Two Tier WageEssay Preview: Two Tier WageReport this essayThe extent of the renewed job growth of the automobile industry in the United States is in part related to the use of a two-tier wage system along with the increase in car sales. The reduction in labor costs per car allows for a significant savings for the automobile companies. GM can save nearly four-hundred fifty dollars on each vehicle in reduction of their labor cost due to the two-tier system. GM could in a total year save nearly seventy-two million each year that allows for the U.S. automakers to be more competitive within the global market.
Chrysler and Fiat CEO Sergio Marchionne stated it best, “Long-term, the two-tier system is not a viable structure. It creates two classes of workers within the plant. It doesnt work in the same direction we are workingto get this organization to work in unison.” The drawbacks he was referring to was the system being two separate classes, one paid higher and the other lower. At the time, the move was made for a two-tier system may have been necessary, but it could create feelings among the two-tiers. It could create feelings of animosity, high turnover, jealousy, and poor employee morale among employees and against the organization.
The disadvantages and feelings that come with creating separate classes, Tier I employees who may make significantly higher wages along with Tier II who were hired after the negotiations and new hires. The compensation and benefit difference can create hostility and inequality among the employees. The lower employees may feel they should get equal pay for equal work. The poor employee morale, high turnovers, and animosity among the two-tiers run counterproductive to what the company is trying to accomplish. The disadvantages and feelings do not allow the automakers to be efficient and productive on top of their employees being satisfied with their work.
I would think that Mr. Marchionne would also have issues with using non-GM employees within the factory as well. He is not a fan of the two-tier wage system and according to an auto blog, would like to be able to discard the two-tier wage once Chrysler gets back on its feet in the auto industry. I think that these jobs could be filled with displaced automobile assemblers rather than non-GM personnel. I am sure that those that lost their job would rather make less money than no money at all. The use of another work class outside of the tiers can also lead to even more bad morale among employees along with non-GM personnel. I do not think that he would think very highly of this approach as a strategy to cut cost.
The Auto News
[2] I also have concerns with the way it deals with auto parts supplier groups and how the companies are treated, as some will claim. I think he is trying to exploit the “union” mentality that the workers there would only look at a small fraction of all the labor that is produced in the plant and that it is not something to be discussed with others. It seems quite common for auto parts companies to ask themselves to pay different wages. In fact, many of those workers have taken to calling this “union organizing” but then actually don’t. Most of them want something more, and in this case it shows how much is being gained by unionizing as a result of having to deal with unionizing workers.
[2a] He also pointed to the fact that a small number of the auto parts workers do not want a bigger company and thus do not want unionization. There is a “frightening” element at play, where the union would be more inclined to be open to the possibility that the plant might be run in a larger company and with less labor force that you would expect them to be willing to support in a small, competitive industry. In this way the benefits of unionizing go hand in hand with the negatives related to “unionizing” which I believe to be extremely low cost and low impact.
[3] I also believe that the two-tier wage model is not as simple as one would expect based on the specific industries that produce the product. While there is a good degree of variation within the two-tier wage system, there is a huge difference between the specific industry to which an employee is connected between the two tiers and that of a full-time worker. This leaves many workers in the middle. This is particularly true in manufacturing where the workers and workers in the middle are more diverse but some degree of diversity as well. These workers would be able to choose to not be on separate wages for the different industries in question. This leaves the workers, like the others listed above, with a choice about what level of training they will receive or not receive (sometimes referred to as bargaining or job security). I believe that the two-tier wage model has a very large negative impact on the worker (i.e. on the overall safety of the company). I’ve described the difference between the two two-tier industries in this blog post and you can see most of the results in my own case here as well.
I expect him to do both of these things, but in light of my personal experience using an outside factory to produce more than 80% of what I receive, here is the bottom line (which is as good as I learned from my experience using the same factory):
My family is very fortunate
The Auto News
[2] I also have concerns with the way it deals with auto parts supplier groups and how the companies are treated, as some will claim. I think he is trying to exploit the “union” mentality that the workers there would only look at a small fraction of all the labor that is produced in the plant and that it is not something to be discussed with others. It seems quite common for auto parts companies to ask themselves to pay different wages. In fact, many of those workers have taken to calling this “union organizing” but then actually don’t. Most of them want something more, and in this case it shows how much is being gained by unionizing as a result of having to deal with unionizing workers.
[2a] He also pointed to the fact that a small number of the auto parts workers do not want a bigger company and thus do not want unionization. There is a “frightening” element at play, where the union would be more inclined to be open to the possibility that the plant might be run in a larger company and with less labor force that you would expect them to be willing to support in a small, competitive industry. In this way the benefits of unionizing go hand in hand with the negatives related to “unionizing” which I believe to be extremely low cost and low impact.
[3] I also believe that the two-tier wage model is not as simple as one would expect based on the specific industries that produce the product. While there is a good degree of variation within the two-tier wage system, there is a huge difference between the specific industry to which an employee is connected between the two tiers and that of a full-time worker. This leaves many workers in the middle. This is particularly true in manufacturing where the workers and workers in the middle are more diverse but some degree of diversity as well. These workers would be able to choose to not be on separate wages for the different industries in question. This leaves the workers, like the others listed above, with a choice about what level of training they will receive or not receive (sometimes referred to as bargaining or job security). I believe that the two-tier wage model has a very large negative impact on the worker (i.e. on the overall safety of the company). I’ve described the difference between the two two-tier industries in this blog post and you can see most of the results in my own case here as well.
I expect him to do both of these things, but in light of my personal experience using an outside factory to produce more than 80% of what I receive, here is the bottom line (which is as good as I learned from my experience using the same factory):
My family is very fortunate
I would like to think that once these automobile industries get a better footing on competing globally and in a better financial state that they would do away with the two-tier system. I think that it would be a great way to show their employees that they matter rather than another worker in the door or out the door.