. companies to remain competitive with foreign rivals, particularly those building "transplant" factories in the United States.

Those transplant factories pay as much as $25 an hour, with bonuses but more limited retirement and health benefits."

It's a clear case of the UAW agreeing with the under paying the $14 workers in order to over pay the $28 workers.

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I've been doing my job for a few years, no more. Newcomers will not earn the same as me, though they do the same job.

This development is completely due to my company taking advantage of a horrendous job market during the recession, nothing else.

Nothing to do with more experienced staff paid more for their knowledge.

+1 and it has been happening in a lot of other places as well.

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Guest sillybear2

Whatever job did the newbie expect the same pay as the guy with 25 years experience? Don't they expect an annual increase in pay as their experience grows?

It's a production line, it's simply about speed and quality, experience counts for little. Whenever a new model is introduced everyone starts from the same base anyway.

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this has been going on in the UK for years. I've worked for two manufacturers in the last decade where there has been at least two different terms and conditions contracts for employees doing exactly the same unskilled job. In fact, a major Suffolk printer I was at in 2004 were running four different pay rates within the same dept.

Another scourge is contractors working on large construction projects employing agency workers alongside their existing employees for much less favourable terms. This causes resentment and consequently, quality suffers.

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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