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UAW Seeks to Claw Back Its Four-Year-Old Wage Concession

A Chrysler Group LLC employee inspects an engine on the production line of the company's Jefferson North Assembly Plant in Detroit on April 28, 2011. Photographer: Jeff Kowalsky/Bloomberg
A Chrysler Group LLC employee inspects an engine on the production line of the company's Jefferson North Assembly Plant in Detroit on April 28, 2011. Photographer: Jeff Kowalsky/Bloomberg

May 25 (Bloomberg) -- United Auto Workers Vice President Joe Ashton, who negotiates with General Motors Co., said he wants to raise the $14-an-hour entry-level wage for union members at assembly plants in talks this year.

The pay for new employees, about half of what senior workers get, is “not a middle-class wage,” Ashton said today in an interview after GM announced it will invest $69 million and add 2,500 jobs to start making two new models at the Detroit plant that builds the Chevrolet Volt plug-in hybrid.

The UAW’s push in this year’s labor talks would seek to partially pull back on a concession made four years ago before the automakers have had a chance to hire many workers under the lower wage. The union is not seeking to eliminate the entry-level wage, which is paid to 3 percent of its members at the three largest U.S. car companies, Ashton said.

“In negotiations, there will be some conversations about moving these people up,” Ashton said. “We’re not looking to make these plants uncompetitive. It’s no good making $28 or $38 an hour if you don’t have a job.”

The union must balance priorities in negotiations between keeping costs low to secure new jobs and getting back some concessions made in recent years as GM and Chrysler Group LLC were headed into bankruptcy, said Harley Shaiken, a professor at the University of California, Berkeley, who specializes in labor.

“The companies will resist it,” Shaiken said. “It was one of the most painful concessions that the union made. They felt they had no alternative.”

UAW workers in U.S. automaker plants earned $13.30 an hour in 1985, according to the Center for Automotive Research in Ann Arbor, Michigan.

Second-Tier Wages

The UAW will point out that GM and Ford Motor Co. made billions of dollars last year in a weak car market while most of their workers made the top wage, Shaiken said. At the same time, the union won’t jeopardize the recovery of Detroit’s carmakers with huge demands, he said.

GM reversed plans to close a plant in Michigan last year to build small cars there after the UAW agreed the factory would be staffed with about 40 percent of workers earning the second-tier wage. Raising pay for those workers may create an incentive for GM, Ford and Chrysler to outsource work, said Bob Clark, president of labor firm RWC Consulting LLC.

‘Self-Defeating’

“If his intention is to compress the difference between regular employees and the second tier, than it’s self-defeating,” Clark, a former director of labor affairs planning for Dearborn, Michigan-based Ford, said in a telephone interview. “Even with the second tier, they have uncompetitive labor costs, and that means fewer and fewer jobs.”

Ashton said in March that the UAW would consider expanding the use of a lower wage for new workers in exchange for jobs. He made the comments at GM’s factory in Orion Township, Michigan, where the automaker retained 1,550 hourly and salaried jobs to build the Buick Verano and Chevrolet Sonic small cars beginning later this year.

Ashton is “under some pressure on the issue of second tier” from his union, said Art Schwartz, a former GM labor negotiator who is now president of a consulting company in Ann Arbor, Michigan. “This is one way to deal with it. You don’t want to do away with that because he can win work with it.”

GM, Ford and Chrysler may not be receptive to raising the entry-level wage because the automakers still have a gap they are trying to close with foreign automakers, Schwartz said.

Nonunion Competitors

Ford’s U.S. labor costs are about $58 an hour, $8 more than mostly nonunion U.S. factories of competitors such as Hyundai Motor Co., according to a website Ford started last month to promote its negotiating position in contract talks.

GM’s shares closed at $31.27 a share, up 44 cents, or 1.4 percent, in New York Stock Exchange composite trading. Ford fell 8 cents to $14.58.

The UAW will negotiate new contracts this year with GM, Ford and Chrysler before their agreements expire in September. UAW President Bob King has said workers have given up $7,000 to $30,000 each in concessions since 2005 to help the automakers survive.

A two-tiered wage was contentious among some union members who spent their entire careers making the same wage as their co-workers, said George McGregor, president of UAW Local 22, which represents workers at GM’s Chevrolet Volt plant.

“I want to get back to where we were,” McGregor said. “I’m making $28 an hour and the guy across from me is making $14 an hour and doing the same thing. It will take time, but we’ll get it back.”

To contact the reporters on this story: David Welch in Southfield, Michigan, at dwelch12@bloomberg.net;

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net.

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