Leaner, meaner UAW

The 64-year-old General Motors pipefitter, marching a picket line outside the Lordstown complex where he has worked 37 years, had a few choice words about his standard of living.

Earl Dunlap said GM was chipping away at middle-class wages and benefits that men and women in the plant had bargained for and built.

"Once they're done with us," Dunlap said, "they'll come after everybody else."

As it turned out, the United Auto Workers' strike against GM lasted just 41 hours before the two embattled parties worked out a deal.

But new wage information on autoworkers in northern Ohio shows that Dunlap was right: Automotive pay was eroding before anyone pulled up a chair to the bargaining table in Detroit. And if the proposed settlement reached Wednesday between GM and the UAW is approved by the union's rank-and-file, it will mean lower pay for some future UAW members.

The contract also could squeeze wages and benefits of factory workers nationwide, economists said, and even those of white-collar workers.

Jim Graham, president of UAW Local 1112 in Lordstown, does not agree. He said the contract is as good as the union could have hoped.

"We're living in a different world today," Graham said. "You have to evolve with what's happening around you. If you don't evolve, you're not going to be here. The UAW did a great job with what they had.

"If you don't make changes and [you] go about business as you did 25 years ago, you're not going to be around anymore."

But labor historian Peter Rachleff predicted that arbitrators and mediators will look to the new contract, and employers will cite it. "This is a big step in the direction of leaner, meaner and generally down," he said.

Autoworkers' pay on downward spiral

It's not as if the contract talks last week were the first time that workers were asked to help battle potent Japanese automakers.

New research from Cleveland State University shows that hourly pay for autoworkers in northern Ohio was in decline for some time.

From 2000 to 2006, inflation-adjusted wages of production and maintenance workers in northern Ohio fell 6 percent, CSU's Ellen Cyran found in analyzing U.S. Census data.

During the same period, the salaries of auto plant managers jumped 29 percent, while salaries of industry professionals such as accountants and computer specialists rose 14 percent, the Levin College of Urban Affairs researcher found. Her review looked at the Big Three automakers and companies up and down the supply chain.

Ned Hill, CSU professor of economic development, said the pay trends are "globalization at work."

"What we're seeing in these numbers," he said, "is the two sides of trade. We're seeing the winners and the losers."

Auto production and maintenance workers are in a pool of semiskilled and unskilled labor that has doubled worldwide since the fall of the Berlin Wall in 1989.

And while that has hurt production wages, the value of "headquarters jobs" that require advanced education has gone up, Hill said.

The diverging pay also reflects cuts of 25 percent to 50 percent that the UAW agreed to with suppliers like Delphi. Terms of Big Three contracts historically set the mold for bargaining with suppliers; today, the reverse is true.

"The parts sector is sort of the ugly duckling of the whole thing," said Nelson Lichtenstein, author of "State of the Union: A Century of American Labor."

Two-tier pay scale could be double trouble

The core of the GM-UAW deal is a new retiree health-care trust administered by the union. But it's another detail that economists say could permanently depress wages for blue-collar auto work.

The pact has a two-tier system that pays non-core workers such as materials handlers and janitors less than assembly workers. The deal also requires that new employees be hired only for non-core jobs until there are openings on the assembly line. They will also get a 401(k) plan instead of a pension.

Tiered wages can be useful for unions and management. For the union, it's easier to accept pay cuts to settle contracts when they affect nameless future workers. Companies see tiers as ever-sharper tools for paring labor costs.

But tiers have a checkered history. If they create resentment among the rank-and-file, morale and productivity can suffer.

"It sort of says, 'Maybe we're not all in this together. We're going to get ours, and you'll just have to fend for yourself,' " said David Walsh, an associate professor of management at Miami University who studied tiers in the airline industry.

Grocery chains in Southern California learned that tiers can be trouble.

Workers there went on a 141-day strike four years ago trying to resist them. But the stores prevailed with a system that gave new hires fewer benefits than veterans.

This year, a new contract tossed out the tiered pay scale. The chains didn't put up much of a fight. They had learned that tiers didn't deliver the savings expected and caused disharmony.

Ripple effect is hard to predict

Will the UAW-GM deal affect the broader work force of workers outside the auto industry? Economists and historians are divided on that.

The ability of well-paying auto jobs to increase wages in other occupations will weaken as new workers cycle into GM's plants at lower pay, said John Russo, co-director of the Center for Working-Class Studies at Youngstown State University.

Russo and others see the decline of union jobs as a basic part of the widening income gap in the United States.

Eighty-two percent of personal income gains between 1980 and 2005 have gone to the top 1 percent of the population. Inflation-adjusted income for the top 1 percent increased 156 percent during that quarter century; median compensation for the population as a whole increased 19 percent.

"A lot of the reason for that top loaded income distribution is because of the decline in manufacturing," said Susan Helper, professor of economics at Case Western Reserve University.

Others say wage pull from the UAW is nothing like what it was from the 1930s through the 1970s. And although once-premier factory jobs are losing ground, they say, their retreat doesn't necessarily spill over.

It's a mistake, for example, to see the decline of plum manufacturing jobs as automatic gains in low-pay service jobs, Federal Reserve Bank economist Mark Schweitzer said.

"Per capita income levels have been rising in the United States," he said. "That implies that jobs lost have been replaced by jobs that make up for the loss and then some."

At the Third Way, a centrist lobbying group in Washington, the focus is on keeping headquarters operations in the United States, even if production jobs decline.

"Is the bottom dropping out of the middle class? No, we don't think so," said Anne Kim, director of the center's Middle Class Project.

What will take the place of reduced factory jobs? "Eventually, hopefully, high-paid service jobs," she said. "It's just that it's an incredibly painful transition."

To reach this Plain Dealer reporter: agrant@plaind.com, 216-999-4758