By on March 23, 2015

Auto Workers at Labor Day Parade Call for an End to Two-Tier Wages

The two-tier wage system in place now may come down in this year’s UAW negotiations with the Detroit Three. If so, Tier 1 may be the dead man walking.

Automotive News says its sources and analysts believe the outcome of the upcoming negotiations could see Tier 1 wages phased out in favor of more Tier 2 employees, mainly on the basis of keeping up with the labor-cost schemes among the transplants. Center for Automotive Research industry and labor group director Kristin Dziczek states that the tiers could merge over the next two negotiation cycles, proclaiming that “over the next eight years, we won’t even be talking about tiers.”

At present, nearly 40,000 workers are under Tier 2 contracts, making up just 29 percent of the 137,000 hourly employees working for FCA US, Ford and General Motors. Among the UAW rolls, FCA has the most members under Tier 2 with 42 percent, followed by Ford’s 29 percent and GM’s 20 percent.

Ford worker and bargaining committeeman Gary Walkowicz believes Tier 2 should give way to Tier 1, which pays $28/hour, a feat he says could be done overnight for $335 million a year at his company, which made $6.9 billion last year. He adds GM could do the same, considering the automaker recently bought back $5 billion in shares.

However, the two companies have higher hourly labor costs than FCA or the transplants, coming to $59/hour compared to the latter’s $40. Further, FCA’s situation is a result of a hiring cap suspension made during its bankruptcy proceedings in 2009, allowing the automaker to hire as many Tier 2 employees as it needs. The cap, established in 2007, limits hirings to between 20 percent and 25 percent of total hourly employment, though FCA and GM had theirs lifted through September 2015; Ford never had its cap removed.

Tier 1, meanwhile, could disappear due to demographics: average age of those workers at FCA and GM is 51, 49 at Ford. Eight years and two cycles later, most of those workers will have retired or nearing retirement. The hiring cap could also push the upper tier over the cliff, as all three automakers will want to gain or maintain a higher percentage of Tier 2 hiring than the current cap allows.

One proposal, according to consultant and former GM labor negotiator Art Schwartz, could see the UAW raise Tier 1 wages, while the Detroit Three offers to boost those of Tier 2, adding that the end of Tier 2 could jeopardize jobs that would not have happened were it not for the two-tier system.

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70 Comments on “Two-Tier Wage System May Merge Toward Tier 2 In UAW-Detroit Three Talks...”


  • avatar
    DeadWeight

    If they don’t like their pay, why not quit and get a job elsewhere?

    It’s so basic, even a UAW monkey should understand.

    They could always go get a AFL-CIO government job.

    • 0 avatar
      Xeranar

      You mean bureaucratic jobs protected by the AFL-CIO coalition or actual AFL-CIO jobs because the latter isn’t possible. But hey, you’re a real capitalist! You did it all by yourself and never need to buy things that require multiple people to work in conjunction.

      • 0 avatar
        Big Al from Oz

        @Xeranar,
        Why does a “team” of workers need to be represented by another?

        I work in a very large team and guess what, we are not unionised.

        What makes the team work has nothing to do with unions or socialism.

        A team works because of attitude. As you can witness by the UAW they don’t follow the socialist paradigms.

        How can the workers be equal, especially when there are two pay scales? What should of happened was all of the longer term socialist UAW workers should of had a pay cut and gave that money to the newer workers on the lower scale.

        But, hey, as is illustrated here, the fellow workers only care about themselves.

        I believe unionism/socialism is the worst form of capitalism, as this case illustrates.

        A unionist/socialist wants to have what a capitalist has, but without taking the risk a capitalist had to achieve.

        A true unionist/socialist would of given to his “disadvantaged” comrade. You know the unionist/socialist code, communal, one suffers we all suffer.

        Unless, of course you are part of the socialist elite.

        • 0 avatar
          Xeranar

          Unionism and socialism aren’t a form of capitalism, but whatever on that.

          As for your anecdotal response, meh? I don’t really care anymore Big Al what you think a ‘team’ works for, people work for money and they want to given the value they can get from a corporation that exploits their labor for profit. Whether you like the UAW or not is irrelevant. The points stand on their own.

    • 0 avatar
      mikey

      UAW monkey….really? How profound.

    • 0 avatar
      DeadWeight

      “Monkey” refers to what I think of as groupthink people who can’t differentiate themselves and their market worth based on skill differentiation & specialization, so they collectively picket (and do other such things).

      It has absolutely no relationship to race, ethnicity, sexual orientation, gender, LBGT preferences, religion, species, molecular structure, etc., as I intend it.

    • 0 avatar
      OneAlpha

      I used to wonder what the difference between a Union Bum and a Union Thug was, and then I figured it out.

      It’s nothing more than timing and location.

      When the guy’s slacking off at his job, he’s a Union Bum. When he’s out on the picket line chanting and threatening “scabs,” he’s a Union Thug.

    • 0 avatar
      carguy

      @DW: Wages are a negotiation between the employers and employees. Collective bargaining through unions is a great way for labor to even the playing field and get a better deal. Just like most corporations trey to get as much leverage in every deal they negotiate. It’s just the free market at work.

      • 0 avatar
        DeadWeight

        So is that why unions have tried, in every case thus far, to prevent employees at union facilities from opting out of having to pay union dues?

        Those wishing to opt out are too stupid to see the “value” that paying union dues provides them?

        • 0 avatar
          mikey

          Agreed …I personally don’t see any issue at all, with those that wish to opt out. As long as their comfortable with “opting” out of their union wages, and benefits.

        • 0 avatar
          carguy

          No argument there – membership should be voluntary. However, to call all UAW members “monkeys” seems to indicate that your dislike of organized labor runs much deeper than just compulsory membership arrangements.

          • 0 avatar
            DeadWeight

            I don’t dislike individual union members, per se, and in fact, sympathize with the average person’s plight, including theirs, in trying to maintain living standards in a corrupt world made more corrupt by mad central bankers and Crony Capitalism.

            It’s just that I think that they’re naive – hopelessly so – if they believe they can be exempted from a historical tsunami that’s lifting only a relative few boats, while sinking many, many others, as if they somehow have leverage.

            Even Germany’s middle class and union structure is being torn down, as in right now, in a process of manufacturing and technology outsourcing to nations such as the Czech Republic, Poland, Serbia/Croatia, etc.

          • 0 avatar
            highdesertcat

            DW, I expect that during 2015/2016 a lot of boats will be lifted as we, the US, will expand our ties with Poland, both militarily and industrially, and will set up a bunch of American factories there.

            Right now, Mexico is cheaper for labor than China, but some have held that several of the breakaway republics of the old USSR will be cheaper yet.

            I see maybe GM and Ford making some cars there with a price-point along that of the old Trabant, but much better in quality and value.

          • 0 avatar
            golden2husky

            …..Historical tsunami that’s lifting only a relative few boats, while sinking many, many others…..

            And there lies the fundamental problem. America is rapidly losing the middle class. The UAW can’t fix that. The American postwar boom gave rise to a strong middle class. Today you have to go heavily into debt for a college education that really guarantees nothing. Not that anybody is entitled to a guarantee, but it wouldn’t hurt to have a fighting chance.

  • avatar
    Xeranar

    Woo…Trot out the anti-union completely unfounded “I don’t understand capitalism in the slightest” comments.

    Anyways, the transition out of Tier II to a single tier system would make sense with the transition of all workers to Tier I. But of course multi-billion dollar corporations are going to bulk at having to pay anything because the corporate controllers are conditioned to avoid extra costs at well..all cost. Even if it means animosity on the work floor and general more confrontation with the workers. But that’s how we like it in the US, isn’t it? To corporatists and unionists fighting each other while Germany and Japan work more or less in unison. Oh the fun of being ideologically broken….

    • 0 avatar
      DeadWeight

      It’s really simple.

      Employers offer employment at the wage/benefit levels they think will attract labor.

      If those wage/benefit levels aren’t sufficient, they won’t be able to hire enough employees.

      If they aren’t able to hire enough employees due to insufficient wage/benefit levels, they will need to RAISE their wage/benefit levels offered.

      WHEREIN LIES THE CONFUSION?

      • 0 avatar
        Xeranar

        The confusion is in your argument doesn’t meet the Iron Law of Wages and of course ignores the functional right of labor to organize. I’m not sure why you think this is ‘simple’ because your basic argument isn’t how capitalism in the United States works. When you decide to discuss in terms that are relevant and actual to the point I’ll be happy to press further. Until then, I bid you adieu.

        As for what the rationale is? The UAW has to worry about GM not making money for R&D on future vehicles, that’s the only real functional worry. So if they made approx 7 Billion dollars and they’re asking for around 340 Million raise or a raise of 5% from total profits that’s a relative small price to pay for continued loyalty and efficiency. As for why they ‘deserve’ more than KIA workers, I don’t know? What do you ‘deserve’? Deserve isn’t a word that means anything in capitalism. It is what you can ask for, what you can demand, and what you can extract. Deserve is a word reserved for sitting on your parent’s lap and asking for a new bike. If the KIA workers are satisfied with their lower wages because they live in a depressed economic zone where cost of living in local measures is cheaper but national ones aren’t (i.e. House is cheaper, car is not…) then it isn’t a relevant discussion. If though the Big-3 choose to move there in order to avoid paying higher wages to UAW workers the UAW has every right to fight for industry-wide standards in order to protect the standard of living for their unionized workers.

        The bigger question is if minimum wage kept up with inflation it would be about $20 an hour, if it kept up with productivity it would be near $37. Why do you want somebody to make less when you should want to make more? Do you think this sum zero game is rigged so little in the favor of your boss that to get a meager 5% raise would end your business? Sounds like you need a better boss.

        • 0 avatar
          Landcrusher

          If your point is that DW is wrong because we no longer have a market for wages, but rather have a system based on entitlement run by the government, then I can only be sad because you have a point.

          The reality is that capitalism was never really well defined. The common usage doesn’t match the academic and government meaning. Said confusion helps the establishment types in both parties in power.

          Just one more reason the lawyers have to go first.

          • 0 avatar
            Xeranar

            Actually again, my point (which I addressed in the previous thread) is that we never had a system based on merit or value of labor. We had a system that was based on what could be extracted for value from the labor done. Now that we have excess population and have had this problem since the industrial revolution more or less, we can’t simply put a sign out saying “I’ll pay 5 dollars an hour for widget assembly” and expect people to work for a number of reasons:

            1.) The value of labor within the market is fundamentally unknowable, it is an act of extraction in that you value my widget making at 5 dollars, I value it at 10. Once we introduce excess population the value of labor dwindles to below subsistence and we have to institute wage floors and then eventually in order to keep demand up use demand-side economic measures by putting more money in the hands of workers and less in the hands of corporations to keep selling widget-using items. It’s not that GM or Nameless Co. shouldn’t make a profit, it’s that they should make a profit that generates more demand.

            2.) Not even beginning to get into the pyramid system we use for education where we need far more janitors than doctors in reality, the pay of wages by factories is usually the highest in any given region for the general population so ultimately that pay goes towards the region as a whole. Chatanooga does better when those workers work, they’ll do even better when they get paid UAW prevailing wages.

            3.) That 5 dollar an hour widget shingle doesn’t exist in a vacuum, in fact it exists in a competing labor market. By inadvertent collusion or intentional those who own the means can dictate the wages. This is where the Wagner Act steps in and changes the system because it allows for non-violent shutdowns to offer the proles actual fighting capabilities against the DW’s of the world who would rather steamroll them then offer them another nickel of his profits (which is really their profits, I mean at most DW signed some CEO paperwork to allocate resources but floor workers made the cars, engineers designed them…so on and so forth).

            Disagree with my ideology, but atleast see the basic math works out.

          • 0 avatar
            Landcrusher

            Interesting theory. I’ll give you partial credit.

            There are all sorts of issues here. I’ll address a minor one to see the reaction. If it’s the normal nonsense I’ll likely just be done.

            Above market wages and benefits and job security warp the local markets and national ones. There is no free lunch. Workers will stay in UAW positions long past the time they are qualified to do more important work. Many overqualified people will take the jobs. Frankly, you end up robbing the local talent pool. The cost of these politically protected positions also get passed onto consumers most of whom, even in Xer’s wildest dreams, will never be able to get such mana from Washington.

            There is no free lunch.

          • 0 avatar
            Xeranar

            Thanks LC for finally acknowledging I’m right, but the second I accept ‘credit’ from you is the day I hand in my PhD. You’re again making highly erroneous claims about how a labor market works. Presumably the UAW would drain away a few engineers or doctors or chemists (or political scientists) from the talent pool if the value of their work exceeded those of professionals. But they almost never do and the relationship to time served, physicality of the work, and requirement of education makes the idea that floor workers at an UAW plant aren’t going off to cure cancer because they make well enough is just silly.

            Once again you keep making erroneous statements about ‘cost to consumers’ since I bought the car I paid ALL THE COST. It’s part of BUYING THE CAR. If anything, because labor accounts for about 30% in the average system (it varies, I know, but textbooks usually advocate for about 30%). An increase in 5% of profits to off-set the cost would mean an actual increase of about 1-2% in real world costs. So adding $220 to a car isn’t really that big an issue. Especially if the wage floors were built to match the system.

            There is a certain point where corporations simply have to eat that difference and usually if its a small enough increase it doesn’t matter. But again, free lunches don’t apply here. You’re confusing the idea of a sum-zero game with the reality of the system where 60% of the wealth is cordoned off by the elites. Pulling that wealth back down towards citizens would mean less for the elites but they have so much it wouldn’t be noticed.

          • 0 avatar
            Landcrusher

            Well, more of same. I didn’t say you were correct, only interesting.

            Your manufacturing math proves you have no idea how business works. Stick to demagoguery on the dole.

            Your illusions that corporations have to eat a difference is similarly a sign of ignorance.

            We are just done. Your Kool Aid overdose has left you without value.

          • 0 avatar
            Xeranar

            More hashslinging from the sidelines. The constant instance because I work for a Public university I’m on the ‘dole’ got old a long time ago. You’re a repugnant creature without a shred of evidence to support your arguments. What would you like to call the value of labor as a whole? I simply used the difference in profit to evaluate the cost of a car. Mind if you if we accounted for revenue the difference would drop into substantially smaller fractions, so it would go from about $200-300 per car to somewhere around $50-60. Isn’t math fun? I love that I can do it and you gnash your teeth desperately to find an excuse to dissuade it.

            By the way, that advanced economics degree? It’s what, 30+ years out? It sounds like you’re still using arguments done in what would be considered undergrad classes now. But hey, you can always go back to school and work with those evil dole takers who don’t do anything but educate people for a living…

    • 0 avatar
      mkirk

      So what exactly is the rationale of the higher labor costs and why these workers deserve more than say, KIA workers in Georgia. I know several folks that make a good living at the wages the transplants pay. Yes, the US makers do have legacy costs, but to the tune of nearly 20 bucks an hour? That is insane.

      And I’m not being inflamatory, I just don’t get it.

  • avatar
    mkirk

    I wish I could see a comprehensive list of the competitive advantages the Government granted to GM and Chrysler over Ford as a result of them being the more poorly run of the big 3. Debt wiped away, lower labor costs…it seems they should be wiping the floor with Ford yet they really aren’t.

    • 0 avatar
      28-Cars-Later

      Good point, although Chrysler has certainly increased its market share since 2008.

      • 0 avatar
        mkirk

        Well I would hope so…if the article is correct they are paying substantially less for labor. Looks like some of that is going in to product development as most of their current offerings look pretty solid.

        • 0 avatar
          28-Cars-Later

          I’m very curious about Chrysler’s product development bailout to now, because if you look at it, how much “new product” has there really been? With the exception of the Alfa derived Dart/Cherokee, Viper, and Fiat 500, how much new product has there really been? Seems to mostly be continuations or reconfigurations of pre-FCA product from 2008 to the present time.

        • 0 avatar
          Jack Denver

          Since the majority of UAW workers are Tier 1 (and will always be, despite retirements, because of the cap – I’d bet that the Chrysler cap comes back in the next contract) , it is in their economic interest to sell out Tier 2 and keep the differential. Solidarity is dead. If Chrysler says “here is $100 – you can either pay yourself $70 and give $30 to the new hires or we can go 50/50?”, which would you do?

          • 0 avatar
            DeadWeight

            The UAW’s (and CAW’s) stupidity has no limits.

            If they think Sergio was merely posturing when he stated that FCA was winding down Canadian manufacturing operations over time due to Canadian manufacturing costs, they’re even dumber than I have them credit for.

            Look at what’s happening to Canada and Australia’s manufacturing base, by the numbers.

            The UAW was stupid and greedy in the 70s, the 80s, the 90s and the 2000s, and they’ve not learned anything based on past idiocy.

          • 0 avatar
            Big Al from Oz

            @DeadWeight,
            Australia is uncompetitive in the auto assembly side of the business, not all aspect of vehicle manufacture.

            Australia’s problem is our overall income is expensive, even with our dollar now sitting between 77c-80c in US money.

            Another problem for Australia is our market size and the number of manufacturers represented here.

            Canada is slightly different. I do see Mexico becoming a larger vehicle manufacturer over time.

            The Canadian’s like us will need to find a better way to earn money. If vehicle assembly leaves Canada the Canadian’s will be the better for it.

            The Canadian’s (federal and province) pay a lot of wasted money to maintain vehicle manufacturing.

            The US does as well. If industries require the amount of ‘life support’ to maintain viability, then maybe the auto manufacturers should reduce in size until market forces dictate what is profitable.

            I know the UAW wouldn’t like my comment as they expect a country to pay for the waste they support.

            But, it is costing 100s of billions of dollars that could be better spent creating employment that makes real money, not subsidised money.

          • 0 avatar
            ect

            “FCA was winding down Canadian manufacturing operations over time due to Canadian manufacturing costs”

            Huh? FCA is investing $2 billion in Windsor, which Sergio was recently quoted as saying “will run flat-out” Hardly winding down.

            “Look at what’s happening to Canada and Australia’s manufacturing base, by the numbers.”

            OK, let’s. Toyota opened their new plant in Woodstock in 2014, Honda has announced an $850 million investment in Alliston, and Ford is investing $700 million to build the new Edge in Oakville. GM is spending $500 million at CAMI. Linamar has announced a new $500 million investment in their business, and plans to expand their workforce by about 20%.

            That doesn’t sound like “winding down” to me.

  • avatar

    proof positive that UAW leadership is on the take. Solidarity is a lost concept. it started with Quality of Worklife and other Joint Efforts. the union fell for Jobs Bank which heightened the public’s apathy for class struggle.

    • 0 avatar
      DeadWeight

      The UAW management/leadership has always been all about their own interests.

      You should have seen what kind of real estate investments they were making with union money back in 2003 to 2007, and who was getting paid what.

      They’re as bad as the Teamsters.

  • avatar
    mikey

    I come out of the Canadian GM/CAW system, in late 2008. “Two tier” had just come into play. Our “2 Tier differs from the UAW version. Our 2nd tier people get more money. On the other hand, unlike the UAW, we allowed outside vendors, inside the plant. The outside vendors, perform work formally done by GM hourly people. The whole idea, was far from perfect, and not easy to swallow. Water under the bridge.

    I have not kept up with the ever changing situation, in the UAW-GM local, and master agreements. Call me selfish, or out of touch, greedy, or mercenary. That being said. These days, my only concern, is the viability of the Canadian GM hourly pension plan.

    As others have pointed out, it stands to reason, that over a period of time, two tier will evolve, into a merged system. The question is how, and when.

    The UAW no longer has the “nuke option” . Shut the plants down, set up pickets, start the bon fires, and break out the beer ???? . Not a chance.. It isn’t 1984 anymore. Though there is a hard core, small faction that believes it is. So the UAW and the former big three, will have to work it out the hard way. You give a little, you take a little, the plants will stay running.

    The universe will unfold..as it should.

    • 0 avatar
      SCE to AUX

      Hi mikey:

      I can’t recall how the two-tier came into being (either UAW or CAW), but isn’t it something the unions agreed to? And/or, did they have a gun to their head when the terms were drawn up?

      Shouldn’t the current union members direct their frustration equally toward the union leadership and the company?

      The two-tier seemed like a good/bad idea when it arose. Good since it’s reasonable to pay newbies less (but half?). Bad since it was inevitable someone would realize they’re being paid half for the same work, regardless of tenure.

      Seems to me it should go away since it has generated so much strife. But the UAW may end up with fewer workers employed at a result.

      I’m interested in your thoughts, since you were there, and seem pretty clear-eyed about how things were and are. Hope you are well.

      • 0 avatar
        mikey

        @ SCE to AUX….Yes, I am well, and thank -you.

        The UAW was the first to agree with two tier, and VEBA. In Canada, we had no choice, either go with the basic pattern of the UAW agreement, or GM takes their ball, and goes home.

        Some may suggest, that the Unions had an option, along the lines of lowering the older workers pay ? Such a deal would have never got past the ratification process. As it was, the concession agreements barely scrapped by. A concession of that magnitude, would have been political suicide for the UAW/CAW leadership. An interesting fact that is overlooked by many of the arm chair quarter backs. The option of lowering the senior peoples, wage package, was never on the table.

  • avatar
    CliffG

    Why are they even bothering? Why don’t they do what So Cal Ed is doing, just fire them all and hire H1b workers at half price? Who is going to complain? The left-wing high tech Silicon Valley types that bankroll the Democrat Party? Hah, they depend on those workers for their profits. The Chamber of Commerce that funds the Republican Party? President Goldman Sachs? Even labor unions are primarily government labor unions these days. And you can depend on the news media providing cover, even Fox News won’t touch anti-immigration stories. Seems like a win – win to me.

    *ps GM decided that rather than investing $5 bil in improving their production facilities for the next ten years instead spent it on improving their stock price for the next 12 months. So you know what they really think.

    • 0 avatar
      DeadWeight

      +1

      There is only an illusion of choice in American Politics, based on a two-party system that nearly exclusively uses social wedge issues – and jawboning pretty much (as the courts decide most of these issues ultimately, anyways) – as their differentiating meme to divide and conquer the minority of the voting eligible population that bothers to turn out on election days.

      Both “different” parties are funded by nearly the exact same corporate, banking, defense complex, et al., interests.

  • avatar
    dwford

    This is going to be a very interesting set of negotiations. We will soon see if the automakers and the union have learned their lessons from the last 6 years. It will be very tempting for the union to over demand, and very easy for the automakers to cave, given the current prosperity.

    In the end, the tier 2’s probably get a raise, but not to tier 1 levels, the automakers get to increase the number of tier 2’s, and every worker gets a fat signing check.

    Like the article mentions, the automakers can just wait out the old timers and slowly transition to a tier 2 system, but it won’t be at current tier 2 rates. They won’t get away that easily.

    • 0 avatar
      highdesertcat

      I don’t think anything has changed from the past, or the objectives of the UAW and unions in general.

      If an employer is successful, the UAW and the unions want to share in that. Don’t take any risks. Just share in the wealth. Not the losses.

      If an employer is not successful, not profitable, that’s immaterial to the UAW and the unions, because they still want a larger amount of pay and benefits, and will collectively bargain their members out of their jobs by driving their employers into bankruptcy.

      Plenty of precedence for that.

      But in today’s America, that’s no longer a big deal because the US taxpayers will bail out a failed automaker again to keep the UAW working if it becomes necessary. We, the people, have been in for penny and in for a pound since 1 April 2009.

      • 0 avatar
        mikey

        HDC…December 19 2008, was my last shift. George W wrote the first check that morning.

        • 0 avatar
          28-Cars-Later

          He forgot your congratulation check though didn’t he?

          • 0 avatar
            mikey

            28 cars..Yeah it must of been just an over sight. Or maybe because they won’t let me vote, in US elections ?? Though this Cruze dude was born in Canada ? I can’t see you guys let the Biebs run. I’m okay with it, then you can have the Biebs for good.

      • 0 avatar
        mikey

        “To keep the UAW working” I guess the thousands of salary jobs that were saved, didn’t count ? How about the dealers, and all their employees ?

        “driving their employers into bankruptcy ”

        So GM turned billions of dollars in profits, on every conceivable, configuration of a truck. Paid layers, and layers, of some of the most incompetent, empire building, senior managers imaginable. The same incompetents, were rewarded obscene bonuses, while Toyota and Honda handed them their lunch. The same gang of idiots that wouldn’t put the effort into building a quality, affordable small car ??? This is somehow the fault UAW/CAW.

        Three reasons the big three failed.

        Number one… bar none, Senior management, up to, and including caving to the UAW {look up Flint strike 1998} Poor product planning, and lousy execution. I could fill pages, its all been said before.

        Number two…Lying, thieving, dealers, and their service departments. How many people, quietly, no yelling, no screaming, just walked out of the GM dealers door, never, ever to come back?

        Number three…The UAW failing to see, that with the transplants, firmly in place. The game changed. Pattern bargaining, and the theory behind it, was no longer effective. When you could hold a gun to GM’s head, while Ford, and Chrysler, were churning cars out the door, GM would cave. The playing field changed, with well paid, and happy, Toyota, and Honda workers. The UAW could no longer play the “oh its an imported piece of s” Not when, you got a guy in Ohio, or Ontario collecting a nice pay package.

        The former big three had expensive legacy costs, giving the transplants a competive advantage. The UAW/CAW was blind to that fact.

        Ignoring the competition, cost the UAW/CAW, and the former big three, and.. yes ! the taxpayers dearly.

        So yes the UAW/CAW can shoulder “some” of the blame. But not all of it.

        • 0 avatar
          Landcrusher

          You covered that very well and very objectively. Still, it was the existence of the UAW that saved GM. Without their power, the company would have likely been flushed.

          In anything close to a fair world, they would have gone under and everyone would be better off in the long run except those responsible for the failure – mostly bad managers, union officials, and rotten pols.

        • 0 avatar
          golden2husky

          Mikey, well said. The union certainly played its part, but one can’t help but wonder if GM and the rest of the Big Three managed to deliver the products people wanted that they might have been able to keep the market share and afford the high wages…really, its the product.

        • 0 avatar
          highdesertcat

          Mikey, it depends on which s!de of the fence a person is on, that determines their interpretation of the same facts. Those on the receiving s!de are as happy as clams in Rolex Oysters.

          I’m on the s!de of the fence that believes that every business has a life cycle. They start up, they live, they die. Hell, we will all die.

          So why can’t we allow a business like GM to die? It could not survive on its own. Ditto Chrysler, but at least we, the people, got rid of that carcass.

          People like me believe that GM and Chrysler’s life cycles had run its course. And it matters not what the reasons were for their demise — they died. They should have stayed dead.

          No one in the US government cared that other US businesses died or that millions of people were thrown out of work, many who lost everything in their lives; homes, cars, status.

          At that time keeping 6% of the US work force employed by the US auto industry working when 25% of the US workforce actually became unemployed, is precedent-setting. Some have called it bad juju.

          Yeah, I can see where the UAW got the better end of that deal. But what about all those other businesses not remotely connected with the US auto industry who had to lay off people, and file for protection themselves, or, just shutter the business.

          As it turns out, we now find out that less than 67% of America’s eligible workforce is actually participating in the labor pool while the other 33% have either given up looking for work or no longer choose to work since drawing a welfare check and foodstamps is the new in-thing in America.

          I’m cool with the outcome. I’m not helping to pay for it. I’m taking out whatever I’m entitled to, rather than paying into it. I hope to live long enough to see our US social security go broke in my lifetime.

          This is what the majority in America wanted. This is what they voted for. Not once. But twice. I say, good on them. They can pay for it too!

          America always gets exactly what it deserves, because we vote for it!

          (Sorry about the delayed response. I’m up to my @ss in alligators.)

          • 0 avatar
            ect

            Just to be clear, the labor participation is measured against the entire US population over 16. It peaked in Q1-2000 at 67.3%, and has fallen since then to 62.8% – the same level it was at in 1980.

            Most of the balance is made up of students, non-working spouses and retirees. You may want to believe that 1/3 of the population is “drawing a welfare check and foodstamps”, but it just isn’t so.

            The Tea Party types all want to forget the larger economic context (a global financial crisis, as I recall) but the reality is that the bailouts of GM and Chrysler didn’t happen in isolation, but as part of a much larger plan to save the economy. Fortunately for us all, and despite the best efforts of extreme right-wingers to derail it, it worked.

          • 0 avatar
            highdesertcat

            ect, I know how labor participation is measured.

            The one-third I refer to are not contributing, even if they do not receive a welfare check or food stamps.

            In case you don’t know, I am an Independent with equal disdain for both political parties, having started in life as a Democrat, progressed to being Republican during my 20-year stint in the US military, before becoming a devout Independent after I retired in 1985.

            Upon my retirement from the US Air Force at age 38, I chose not re-enter the labor force but chose to try eking out a living on my own. I think I did well. I’m still around.

            And even today, a great many people who retire from the military, civil service, police, firemen, private practice, whatever, do not re-enter the workforce, by choice.

            My guess is that is because there is no incentive to do so. Regardless, they are not contributing. Not paying in. Just taking out their just desserts.

            The larger economic context IMO has nothing to do with political philosophy, but has everything to do with how much of what you work for and get paid, you actually get to keep.

            There are some, who believe in bailouts, handouts and nationalization. Bully for them. And as far as I am concerned, they can pay for it too, with their taxes, with their labor and with their blood, sweat and tears.

            I am not among those, but I am not a TEA partier either.

            The only larger economy that was saved by the bailouts, handouts and nationalization was that of the UAW. Everything else, everywhere else, fell apart at the seams.

            The global financial crisis was caused IMO by the economic policy of (primarily) the US government that wanted everyone to share in the American Dream of home ownership, realized with NINJA loans and mortgages.

            The real estate business owned by my wife and her family did extremely well after the house of cards collapsed, buying properties on the cheap.

            So for us, we are what we are today and have what we have today because we derived a benefit from the misery and pain of others who lost everything they had because they lost their job and their way of life. Many other real estate buyers did the very same thing.

            That’s what the voters got for electing the government they wanted. No one else to blame.

            But it doesn’t make me, or others, want to contribute to it, or rejoin the workforce.

          • 0 avatar
            Landcrusher

            ect,
            Marginal tax rates and other government action is currently keeping a small country’s worth of spouses out of the work force. It’s the biggest waste of talent likely in the entire history of the planet.
            We’re not talking labor here. We are talking professionals whose work creates value and jobs for others.
            The plan to keep the economy stagnant was a cowardly attack on the disenfranchised by those currently in positions of power. It’s criminal, not benevolent.

  • avatar
    jacob_coulter

    The two tiered system really does lay bare the hypocrisy of modern unions.

    So all of that talk about worker solidarity and equality was really just bullsh!t.

    Some animals are more equal than others in the UAW.

    • 0 avatar
      mikey

      Animals, Bums,Thugs, Monkeys…Just makes a guy feel all , warm, and fuzzy.

      • 0 avatar
        ktm

        mikey, I could be wrong, but I don’t think jacob was being condescending with his term “animals”. That statement alludes to George Orwell’s “Animal Farm”. In the story, the farms animals have solidarity and kick the farmer off the farm. All was great until the pigs started playing by a different set of rules.

        “All animals are equal, but some more equal than others.”

        In this instance, the UAW/CAW leadership talks about solidarity with their brothers, but in fact make decisions that are in their best interest.

        • 0 avatar
          mikey

          @KTM…Sounds reasonable, sorry Jacob. I am pretty well read, but never read Orwell

          • 0 avatar
            jacob_coulter

            Yea, it’s from Animal Farm.

            I wasn’t equating the UAW with animals. I’m an animal lover, after all.

            Both 1984 and Animal Farm should be mandatory reading in all schools in my opinion.

          • 0 avatar
            golden2husky

            It was mandatory, at least in my school. I read them both in 7th grade English class….

    • 0 avatar
      psarhjinian

      Remember, when capital organizes, it’s perfectly okay. Corporate interlock, lobbying, free-trade agreements, informal networks and so forth: that’s all fine.

      But when labour acts in concert, that’s just evil.

      Labour doesn’t have money or power, at least at the level of the individual. What it does have is _numbers_. It really isn’t any less acceptable, morally, for people to leverage those numbers in collective bargaining. It is literally the only asset labour has, especially against the advantages that capital has, such as the ability to move across borders and extract favourable regulatory, legislative and taxation concessions. Collective bargaining is really just the thumb on the other end of the scale.

      If it weren’t for the fact that most Americans don’t see themselves as a proletariat, but instead as temporarily-inconvenienced millionaires, this rabid anti-syndicalism wouldn’t be such an issue.

      • 0 avatar
        jacob_coulter

        Labor doesn’t have any “money”? Wow, that’s rich.

        The UAW at one time had their own private golf course for members.

        Guess what group constitutes the largest political donations in the United States? Labor Unions. No other organization comes close.

        They’re rolling in the dough.

      • 0 avatar
        Landcrusher

        Not true, Psar. At least not in the US. Unions specifically get to do things that are illegal for companies.

        As for government deals, well, most are horrifically bad except in the real world we are still stuck dealing with a lot of Big Government. Love it to be different, but taking power from the individual by forcing them into groups is just moving backwards. .

  • avatar
    RonaldPottol

    For a really interesting look at these questions, as well as why the Germans pay their car workers more, check out “Only One Thing Can Save Us: Why America Needs a New Kind of Labor Movement” by Thomas Geoghegan. It will make you think. http://www.amazon.com/Only-One-Thing-Can-Save-ebook/dp/B00AUZS1LU/

  • avatar
    indi500fan

    Is is fair to say that Tier 2 is roughly on par with the non-Detroit brand US plants?

    Because those plants really define what the competitive wage level for making vehicles in the USA is. It’s unreasonable to think you can have a $10/hour gap vs your competitors and survive long term.

  • avatar
    SoCalMikester

    figure out what the transplants pay, and pay slightly better. do the transplants even offer a pension?

    it would be interesting to see an interview with someone retired from the honda plant in marysville after 30+ years.

  • avatar
    SaulTigh

    Honda of American Mfg.’s website says they offer a 6 percent 401k match and a “retiree lump sum” based on years of consecutive service, among a whole slew of other benefits. I think they’ll do OK. And, with a 401k, at least the money is yours. If your pension plan is poorly run, it might get taken over by the government and you’ll be treated to a hair cut.

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