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

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 be animosity."

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 pay gap.

"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 getting hired.

"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 attitude."

Even so, Chrysler has seen significant attrition among the newer hires, as they encounter the monotony and regimentation of a job on the line.

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."

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