The QUALITY of U.S.-brand cars and trucks IS STILL NOT UP TO that of
Japanese brands, despite Toyota's problems, and despite what the
domestic automakers' PR people want you to believe.
As long as the UAW -- whose uncompetitive wage and benefit scales
helped drive Chrysler and GM into receivership -- is calling the
shots, its uninspired 2nd-tier wage-earners will never fully embrace
the need to produce quality products.
Give this patently unfair arrangement two-to-four years and you'll
find Chrysler, GM, and yes, Ford, too, begging for another round of
"After bailouts, new autoworkers make half as much as veterans in same
By Peter Whoriskey
Washington Post Staff Writer
Sunday, July 25, 2010; A01
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
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
"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.
Less pay? They'll take it.
Unemployment rates run over 13 percent in Detroit, and higher than
that for African Americans. Many had been unemployed before recently
"I've got a wife, three kids and a mortgage," said Dealon Norton, 28,
who was unemployed for a year and now has a job putting bolts into
doors. He is untroubled by the pay gap: "I really needed a job."
Others traded lesser jobs -- one was a $10-hourly nurse's assistant,
another was an $8-an-hour White Castle manager trainee, a third was
machine operator for a local newspaper -- for the upgrade to $14.
Johnson said he, too, held a job before this, but it was in Texas, at
a company that makes car seats. So while he was making about the same
wage in the Dallas area, he could afford to fly up and see his family
only once or twice a month.
"You gotta be grateful," he said.
Indeed, the company also said that despite paying only half of what it
once did, it continues to attract good applicants.
About 99 percent of the 1,300 new hires hold high school degrees,
according to Chrysler, just like the workforce already at the plant.
The new hires are also younger: The average age of the previous
workers is 46; for the new hires, it is 33.
And because of the hard times in Detroit, Chrysler officials expect
that workers will look beyond the pay disparity.
"If you care about your job, your salary, you look at things in a
different way," said Gualberto Ranieri, a Chrysler spokesman. "You
realize that in certain areas of this metropolitan area that
opportunities for a job are not so wide. You have a different
Even so, Chrysler has seen significant attrition among the newer
hires, as they encounter the monotony and regimentation of a job on
Ergonomics and mechanization have made tasks easier, but the line's
swift pace dictates ceaseless focus. Each chore -- hoisting a power
drill, attaching a windshield wiper, attaching a seat -- must be
repeated each time a vehicle passes by, which can be every 50 seconds.
Breaks are precisely meted out. During one shift last week, work began
at 11 a.m., a 13-minute break was held at 12:47, another 13-minute
break was held at 2:40, a half-hour lunch came at 4:30 and a 14-minute
break came along at 6:01. Workers left at 7:30.
"I hate my job," said one veteran worker, John, outside the gates one
day last week. He would give only his first name. "And there's no way
I would do this for $14 an hour. These new cats are getting screwed.
This is [nasty] work. You bust your butt. You really do."
John and other veteran workers predicted that as the new job becomes
more familiar, the sense of novelty will be overtaken by boredom,
discontent and, in some cases, repetitive stress injuries.
"Let's wait and see how they feel then," he said.
Deeper pay cuts
Once one of the nation's most powerful unions, the United Auto Workers
is credited by historians with lifting working conditions for all
Americans and clearing a path for factory workers into the middle
class. Union officials talk about "a fair wage," echoing ideals of
justice and morality.
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.
Before pumping billions into GM and Chrysler, the Bush and Obama
administrations leaned decisively toward the market view on wages.
During negotiations with Chrysler, the Obama administration called for
"maintaining all-in hourly labor costs comparable to its U.S.
competitors, including the transplants," according to an April memo
describing the Treasury proposal.
The administration proposal also called for all new production
employees to be paid the $14 rate, expanding a 2007 labor agreement
that set up the lower rate, though only for some "non-core" jobs. In
doing so, the administration went well beyond the pay cuts the
automakers had envisioned, sources said.
"From the manufacturer's perspective, the line workers were always
going to be getting $28 an hour," said a source familiar with the
negotiations and the auto manufacturers' thinking. The person, who
lacked authorization to discuss the issue, declined to be named.
"Those jobs are difficult. But there are other jobs in the plant, and
those are not nearly as stressful. Those were going to be the $14."
"The government didn't say $28 an hour was overpaying people," the
source said. "But they saw the $14 rate as a way to lower overall
labor costs to be competitive."
The two-tier system won approval, first in 2007 and then in 2009,
allowing the automakers to win the government bailout and move beyond
the crisis. But some at the union saw the wage compromise as the
abandonment of fundamental principles that had guided the organization
since its founding in 1935.
But the once powerful union has long been aiming to manage an orderly
retreat to avoid a rout, according to some observers.
"The idea of the UAW and the steelworkers negotiating so that workers
could make it into the middle class, of allowing them to make it as
manufacturing workers -- that is all gone," Gary Chaison, professor of
industrial relations at Clark University. "And it's difficult to see
how they will be able to find their way back."
The two-tier agreement "effectively ends many of the principles
established 70 years ago in the UAW's birth," Bill Parker, a
negotiating committee leader, wrote in an unusual dissent. "For years,
the UAW embodied industrial unionism and the gains of the New Deal. So
goes the UAW, so goes the American middle class."