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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.
from the October 12, 2007 edition
Page 3 of 3
"We protected jobs, wages, and benefits for both active and retired General Motors workers," UAW president Ron Gettelfinger said in a statement after workers ratified the GM contract.
Even as 66 percent of GM workers approved the deal, many see it as a step backward. The website for Soldiers of Solidarity, which represents auto workers critical of union leadership, includes a posting about the GM contract headlined, "Ripping to shreds what workers built over 70 years."
The commentary argues that the deal will "begin to radically lower wages throughout the auto industry" and undercut union solidarity with new wage tiers.
Many union workers, at the very least, worry that the current round of bargaining could portend more cuts to come.
Rivals such as Toyota are now looking to pare their US labor costs by adopting wages based on local averages for manufacturing jobs, not higher-paid automotive jobs. Until recently, experts say, the UAW had helped to lift the pay of auto workers nationwide, as nonunion rivals were forced to offer relatively high pay to counter efforts by the union to organize foreign-owned factories. The new phase may involve falling labor costs for both union and nonunion jobs, these experts add.
Some skeptics say the latest labor deals won't be enough to allow Detroit's Big Three to compete effectively.
If true, that fact may guarantee that the pattern of givebacks in 2007 would persist.
"Eventually the production workers are going to have to accept lower pay than they have now," says Peter Morici, a University of Maryland economist. "Or there will be yet another tier created…. Or they won't be able to compete."
So, he says, "four years from now they'll end up going through it all again."
With a cost gap still separating the Big Three from foreign competitors, Mr. Morici says he's surprised that Chrysler didn't push harder for concessions. The company is in rougher shape than GM, and could have weathered a strike for some time, he says.
The terms of the Chrysler deal aren't known, but the seven-hour length of the strike suggests to Morici that Chrysler's owners didn't push hard enough.
Much is changing, however.
Union members will be well-paid for higher-skill jobs. But the healthcare trust, coupled with the replacement of older workers with younger ones at lower pay scales, represent a big shift for the UAW.
"The real benchmark today is not one ... of the Big Three," Cole says. "It's really the internationals that they're competing with."
The union doesn't like that, but it recognizes that fact. In bringing the union toward this step, Cole says that "Ron Gettelfinger really did quite remarkable job."
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