The UAW agreed to a tiered-wage system for workers at the Detroit 3 in 2007 among a host of concessions meant to keep the automakers financially viable.
The reasoning at the time was that starting new employees at a much lower rate would allow the companies to continue hiring and investing in products without adding the labor costs of legacy employees.
“The union had a choice: Do you protect your existing workers fully and have these newer, younger workers getting paid half as much, or do you say ‘everybody has to share the pain’ so the older workers take a pay cut and the younger workers won’t have to come in at such a low wage,” Steven Rattner, who headed the Obama administration’s auto task force that steered GM and Chrysler through bankruptcy, told Automotive News. “That was, in effect, a decision the union made as much as management.”
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