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| Union members hug after the UAW strike against Chrysler ended Wednesday. Kathleen Galligan/Detroit Free Press/AP |
Auto worker benefits – long rising – begin to wane
Judging from UAW contracts reached this week, from now on auto workers can expect lower pay and fewer benefits than their predecessors.
By Mark Trumbull | Staff writer of The Christian Science Monitorfrom the October 12, 2007 edition
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Two labor strikes this fall have been short, but the outcome is still tough for auto workers: After years of rising pay and benefits, the tide has turned the other way.
The next generation of United Auto Workers will receive lower pay and benefits than their predecessors, judging by the contracts reached or ratified this week.
If there's a big pattern in the current round of auto-industry bargaining, that's it.
Officially, pay cuts aren't part of the deals. But the launch of a two-tier system, offering many new hires lower wages, raises the curtain on an era when overall pay will be lower.
In benefits, a new contract ratified by UAW workers this week allows General Motors to contribute to a cash-balance retirement plan for new entry-level workers, rather than providing a guaranteed pension.
Meanwhile, in deals cut this year and in 2005, union workers and retirees will be shouldering more of the rising costs for healthcare, and the companies less.
All this marks a major shift for a union that has often set a standard for organized labor nationwide. This time, too, the labor trend in Detroit could have spillover effects beyond the auto industry.
"The real focus here is to get a competitive structure" against nonunion rivals, by moving away from a defined-benefit model of compensation, says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "This may be a visible enough step where we can really see this begin to move into other parts of the economy."
Of course, the shift toward 401(k) plans and higher medical copayments by workers has been gathering force in America's private sector for years. But when the UAW migrates in that direction, Mr. Cole says, it's possible that other powerful unions – think teachers and government employees – may end up following.
In the case of other union workers, the pressure may not come from Toyota or Honda, but from budgetary pressures as state and local governments confront the same medical inflation that besets GM.
For now, what's clearest is that 2007 marks a transformational year for labor in the auto industry.
So far, the union has gone on strike briefly at GM and Chrysler, which means a similar walkout could happen at Ford as well. But deals have been reached quickly in all cases, providing significant reductions in labor costs. The picket lines at Chrysler lasted just seven hours on Wednesday.
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