Report: New UAW Contract Could Boost Tier 2 Pay Up to $29 Per Hour

by Aaron Cole

December 30th, 2020 10:54 PM

Bloomberg reported (via Automotive News) Thursday that a proposed contract brokered Wednesday night between the United Auto Workers and Fiat Chrysler Automobiles would raise Tier 2 workers’ pay to $29 per hour, up from $25 per hour, after an eight-year, “grow-in” period.

The separation between the two classifications of union employees — veteran Tier 1 and more recently hired Tier 2 — was a major point of contention for the workers, who voted down the proposed contract last week by a margin of nearly 2-to-1.

Roughly 40 percent of FCA’s union employees are Tier 2 workers, a much higher proportion than General Motors and Ford. On average, those employees are paid $9 to $12 less per hour less than workers hired before the recession. The proposed contract, according to the report, would not eliminate the tiered system, but instead bring closer the two pay scales. The contract also wouldn’t cap the number of Tier 2 workers hired by the automaker.

The union will take the proposed contract — which was negotiated with FCA only hours before a proposed strike — to its workers on Friday.

“We heard from our members, and went back to FCA to strengthen their contract,” UAW President Dennis Williams told employees Thursday. “We have made real gains and I look forward to a full discussion of the terms with our membership.”

Senior employees would get the same raises proposed in the rejected contract.

#Contract #Fiat.Chrysler #Tier #Union #UnitedAutoWorkers

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19 of 35 comments

Brn on Oct 08, 2015

Let's be sure to put the hate on anyone wanting to earn a decent wage, doing a shitty job, in freaking 2015.

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- Altair7 on Oct 09, 2015
  
  Menial skill = menial wage. There was a time when most were able to understand the concept.
  
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- Brn on Oct 10, 2015
  
  @Altair7 It's a tad bit more difficult than flipping burgers. If it were so darn easy, China would already dominate.
  
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- Brenschluss on Oct 10, 2015
  
  @brn Earnestly, I would be interested to know what is expected of an upper-tier UAW member employed at an American automotive factory. This might be interesting to explore for people who don't know any better, like myself. It's easy to talk shit, but I have no idea what one is told once clocked in at one of these factories.
  
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Xeranar on Oct 08, 2015

So many fancy armchair analysts getting uppity over a $160 a week raise... Who knew $8,320 a year raise would make people lose their minds. I mean selling nearly 2 million vehicles annually in the US and nearly 116 billion in net revenue...Clearly they better be running to stop the checks or they'll be out of business tomorrow! Anyhoo....The plants aren't closing anytime soon. Sergio knows that Mexican wages are rising faster than most plants in SE Asia and while they don't parallel the US' yet they will sooner many will think.

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- BklynPete on Oct 08, 2015
  
  FCA Tier 2 workers deserve what they're getting. The Agnelli family and chief bagman Marchionne has done well on their backs. At the same time, they seem smart enough to realize they're making hay while the sun shines. FCA is a hot mess about to totter into disaster, and this time even Jeep is being tarnished (Renegade née 500X). Without a product plan, updates or new technology, those NA truck factories will be very quiet in 3-5 years.
  
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- 28-Cars-Later on Oct 09, 2015
  
  Percentage wise it sounds like fair sized wage increase but I don't think Tier II has had a raise since it was introduced (or have they?). Assuming they have not, if two weeks vacation is factored in as per the link below, compensation is $60,320 up from 50K or a total increase of 20.64%. However 20.64% / 7 years since 2008 is only 2.94% per year, or a standard three percent raise. Not too shocking when you break it down... http://www.convertunits.com/hourly/29
  
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- DenverMike on Oct 09, 2015
  
  "Net Revenue", for sure. But what's left "taxable", once the dust settles? For the year, about 2 billion? So what's FCA's liability for this raise? Has to be 100+ million annually, no? Mexico auto assemblers are at about what exchanges for $5 an hour. Benefits? Overtime pay? Paid vacation? Holiday pay? 401K? Maternity leave? Complaining? Complaining about $5 an hour???
  
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- Xeranar on Oct 09, 2015
  
  @28-Cars-Later Exactly, I was doing the math and compared to Tier I they're still bringing home less than they should be without the two-tier system. Never mind that the headline is the optimal amount, essentially longevity pay that I imagine a large percentage would get but not all. Skilled labor willing to work in a factory and make that kind of money is actually telling of how little the rest of the economy makes than how much they're overvalued. It's kind of sad when you think about it in a sustainable wage like that is possible and yet the average individual makes around 28K. Sidenote: Minimum wage raised to $15 an hour would make the median wage around 36K, household around 72K (up from 28K & 51K respectively).
  
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- 28-Cars-Later on Oct 09, 2015
  
  @Xeranar You would think some news agency would have done the math and indicated what it really was in the headline (a COLA raise). That 28K figure sounds high given some of the people I have encountered in the past two years. I suppose its an aggregate of workers of various ages and locations nationally? That I could see.
  
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- Xeranar on Oct 09, 2015
  
  @DenverMike DM - It gets hard to know taxable income since FCA owns atleast a portion of most of its OEMs along with how many subsidiaries and offshoots that can hide funds. Using physical product profitably rates of 7% would put peg them around 8.12B, I think the 2-3B most quote is due to a mixture of debt servicing and R&D shuffling. Still a drop in the bucket given how much they pay workers. Mexican workers are paid about $5 an hour but Mexican unions are starting to strengthen and the basic drive to reach parity with the US is increasing. Mexico is in a complex position where they want to protect their cheap labor market but they also know that inevitably they're going to increase and so are walking a careful line right now. Basically the strongest point in Mexico is the low cost of living coupled together, they can afford to work for less. That's changing though as newer first world access comes in and drives standards of living up as well as international unions starting to take note that Mexico's laws are supportive as long as you can keep the strongmen out. It's a complex situation that won't change in the next decade but automakers are hedging their bets in Mexico mainly because of two reasons: The inevitable labor bust/income challenge towards parity & Destabilization due to the drug cartels and ineffectual government. If either of those gets too large the plants won't be worth the billions they invested. So it's a game of risk, pay more upfront in the US knowing you'll have a guaranteed supply of vehicles and labor or roll the dice and risk blowing a multi-billion dollar plant. Many are choosing the latter and hoping to be out of the boardroom when the first one happens basically.
  
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- Mopar4wd on Oct 09, 2015
  
  @Xeranar I work with a bunch of engineers that used to work for a electrical component maker with operations in Mexico. They say in the late 90's it was very cheap and workers were there 6 days a week with little benefits. 5 years later they had unionized and had benefits. He said the biggest thing they want and got was long vacations and holiday pay. I gather they got almost 4 weeks of vacation. The mexican unions took a hit in the recession, I expect with the new focus on mexican factories they will start seeing wage increases. I believe they are a lot lower then China now so they have room to rise. Also X says is right Mexico is unstable, One of our suppliers has two factories in Mexico one near the border in I gather a stable area the other further in with much cheaper labor. Deliveries from the cheaper one have lots of issues with shipping and workers not showing up. I don't think you want to put all your eggs in that basket.
  
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- Lorenzo on Oct 09, 2015
  
  @Xeranar Chrysler workers got $17/hour from Iacocca in 1986. That's $37/hour today.
  
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- Tonycd on Oct 09, 2015
  
  @BklynPete Tiered pay is cancerous to a workplace's morale. Shame on the unions for allowing it in the first place. They sold out their younger peers to temporarily protect pay and benefits for themselves. And in so doing, they destroyed the united front that workers must present in order to retain a measure of power over their own livelihoods.
  
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Lorenzo on Oct 09, 2015

The tier 2 workers will get raises over eights years? The contract isn't that long, and FCA's tier 2 workers aren't going to wait that long. It looks like the UAW is in the impossible position of trying to satisfy its members while knowing that their employer is on the rocks and won't survive the contract they want. FCA will have to merge with a bigger company, be broken up through spin-offs, or be parceled off in bankruptcy. It doesn't have the income to pay higher salaries and service its massive debt from old Fiat. The workers need to be told how shaky their job security is, but that would undermine Sergio's effort to find a buyer.

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- Mopar4wd on Oct 09, 2015
  
  In the US they are doing very well and from what I just looked up in their earnings report Europe has somewhat stabilized in the last 2 quarters for them and is no longer bleeding cash. The current drag on profits is paying for previous losses in Europe and a sudden collapse of sales in south american over the past 6 months. So globally Fiat can't afford it In the US however they can, at least that would be my argument if I worked there, "my division is doing great I need a raise".
  
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Seanx37 on Oct 09, 2015

Does FCA really have the money for this? Or in reality, they are just kicking the can ? Knowing that they most likely will be sold, or dismembered long before such wages take effect?

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- BklynPete on Oct 09, 2015
  
  It's a joke. They'll never sustain those wages. FCA will be into serious trouble within 2-3 years, if not sooner. Most customers don't care what goes on behind the scenes but a few things will make things bad for FCA: - An economic dip - Wages don't grow - None of the North American product lines get proper updates - FCA pays more to keep the factories going than realize demand - Sergio brings back sales banks - The market's oversaturated with Jeeps - The banks reject Sergio's spiel and call in loans - No one wants to merge It's delusional to seriously think it's going to stay sunshine, daisies and lollipops forever at FCA, and that they're well-poised for a downturn is delusional. BTSR calling me a wienie in 5....4....3....2....1
  
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- Seanx37 on Oct 09, 2015
  
  @BklynPete That is basically what I thought. The huge debt,and servicing of it is a big issue. And the fact that FCA had to delay updates due to lack of money is going to be a huge problem now that all the competition has either updated, or will update all competing products by the time FCA gets around to it.
  
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