Compensation by Newman, Gerhart, & Milkovich...\"Two-Tier Wages\" Chapter 7 Summ

Question

Compensation by Newman, Gerhart, & Milkovich..."Two-Tier Wages" Chapter 7

Summarize the pressures to eliminate a two-tier wage structure as well as the pressures to keep it and if it will go away in the near future? Be sure to consider labor cost and productivity of workers and plants at other companies and in other parts of the world. Auto worker Gary Walkowicz, a member of the UAW bargaining committee at Ford’s Dearborn Truck assembly plant, estimates that Ford could convert its 14,685 Tier 2 workers to Tier 1 wages for $335 million per year. The UAW will likely point out that is a small fraction of the 6.9 billion North America profit earned by Ford the previous year. Your thoughts?

Explanation / Answer

TWO-TIER WAGE AND BENEFIT SYSTEMS

The basic principal of unionism is equal pay for equal work. This means that people doing the similar job should receive the same hourly or salaried pay. There are some exceptions to this general rule because sometimes some benefits and some portion of wages are based on seniority. For example, vacation time off generally increases as a worker becomes more senior and also pensions increase as a worker gains more seniority. Few workplaces have paid bonuses based upon an employee's length of service, usually called loyalty pay. The other way seniority is related to wages is in the wage progression schedule.This means that a worker is hired at a particular rate of pay and after some time they get regular pay increments until they reach the top of the rate. People working in public sector workers often take long period until the top rate is reached it may take 3 to 4 or 5 years. Among manufacturing workers, the time it takes to get to the top rate is usually geared to the time it takes to learn and become proficient in the job.

DISADVANTAGES OF TWO-TIER WAGE AND BENEFIT SYSTEMS?

TWO-TIER SYSTEMS IN NEAR FUTURE

Two-tier systems should be fought against because of all the reasons listed above as they are not good for the union lso for the company. Even though current employees may not immediately be affected, they will be in the future.

Because of the tough recessionary economy we are in, many unions are leery of striking. Threats of layoffs or moving the work sometimes force unions to be into hard position of having to negotiate around two-tier systems. If this is the case, here are some ideas:

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