Ford, GM May Seek Lower Third-Tier Wages

Ford and General Motors are likely to launch this summer's labor talks with a proposal to create a third tier of wages below the two tiers currently in place, sources tell Bloomberg News.

The lower wages would apply to new hires who do less skilled non-assembly line work, according to the report. Bloomberg notes the scheme could bring more union work back into plants that have outsourced such tasks to suppliers.

But experts say the United Auto Workers union isn't likely to be receptive. The UAW has indicated a major objective in its negotiations will be to end the two-tier wage structure it agreed to years ago to help the industry recover from the global economic recession.

The proportion of U.S. union workers at the tier-two level ranges from 43% at FCA to 28% at Ford and 19% at General Motors, according to the companies.

Now that carmakers are profitable again, the UAW rankles at the scheme, which can create 50% wage gaps between two employees doing the same job. Bloomberg says currently base hourly pay is capped at $19.28 for tier-two employees but can reach $28 for seasoned tier-one workers.

The would-be third tier presumably would have an hourly pay cap well below $19. Bloomberg notes that GM already pays some UAW members less than tier-two wages to do non-assembly work under an exception granted by the union.