Two Tier pay in the US auto industry

A New York Times article (Sept 13, 2011) describes the practice of hiring new workers at $ 14 per hour while paying older workers twice that amount. These new employees permit manufacturing at price points comparable with global competition and are part of a growing trend in Detroit. Quality and productivity are comparable across the two groups. But the new pay scales imply that workers will not be able to afford the cars they produce with a year’s salary.  Is being globally competitive with these significantly lower wage rates a long term effective strategy to compete ? Will lack of opportunities to move to the higher pay scales cause attrition and thus a constant need for training ? Is the auto workers union’s approval of these lower wages to be competitive as an effective approach to ensure domestic production an effective long term strategy ?

Advertisements

About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s