Hourly workers Ford Motor Co., General Motors Co. and Chrysler Group have earned a pay increase and it will be one of the key demands the United Auto Workers puts on the table when contract talks open next summer.
“A general wage increase is important to our members and to our nation,” said UAW President Dennis Williams, who took over the UAW presidency in June from Bob King, during a year-end meeting with reporters at UAW headquarters in Detroit.
Williams also noted the expectations for a pay increase are rising among the union’s membership, Williams said. “The companies are profitable again and there is expectation there. In 2008 and 2009 we had a disaster. We made sacrifices,” he said.
The union certainly wants to help keep all three companies competitive. But wages are not the only element of competitiveness in the auto industry, Williams added. “But it’s time for our membership to have a reward. I knew when I took this job this was going to be difficult job,” said Williams, who noted the executives at all three companies have been handsomely rewarded as sales rebounded during the past four years.
“I think all of the ‘Big Three’ understand my position. I have laid it out loud clear,” Williams added. The pay gap between workers and executives in manufacturing has grown steadily since he first joined the UAW in the early 1970s. In the 1970s, top executives made roughly 42 times workers did. Today they make 360 times what workers. The gap should start to narrow again, he said.
Excluding stock options, compensation for senior executives in the auto industry now run from $10 million to $20 million per year.
“Yes they are going to hear about it every day. If they want to be competitive, they have to start there,” said Williams, who also said an increase in starting pay and eliminating two tier wages are also key issues, Williams said.
Profit sharing, which has added roughly $4 per hour to wage of both first- and second-tier workers, is very beneficial, but is no substitute for an increase in hourly wages at this point, Williams said. Workers on the first tier at GM, Ford and Chrysler make $16 per hour while workers with long seniority make $29 per hour. The profit sharing formulas also should be adjusted to account for the impact of recalls and other related problems.
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Earlier this year, Chrysler Chief Executive Sergio Marchionne suggested that the time had come to eliminate the two-tier wage system. Executives at GM and Ford haven’t endorsed Marchionne’s idea but they have indicated they want to preserve the smaller wage for entry-level wage now that is part of the current union contracts.
In addition, the second-tier wages, which have been extremely unpopular with union members, are not acceptable at this point, added Williams, who said he favors raising the minimum wage in the U.S. to $15 per hour.
Studies showing that more than 600,000 manufacturing workers in the U.S. are paid, on average, $9.60 per hour should unacceptable considering the value of the products they produce.
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Williams, unlike some of predecessors, was careful to make no threats about potential for a work stoppage or other kinds of disruptions during next year’s contract talks with the domestic carmakers.
“I never go into negotiations preparing for a strike. Striking is a huge sacrifice to our members. Strike and you have to be prepared for the worst. The strike fund is being rebuilt but that’s not who we are. Ninety-eight percent are settled without a dispute. Striking is a failure on both parties part and we don’t plan on failing,” he told reporters.
The UAW president, however, also made it plain that he expects next year’s contract talks in the auto industry to be significant in a post-recession era where the real wages of American workers have shrunk. American society needs a strong middle class. But to have a strong middle class to have a strong system of collective bargaining, Williams said.
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Unfortunately the labor laws are stacked against workers in the U.S. now, added Williams, who observed that the wider use of temporary and contract workers has been used to reduce the wages throughout the economy.
“It’s one of the reasons why people are people are being left out while the economy grows,” said Williams. “The way the labor law is set up, it’s impossible to organize (temporary workers). The ability to exploit these workers is holding back our economy.”