Unions Accepting a Two-Tier Pay System
Are Giving a Major Concession to Bosses

Since May 1994, I have written and posted more than 500 consecutive weekly LaborTalk columns. HK

A growing trend among unions is to offer employers a two-tier wage system as a bargaining concession in return for some advantages for current union members.

The two-tier structure permits the hiring of new workers at significantly lower wages and benefits, compared to those of the regular work force. It will be worth countless millions of dollars to employers in coming years.

In the contract that ended the nearly five-month strike and lockout of 60,000 Southern California grocery workers, the United Food and Commercial Workers accepted a two-tier wage system for the first time. For newly-hired workers, starting wages will be reduced to $7.55 an hour for most workers (similar to what non-union supermarkets like Wal-Mart pay), with their top pay never rising above $11.05, a full dollar less than the current rate.

New workers will have to pay around $9 a week to secure a basic health care plan on their reduced earnings, while current employees will be fully covered without cost for the first two years of the three-year contract. And supermarkets will contribute only 35% for the pensions of new workers, down from their previous contribution of 100%.

The United Auto Workers also accepted a two-tier structure in a supplemental agreement with the two major parts suppliers, Delphi and Visteon, that employ 52,000 workers. While workers at the “Big Three” auto plants average around $24 an hour, the new hires at the parts plants will start at $14 an hour and can eventually rise to $18.50.

Obviously, there is a strong incentive for the parts companies to get rid of their senior employees through retirement and buyouts, and operate with tremendous savings in labor costs.

In the public sector, the 121,000 members of District Council 37, American Federation of State, County and Municipal Employees (AFSCME), have approved a contract that allows its members to gain wage increases that will be paid for by reducing the pay, sick days and vacation benefits of newly-hired employees.

A two-tier system violates the basic union principle of “equal pay for equal work.” How should a newly-hired worker feel if he is doing the same work as another worker and getting only two thirds of his pay?

It turns the new hires into second-class citizens within the union, breeding dissatisfaction and division. It makes it more difficult to foster unity and solidarity. Moreover, employers, in addition to drastically cutting their labor costs, can use their hiring policies to weaken the union.

The two-tier pay structure creates so many problems for unions, isn’t it time for a debate on this issue within the labor movement?

Our weekly “LaborTalk” and “Labor and the War” columns can be viewed at our Web site www.laboreducator.org. Union members who wish information about the AFL-CIO rank-and-file reform movement should visit www.rankandfileaflcio.org.