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UAW puts pressure on automakers to close wage gap

Mar 26, 2015

Credit GM

UAW members gathered in Detroit this week to let local delegates air their views about what the union should demand in contract talks with U.S. automakers later this year.

The discussion has centered on the two-tier pay system that's been in place for the last eight years.

The pay scale enabled companies to hire more workers, bring them in at a lower wage, keep plants in the state, and Detroit News business columnist Daniel Howes says, "It was really part of the comeback we've seen in Detroit."

According to Howes, Chrysler has 44% of its hourly workforce at a lower wage, and now unions want to close this gap.

"There's a lot of upward pressure on companies to close the gap and also to give base wage increases to what they call the legacy workers," Howes says.

While hourly workers and unions have often been cited as leading to the downfall of automakers, Howes doesn't think this is a fair assessment.

"The hourly workforce, as a percentage of total workforce, is much smaller than it was before the collapse," Howes says.

But for unions, these member numbers could have a larger impact. Fewer workers mean less money and lower wages mean fewer dues.