Two-tier wages a double-edged sword

Resentments grow the longer differentials remain
By Gordon Sova
||Last Updated: 10/18/2007

A news story from the U.S. recently said that the employees at Harley-Davidson had turned down a tentative agreement on February 1 because, among other things, it included a second-tier wage scale for employees hired after ratification. The agreement finally accepted after a three-week strike didn’t include it. The union was the International Association of Machinists. At the same time, the United Auto Workers was rejecting the most recent offer from Delphi but it had accepted a two-tier wage plan to save the auto parts maker.

Recently, Wayne Fraser, director of District 6 of the United Steelworkers, had the following to say about two-tier wages: “We have fought and won the push by employers who were demanding concessions and the introduction of two-tier wages, benefits and pensions. [They] undermine the values of the union, which include equal pay (and benefits) for equal work. These two-tier systems pit workers against each other and against their union. It significantly reduces the power of the union both at the bargaining table and in the workplace.”

The attraction of two-tier structures is that they allow the company to institute a long-term reduction in wages and benefits without forcing the current employees to agree to it as well.