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Does the UAW's victory in Indiana signal the end of the two-tier wage system?

Something happened in the auto industry recently that was mostly overlooked by the mainstream media – but which may have huge implications for the industry and the United Auto Workers union.  

Seven years ago, the UAW made a concession that I am convinced would have had Walter Reuther spinning in his grave.

They agreed to accept a two-tier wage system under which most new hires would be paid slightly less than half what long-time auto workers made.

Think about that.

This means most of them are earning less than $30,000 a year.  Can they buy a house with that salary?  Even buy one of the new cars and trucks they build?

You know the answer. Yet the union agreed, because it felt it had no choice.

Today, the Detroit Three automakers employ something like 125,000 workers among them. About 1/4 make second tier salaries, which means they are second-class citizens.

Sergio Marchionne, head of both Chrysler and its parent Fiat, has said he expected the second-tier wage eventually would be the wage for everybody.

If that were to happen, workers might well ask themselves, “What do we need a union for? What are we getting for our dues?” With Michigan now a right-to-work state, that could spell the beginning of the end of the UAW.

The strike lasted just one day, and then the union won. And what they won was this: An end to the two-tier wage system at that plant.

But then something breathtaking happened.

The UAW went on strike Saturday at a Lear plant in Indiana that makes seats for a Ford assembly plant in Chicago.

The strike lasted just one day, and then the union won. And what they won was this: An end to the two-tier wage system at that plant.

The 760 union members are expected to vote to ratify the new contract Sunday. After that, all the workers there will make the same top wage; a little less than $22 an hour.

This would have made headlines in the Detroit papers once; instead, I found out about it from a story in the Windsor Star.

But don’t think the nation’s union members or auto executives failed to notice. This was a shot across the bow, and it hit the target.

Next year, the UAW’s contracts with the Detroit Three expire, and you can bet getting rid of the two-tier wage system is going to be a top priority for the union.

David Barkholtz, a reporter for the Automotive News, is a longtime observer of the industry.  He says that if you thought the strike was a thing from labor’s romantic past, you may want to think again.

Two days ago he predicted the union would make an all-out assault on two-tier when contract negotiations get going.

And he also wrote:

The union is more likely to go nuclear with a strike than at any time since 2007.

Why? Well, there is a current boom in the auto industry. The companies that were on the brink of extinction are making billions. They are building and selling new trucks and cars just about as fast as they can.

Workers think it is their turn to share in the prosperity, and depend on their union to get that for them.

Covering labor just may be about to get very interesting again.   

Jack Lessenberry is Michigan Radio’s political analyst. Views expressed in the essays by Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.

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