Saturday, October 24, 2015

UAW Members Accept Revised Fiat Chrysler Contract

UAW Members Accept Revised Fiat Chrysler Contract with 77 percent majority

The rank and file of the United Auto Workers union voted down the contract with Fiat-Chrysler, the elected leadership confirmed October 1, 2015. The No votes were 65 percent; the first contract voted down in thirty years. UAW president Dennis Williams tried to put a good face on the rejection. He said “We don’t consider this a setback; we consider the membership vote a part of the process we respect.”

The press accounts clarify the most important problem with the contract for the rank and file: a dual wage system. Back on October 29, 2007, the UAW agreed to have newly hired assembly workers be paid at a lower wage than established workers. A dual wage system gives the incentive to replace high wage workers with low wage workers. It is also cynical and anti-union for labor leaders to divide the membership and disrupt solidarity.

While there are other issues the rank and file wanted addressed, labor leaders failed to eliminate dual wages or include a proposal to cap low wage entry workers at 25 percent as some disgruntled members wanted. The new revised Memorandum of Understanding for employees hired after October 29, 2007 posted on the union website,, sets up two headings under Non-Skilled wage scales for Team Member Rates. One heading is for those hired after October 29, 2007 until ratification of the newly negotiated contract and the second heading is for those hired after ratification of the contract. There is no percentage limit to lower wage new hires that I can find.

The section in the Memorandum of Understanding has a revised wage scale of Team Member Rates for those hired in one of the eight years beginning October 29, 2007. Those with less than a year of service have to wait eight years to reach the maximum wage for workers hired before October 29, 2007. Those with one year of service wait seven years and so on until those with eight years of service reach the maximum upon ratification of the new contract. The final maximum rate for non-axle operations comes to $29.94 an hour for assembly workers.

The next sub-section in the Memorandum of Understanding proposes a revised wage scale of Team Member Rates for those hired on or after the effective date of contract ratification. This second section identifies two sub sections in non-axle operations where new hires start at the same wage of $17.00 an hour, but fall behind in the out years and reach a lower cap than for those hired before ratification of the contract. The maximum for all non-MOPAR and non-axle operations is $22.50; for MOPAR operations the maximum is $25.00.

Team Assemblers

The Bureau of Labor Statistics maintains staffing percentages with wage and employment data for American industries including the auto industry. There are 1.2 million in an occupation defined as Team Assemblers working in all U.S. industries. A few Team Assemblers work in wholesale and retail trade, and a few more in publishing, but almost all work in manufacturing. More Team Assemblers work in the auto industry than any other industry, 245.9 thousand.

Team Assemblers work in three auto sub-industries. First, there is motor vehicle manufacturing where 96 thousand work as Team Assemblers and have 50.8 percent of the staffing with a median wage of $24.81. Second, in motor vehicle body and trailer manufacturing the 39.8 thousand that work as Team Assemblers hold 28.6 percent of the jobs with a median wage of $14.61. Third in motor vehicle parts manufacturing the 110.1 thousand that work as Team Assemblers hold 20.6 percent of the jobs with a median wage of $14.36.

Median hourly wages for Team Assemblers in the motor vehicle manufacturing industry contrasts with wages in other industries in several ways that suggests the compromises union leaders make in negotiations and perhaps when they get too friendly with management. First, the median hourly wage of $24.81 for Team assemblers in motor vehicle manufacturing is the highest median wage out of 122 industries that have jobs as Team Assemblers. Second the $24.81 median wage exceeds the mean wage, which is only $22.77. It is typical that high wages in a distribution of occupational wages will raise the mean above the median wage. Out of 122 industries using Team Assemblers only eight other industries have a median wage above the mean wage and except for one other industry the median exceeds the mean by only pennies.

To have the median wage more than $2.00 above the mean wage assures many below the median are far below it. Some team assemblers working in the auto industry work for over $25.00 an hour while others work for under $15.00. The difference suggests UAW negotiators will accept dividing their membership to get an agreement.

Continuing Dual Wages

Labor law grants union members a measure of democracy, which makes it risky for labor leaders that ignore a growing share of its membership earning low wages. The 65 percent no votes suggest a majority was unhappy paying union dues to a union that negotiates them into lower wages. Revolts do occur occasionally as happened at Boeing ten years ago.

In the present dispute UAW leaders made a revised proposal for motor vehicle manufacturing that closes the wage gap for those hired in the last eight years. The contract has benefits for those hired in the last eight years in a sliding scale based on their seniority up to eight years. However, new hires that come after ratification start at $17.00 an hour, but that will be less than everyone hired before them. In addition the published wage scales diverge in the out years with new hire wages capped at a lower wage after contract ratification. The combination assures new hires will earn less than more senior employees during the duration of the contract. Management can readily accept the contract because it continues to allow them to hire new people at lower wages than higher paid senior employees.

Negotiators modified the explicit dual wage system, but did not remove it. In effect union leaders have worked out a disguised system where seniority gets rewarded with a pay step type of increase in a job everyone agrees can be learned by all in 90 days or less. It appears to be a calculated scheme to get enough benefit for those hired after October 29, 2007 to get them to change their vote and ratify the modified contract. That worked very well as the switch from 35 percent yes votes to 77 percent yes votes demonstrates. However, union officials had to keep their future membership divided to get an agreement with management and to get the votes they needed to ratify it. Remember though everyone has to pay union dues to support the union, which should help explain why some members of unions feel left out and hostile to organized labor. So much for solidarity.

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