Labor Irony: Hard Work, Soft Pay

New workers are paid far less than their equals doing the same job. This labor paradox may spell the future of Chrysler's Belvidere plant and other auto plants in the United States.

Forrest Ammons, 35, earns $18.50 an hour with limited benefits. He makes a decent living manufacturing cars at Chrysler's Belvidere, Ill., plant. But Ammons sweats side-by-side with co-workers who make $10 an hour more than he does and enjoy full health care coverage, ample vacation time and a bunch of other benefits and protections.

At the Belvidere plant, Ammons is what is known as an "enhanced temporary worker," a designation that separates him from his full-time co-workers and UAW members at every other Big Three assembly plant in the United States.

The arrangement between the United Auto Workers (UAW) and the Chrysler Group paved the way for a third shift at Belvidere, which was granted three new product lines - the Dodge Caliber, the Jeep Patriot and the Jeep Compass. The Belvidere situation provides a glimpse of what could be the future for American auto workers: two classes of workers doing equal hard work but earning unequal, somewhat soft pay.

Cost-saving two-tier wage structures have already become a reality for plant workers at Delphi Corp., American Axle & Manufacturing Holdings Inc., and most recently the Dana Corp. and Caterpillar Inc. The two-tier wage structure is a unique agreement where new hires make less than veteran workers. The same was approved by the union in 2005.

"Two-tier is a flashpoint word especially for the UAW, which has such an embedded notion of solidarity," said Karen Boroff, the dean of the Stillman School of Business at Seton Hall University in New York.

The General Motors Corp., Ford Motor Co. and Chrysler are expected to press the union for more modifications in main areas including wages when bargaining starts this month on a new national labor agreement. A broader two-tier wage structure that extends to more domestic auto plants would help Detroit’s Big Three become more competitive. It also could have deep implications for worker morale and union solidarity. While working on Ford Focus parts or Chevrolet Silverado accessories, workers are worried about their future.

In June, UAW officials started calling plant-level union leaders to gauge opinions about the possibility of a two-tier wage structure, said Chris Sherwood, the president of UAW Local 652, which represents GM workers in Lansing's Grand River plant. "They're talking about the feasibility of two-tier wages in the next contract," said Sherwood. "Whether (automakers) are going to get it or not is another issue."

Chrysler does not view its move as a two-tier system because the lower-paid workers are not permanent hires. But some workers and union officials say that is just semantics. The enhanced temporary workers at Belvidere can work year-round for up to two years.

"These people are not replacing people that are off work or absent," said one union official who spoke on condition of anonymity. "They're actually there as full-time workers. There's a difference. They're there doing a full-time person's job."

"They're making things tough for the full-time employees," said Ron Weaver, a production worker, who sat on a bar stool next to Craw. He wondered aloud whether Chrysler's soon-to-be new owner, private equity firm Cerberus Capital Management, will demand the lower wage scale all workers.

UAW membership has dropped in tandem with the Big Three's decline, diving below 600,000 in 2006 from a high of more than 1.5 million in 1979. "The thing with the UAW is they're dealing with how to save jobs," said Gary Chaison, a labor expert at Clark University in Worcester, Mass. “That's really their primary objective right now."