[lbo-talk] Solidarity for Sale: Two Tiers, Slipping into One

Yoshie Furuhashi furuhashi.1 at osu.edu
Thu Mar 9 23:14:22 PST 2006


Jim said:


> On 3/9/06, Yoshie Furuhashi <furuhashi.1 at osu.edu> wrote:
> > Those who write about unions -- there are academics and journalists
> > who do so -- have an obligation to tell the truth about them: good,
> > bad, and ugly.
>
> I never said otherwise. But you were sounding a bit like WS and
> suggesting that "we" pull the plug on unions. In the end, it's up
> to the workers.

Nowhere have I suggested that "we" pull the plug on unions.

From what I can see, though. unions are doing a pretty good job of pulling the plug on themselves. :-0

Robert Fitch's book doesn't say much about America's industrial unions. Many of his criticisms probably do not apply to them. Even they now have to face the consequence of multi-tier contracts, though. The wage premium of manufacturing workers is shrinking fast, as older workers retire.

<blockquote>February 26, 2006 <http://www.nytimes.com/2006/02/26/business/yourmoney/26wages.html> Two Tiers, Slipping Into One

By LOUIS UCHITELLE PEORIA, Ill.

RICK DOTY is a 30-year veteran of Caterpillar, the big tractor and earth-moving equipment manufacturer. He is paid $23.51 an hour as a machinist, and he receives additional benefits worth almost as much. That sets him far above newly hired workers consigned to a much lower wage scale.

To these fellow workers, Mr. Doty, who is also a local union leader, struggles to justify an inequality that he helped to negotiate.

"I remind them they are making more now than they were before they came to Cat," said Mr. Doty, who spends part of his day at the one- story union hall of United Automobile Workers Local 974 arguing that $12 to $13 an hour is good pay here. "And I assure them that five years down the road, when the present contract expires, we in the union are going to improve their lot in life."

That does not seem likely. After more than a decade of failed strikes and job actions — mainly in Illinois, where Caterpillar has its biggest factories — the U.A.W. reluctantly accepted a two-tier contract that provides for significantly lower wages and benefits for newly hired employees. The new second tier is as much as $20 an hour below the cost of employing Mr. Doty, 50, and a dwindling band of other veterans.

As older workers depart, at Caterpillar and at other companies, the longstanding wage advantage that manufacturing workers enjoy over their counterparts in services or construction is shrinking fast. . . . .

. . . . . . . . . . . . . . . . . . . .

In the Midwest market, the competitive wage-and-benefit package is about $23 an hour, on average, Mr. [Christopher E.] Glynn [who is Caterpillar's corporate labor relations director] says. Caterpillar's package for new hires in the U.A.W. contract ratified 13 months ago is pegged above that, at $28 an hour, which includes about $9 an hour in benefits.

Only the most skilled workers in the new lower tier — electricians and machinists, for example — make more than $20 an hour, or $41,000 a year, while in the gradually expiring upper tier, everyone does, even unskilled laborers and shop helpers.

In the new lower tier, such easily replaceable workers will no longer earn more than $12.50 an hour, or $26,000 a year. They must work their way up toward middle-class jobs, Mr. Owens argues, shedding the "union mind-set" of annual raises for doing the same minimally skilled task year after year.

. . . . . . . . . . . . . . . . . . . .

Going back decades, the hourly wage in manufacturing has been higher, on average, than in nonmanufacturing jobs. Through most of the 1990's, that premium was 10 percent or more, but by last year, it had fallen to just 7.45 percent above the average in other industries, according to an analysis of Bureau of Labor Statistics data by the Economic Policy Institute, a research group based in Washington.

. . . . . . . . . . . . . . . . . . . .

His [Mr. Doty's] anger — directed at Caterpillar for not sharing more of its soaring profits — has made him an active member of U.A.W. Local 974. If the bottom tier does not rise substantially in the next contract, he says, he will vote against ratification. His superiors in the union are more circumspect, including Mr. Doty, who counts on a rising membership to strengthen the U.A.W.'s bargaining position.

The Illinois hiring over the past year has swollen the U.A.W.'s ranks to 11,500 of Caterpillar's 41,000 employees in the United States. Local 974 now has 6,000 members, up from 4,500 in 2004, and Mr. Doty, an executive vice president of the local who also works nearby at Caterpillar's diesel engine factory in Mossville, Ill., argues that the greater "union density" will give the U.A.W. more negotiating leverage when its contract expires in 2011.

"We have to get down the road to where we can bargain a better agreement," he said, "and six years will pass before you know it."

CATERPILLAR, meanwhile, is prospering. It reported revenue of $36.34 billion last year, up 20 percent from 2004. That was on top of a 33 percent increase in 2004 from 2003. Net income was up 40 percent last year, to $2.85 billion; it has nearly tripled since 2003. Tens of millions of dollars have gone into research to develop a great variety of Caterpillar products that sell against those of Komatsu and Volvo, the two biggest foreign competitors.

In the past, such gains would have also translated into higher wages and more generous benefits as contracts were renegotiated every two or three years. But the current, long-term U.A.W. contract at Caterpillar calls for just one general raise: 2 percent in December 2008.

Otherwise, there are some fixed bonuses and modest specified increases every six months as new hires work their way up the wage scale, which starts at $12 to $13 an hour for most factory workers and rarely gets to $20.

Fixed monthly pensions go now only to veteran workers, like Mr. Doty, and job security is effectively canceled for new hires, who must work 12 years without interruption to become immune to layoffs. Mr. Glynn notes that the arrangement gives Caterpillar leeway to shed the new workers when demand turns down for the company's products.

Employee co-payments for health insurance also rose in the current contract, for retirees as well as for active workers, although not by as much as the company had initially wanted, particularly for the retirees. The union membership voted twice against ratification and then approved the contract, with 59 percent voting in favor, after the company sweetened its health care package for retirees.</blockquote>

Yoshie Furuhashi <http://montages.blogspot.com> <http://monthlyreview.org> <http://mrzine.org>



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