And supermarkets will contribute only 35% for the pensions of new workers, down from their previous contribution of 100%.
The United Auto Workers also accepted a two-tier structure in a supplemental agreement with the two major parts suppliers, Delphi and Visteon, that employ 52,000 workers. While workers at the "Big Three" auto plants average around $24 an hour, the new hires at the parts plants will start at $14 an hour and can eventually rise to $18.50.
In the public sector, the 121,000 members of District Council 37, American Federation of State, County and Municipal Employees (AFSCME), have approved a contract that allows its members to gain wage increases that will be paid for by reducing the pay, sick days and vacation benefits of newly-hired employees.
A two-tier system violates the basic union principle of "equal pay for equal work." How should a newly-hired worker feel if he is doing the same work as another worker and getting only two thirds of his pay
It turns the new hires into second-class citizens within the union, breeding dissatisfaction and division. It makes it more difficult to foster unity and solidarity. Moreover, employers, in addition to drastically cutting their labor costs, can use their hiring policies to weaken the union.
As union power wanes, companies are finding it easier to plead global competition and request stringent concessions that workers are unable to accept.
Such "concessionary bargaining" happens during recessions or industry-specific downturns when some companies face the prospect of filing for protection under the U.S. Bankruptcy Code. What's unusual now is how many cases involve companies that are in good shape but cite increased global competition as the reason for the demands. "A lot of companies now are doing it just because they believe they can; it's opportunistic," says Ron Blackwell, chief economist for the AFL-CIO.
Harry, Kelber. "Unions Accepting a Two-Tier Pay System Are Giving a Major Concession to Bosses". June 9, 2004 Online article