In Focus: UAW Strives to Move Away from Two-Tier Wage System


By Allen Smith September 18, 2015

The United Auto Workers (UAW) tentatively reached a labor deal with Fiat Chrysler that eventually would remove a two-tier wage system that pays new hires less than more seasoned co-workers doing the same jobs.But Fiat Chrysler workers were poised to reject the new contract. A two-tier wage system has the same wage for employees of different tenure—a higher wage for those employed at the time the collective bargaining agreement (CBA) is entered and a lower wage for those hired after the CBA.
(The Wall Street Journal)

Agreement Brokered by UAW President Dennis Williams

A drop in dues income has been one of many challenges for UAW President Dennis Williams, and some attribute the dues drop to the use of the two-tier structure, because it creates a lower wage base from which to generate dues revenue.
(SHRM Online)

Younger Workers Angered by Two-Tier Wages

New hires, who tend to be younger, are angry over the discrepancy in pay and benefits fostered by the two-tier system. “We know there is a lot of resentment against two-tier,” said a UAW activist.

Eight-Year Compromise Unraveling

Labor agreed to the two-tier system of wages and benefits eight years ago, and Tier I production workers have been frozen at $28.69 an hour ever since. Tier 2 production workers top out at $19.28 with an inferior health plan and a 401(k) instead of a pension.
(In These Times)

Temporary Two-Tier Wages More Popular

Two-tier wages were created in the airline industry in 1983. Permanent two-tier arrangements, where wages never converge, created difficult political divisions inside unions and eventually were negotiated away. But temporary plans, where wages were just held down longer, survived.
(The New York Times)

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.


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