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After bailouts, new autoworkers make half as much as veterans in same plant

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Dale Hunt, a worker at Chrysler's Jefferson North Plant, discusses the benefits of union membership and the challenges that face young autoworkers compared to their older coworkers.

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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."


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