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New hires in UAW no longer tops

Every day at a General Motors plant near Lansing, Mich., workers drive hundreds of Buick Enclaves — many with leather seats for seven and on-board video systems — off the assembly line.
Lee Henderson, left, of Alvarado, Texas, directs an instrument panel into a waiting GM vehicle during assembly at the General Motors Assembly Plant in Arlington, Texas.Tony Gutierrez / AP
/ Source: The Associated Press

Every day at a General Motors plant near Lansing, Mich., workers drive hundreds of Buick Enclaves — many with leather seats for seven and on-board video systems — off the assembly line.

Driving one home would be tough for the plant's newest workers, whose annual pay is less than the $35,000 it costs to buy even the cheapest Enclave. Newly hired members of the United Auto Workers at GM, Ford and Chrysler earn about $14 per hour, half what veterans make under their current contract.

It's a far cry from the days when the union autoworker had one of the sweetest deals in American labor. And within the Enclave plant near Lansing, the disparity creates mixed emotions, including some resentment, among the 130 recent hires.

"It's difficult to look across the line at someone getting paid more for doing the same job you're doing," said Steve Barnas, the plant's union bargaining chairman.

For decades, the UAW tugged wages upward. In 1960, a UAW member made 16 percent more than the average American manufacturing worker. By 2006, the figure was 74 percent. Today, new hires in the UAW make about 20 percent less than the average.

In the old days, other industries adopted UAW benefits to compete for workers. Rival companies like Toyota would match their pay. The Federal Reserve even kept a close tab on UAW contracts because they were such a strong predictor of U.S. wages.

That was before high gas prices, the recession and skyrocketing health care costs brought the Detroit Three to their knees. Last year, as GM and Chrysler tumbled into bankruptcy, workers agreed to concessions, including the lower starting wage and suspension of cost-of-living raises that could amount to thousands of dollars over the life of a contract.

Demands for cuts are still coming. Workers at Nexteer Automotive, a steering plant in Saginaw, Mich., that GM is trying to sell, were asked to freeze wages for five years, lower the entry-level wage to $12 per hour and remove family members from new workers' health-care plans. Workers voted down the concessions Thursday.

Saladin Parm, who worked at the plant for 23 years before becoming a member of its union leadership team, said workers are the angriest he has ever seen.

"They're saying, 'This is not a high-school job where I want to take my girlfriend out to the movies. I have to support my family on this,'" he said.

In 2005, under a different contract, Parm's own wages were cut from $28 to $18, but the blow was softened by a one-time, $105,000 payment from GM. Workers who have come in recently make even less but pay the same union dues as those who have been at the plant for years. Parm said he understands their resentment.

"We do want our company to be competitive. That's the only way we're going to keep our jobs," he said. "At the same time, we're saying, 'Is this the best you can do?'"

It wasn't always this way. When the UAW was setting the bar for U.S. manufacturing wages, some auto workers made more than $100,000 a year with overtime and enjoyed nearly free health care and generous pensions.

But the UAW and other unions have been forced to make concessions to blunt competition from places like Mexico, where auto workers earn just $4 an hour. Between 1960 and 1969, U.S. wages grew nearly 50 percent; in the 2000s, they rose just 29 percent, according to the Social Security Administration.

The UAW, which elected Bob King its new president this week at a convention in Detroit, still sets the tone. So everyone from nonunion auto plant workers to unionized government workers could face similar pressure to lower their pay, says Sean McAlinden, a senior economist with the Center for Automotive Research in Ann Arbor, Mich.

"The UAW is showing the way," McAlinden said. "What they're basically telling the economy is the defined-pension benefit is dead. That retiree health from the company is dead. That high wages at the start of your career are gone."

Benefits like big one-time buyout payments or cost-of-living increases made nonunion Americans seethe as their own jobs and benefits were cut. As a result, the union lost some supporters.

UAW president Ron Gettelfinger says the economy — not union wages — led to the automakers' troubles, and agreeing to wage concessions was the hardest thing he had to do as a union leader. But he says it helped the companies survive and even prosper. GM and Ford made first-quarter profits, while Chrysler narrowed its losses.

"I think we did what we had to do to get to tomorrow," Gettelfinger said. "You can have the best contract in the world, but if you don't have a job to go with it, what have you got?"

Bobbi Marsh, 32, was hired at a GM plant in Lordstown, Ohio, two years ago, making $14 per hour. With raises she now makes $16, but that's still less than half the wage of her father, a machinist at the Lordstown plant.

Her father's job helped pay for her college and family vacations. She is afraid she will not be able to provide the same for her 10-year-old son.

"I feel bad for my child because I want him to have the same opportunities I had when he was my age," she said.

Marsh had several teaching jobs after she graduated college in 2000, but she was laid off each time because of enrollment declines or budget cuts. She said the job at GM has changed her life with a good, consistent paycheck. Even at $16 an hour, her pay is more than double Ohio's minimum wage.

Lower-paid workers could turn out to be the key to the UAW's resurgence. At the convention this week, Gettelfinger said lower labor costs have led to new investments. GM will be the first automaker to profitably build a subcompact car in the U.S. now that its labor costs are more competitive. Chrysler is hiring for the first time in a decade.

New hiring will boost UAW membership, which has fallen from a high of 1.5 million in 1979 to around 355,000 as the Detroit Three's sales dropped and plants got more productive. That could give the UAW renewed power to set wage standards.

King, a longtime Ford negotiator, said workers — including new hires — should benefit as the economy improves, perhaps with profit-sharing deals in the 2011 contract. But the union will have to proceed cautiously, he said. Automakers can still move work to Mexico or elsewhere.

That could mean lower wages are here to stay. Many workers are already resigned to the possibility.

"I have a lot of faith in our union. My dad came up from the South to make a better living in the auto plants, and he did," Parm said. "That's why it's hard to fathom what I'm seeing. I never dreamed I'd be seeing tears."