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From the Daily: A temporary fix

BY THE MICHIGAN DAILY

Published September 14, 2011

The American auto industry’s recovery has been placed in the hands of its workers. In a move to stimulate the automotive job market, Chrysler recently announced it would implement a two-tier wage system for its employees. The newest workers will earn $14 per hour, and longtime employees will continue to earn nearly double that amount. Union leaders have embraced the change that will increase new hires and ensure job security for current employees. Though the decision will boost Detroit’s economy in the immediate future, a two-tier wage system for employees who do the same work is not a sustainable plan in the long run.

In a move to cut labor costs, Chrysler believes paying new hires a flat rate will make the company more competitive. For years, members of the United Automobile Workers have remained steadfast in their belief in equal pay regardless of seniority. Due to the slowed economy and high unemployment rate, the U.A.W has made numerous concessions to ensure the solvency of automakers and job security for its employees. In a statement to The New York Times on Sept. 12, Chrysler states there have been no changes in the quality of cars coming off the line despite the pay disparity.

The move is a simple solution to a vast economic problem. The American auto industry has been on the decline since the influx of foreign automakers in the United States. Three years ago, the question of solvency was answered: A government-backed bailout for two of the “Big Three.” With the bailout came a slow and steady recovery and the proverbial rebirth of the American automaker. Prior to the economic crisis, the U.A.W. was opposed to its members receiving different pay for the same work. Yet, due to the unemployment crisis, the union has done what is best for its workers and has found new avenues to employment. The U.A.W. understands that any employment is better than no employment.

Though Chrysler’s decision to hire more employees through its new wage system will help in the short term, it’s not sustainable in the future. About 12 percent of Chrysler employees earn the lower wage, but the number of employees hired under the lower-tier wage system is expected to increase dramatically in the coming years. The U.A.W. President, Bob King, said that an increase in the entry-level wages is a top priority in negotiations for a new national contract. Chrysler is putting people to work now, but when the economy recovers, it can no longer take advantage of the unemployment rate.

The two-tier wage system should not become the norm. Chrysler and the U.A.W. must create a long-term plan for integration of the wage classes. While the new plan is acceptable during a time when the economy is faltering, a two-tier wage system promotes inequality, and inequality cannot be a long-term business practice.

Chrysler’s two-tier wage system will allow the company to become more competitive and ensure paychecks for thousands of Americans. Once the company is on solid footing, it should reinstate normal pay disbursements and put employee compensation on an even footing.


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