How Two-Tier Union Contracts Became Labor’s Undoing

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By Louis Uchitelle | The Nation | February 5, 2013

Two-tier wage systems go way back. The Roman Emperor Marcus Opellius Macrinus, in need of a larger army but short on cash, cut the pay for new recruits, forcing them to endure the same battlefield risks as veterans, but at a lower wage. That annoyed the new warriors, and their resentment ignited an army revolt that in 218 ad cost the emperor his life.

Centuries later, two-tier wage arrangements are multiplying in America, yet without provoking the kind of public resentment that led to Macrinus’ downfall, mainly because those involved seem to have struck a deal that keeps a lid on passions. In response to persistent demands from employers for lower labor costs, some of the nation’s most prominent unions—instead of protesting or striking—have agreed to reduce the pay of newly hired workers as long as the wages of existing employees go untouched. And the new hires themselves have abstained from open protest, instead preferring the lower tier to no work at all, or to work that pays even less than a union-negotiated lower tier.

That’s Karl Hoeltge’s attitude. The 22-year-old earns $15.78 an hour on the assembly line of a General Motors factory near St. Louis, under a union contract that will cap his pay at $19.28 an hour five to six years from now. That is, if he hasn’t left by then to pursue his dream, which is to commercialize one or two of the children’s toys he designs in his off hours. Karl’s father, Gary, has worked for years on the same assembly line, and the son says he might be more reconciled to a career at the plant if he could work up to the $28 an hour his father earns. But, he says, “I’ll never catch up to my father’s pay—not if the union allows the present setup to continue.” Read More

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