Trouble Ahead For Auto Industry’s Two-Tier Wage Structure

LIVONIA, Mich. – When Chrysler CEO Sergio Marchionne made his disdain for a two-tier wage system known at the conclusion of UAW contract negotiations in October, his comments weren’t so much parting shots as they were a preview of coming attractions.

The viability of the two-tier wage structure will be a defining issue of the next round of labor negotiations.

“What has to be decided in 2015 is, ‘Where are you going with the second tier,” said Art Schwartz, president of Labor & Economics Associates and a former lead labor negotiator for General Motors. “Where’s this going to lead eventually? That’s the big issue.”

Several analysts at a conference hosted Tuesday by the Center for Automotive Research predicted caps on the number of second-tier employees will gradually be raised, and that an intermediate wage rate between the two rates could be negotiated.

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