...Two-Tier Wages Andrea Conklin Baker College, HRM 300, Dr. Nicole Runyon March 9, 2014 Our economy had a downturn in 2007-2011 and the automotive industry was hard hit. GM and Chrysler filed for bankruptcy due to increasing labor costs and decreased demand in automobile from consumers. Therefore, U.S. automakers turned to two-tier wage structures to control labor costs over the next several years. GM started using a two-tier wage structure in late 2007. Any new hires after September 2007 received an hourly Tier II wage of $14, about one half the hourly of the $28 hourly wage of Tier I existing employees (Milkovich, Newman, Gerhart, 2014, p.242). In the U.S. in the late 1990’s had over one million people employed in the automotive industry, the number dropped to 550,000 during the recession. The Center for Automotive Research projected that in 2012 the numbers could increase to 650,000 and in 2015 it could be more than 750,000 employees (Milkovich, Newman, Gerhart, 2014, p.242). Two-tier wages systems has helped the automotive industry recover because the reduced hourly wages for new hires helped decreased labor costs to compete with labor costs internationally. With the downturn in the economy there were many people that were unemployed and having these two-tier wage systems allowed the automotive companies to hire in eager and willing employees for the $14 an hour wage, compared to these applicants receiving...
Words: 1281 - Pages: 6
...Two-Tier Wages. After thoroughly reading chapter seven and the introduction to the questions portrayed to us, I decided to first and foremost do some research as to what the exact number of people employed by the automobile industry in the United States is. In the book, it speculates that in 2012 the automobile industry will employ roughly 650,000 people and 750,000 people in 2015. Since we already are in 2016, those numbers are a fact and according to “autoalliance.org” “Auto manufacturers, suppliers, and dealers themselves employ more than 1.5 million people, and directly contribute to the creation of another 5.7 million jobs.” Two-tier wages definitely has played its role in the industries job growth through the years. Looking at the facts, the number of car sales has been on the rise, again partly due to the two-tier wages. With the expected number given to us, GM will effectively be able to lower the price per car produced by $450.00 thanks to this price decrease, effectiveness goes up, production goes up and sales go up. Again, referencing back to the book, “GM will save as much as $72 million per year” in labor costs. Based on the numbers, in my opinion, the two-tier wages has had a great impact in both job growth and industry productivity. As a long term viable option, two-tier wages faces significant draw backs. The book uses the example of GM, an employee hired post September 2007 would be making $14.00 dollars and hour, compared to an employee whom was hired pre September...
Words: 933 - Pages: 4
...industry in the United States has significantly prospered in lieu of two tier wages. Also hiring employees from an outside supplier, or also known as contract employees, frees up time for the tier 1 employees, having contract employees doing simpler more time consuming work and allowing skilled workers focus more readily on the design and build work. The two tier approach has been very sustainable, and more profitable for the automotive industry especially GM. Implementing lower wage employees who are able to do more of the running, simpler tasks and tool work that is directed by a mentor usually tier I employee. Along with the two tier system, manufacturing was streamlined. Two tier wage system has helped build and develop streamlined GM by how they work with their suppliers, how they keep their inventory management trimmed, and they manage a just-in-time inventory where assembled parts are removed from the delivery trucks and placed on the line immediately and delivered to right to production for immediate use. (Smith, 2015). In response to Mr. Marchionne not liking the two tier wage system, stating that it doesn’t work while he is trying to get his organization to work in a unison manner, it turns out that Mr. Marchionne really wants to lower the wages for all tier I employees, while slightly bringing up the wages for the tier II employees or contract employees, thereby making all employees the same wage. The problem with his plan is it divides the generations. It divides...
Words: 683 - Pages: 3
...Having a two-tier wage has allowed automobile companies to reduce labor costs without having to cut employees. Having the lower pay has allowed the companies to close the gap with foreign car makers. The two-tier wage has allowed the employment to dramatically increase in Detroit’s automobile industry (Vlasic, 2011). A two-tiered structure does not treat all employees the same. Essentially, two employees are doing the same job, one is making significantly less than the other one. According to the United Electrical, Radio and Machine Workers of America (UE), workers who receive the lower wage resent their employer (Gish, n.d.). The employees lose respect because they are making less money for performing the same duties. Employee discontent can lead to a high turnover rate. This could prove to be more costly in the long run. Employees can feel resentment to their fellow employees (those who make more) because they are not being treated fairly. New workers can feel resentment towards the senior workers. This can lead to either and unstable or hostile workplace, which in turn, can hinder productivity (Gish, n.d.). Sergio Marchionne believes that people should be paid the same wage for the same work. He believes that it is impossible, and offensive to the lowest paid workers. He wants to freeze veteran workers wages and offer less-senior workers more profit sharing potential. He wants to create a lower, performance based pay scale. Currently tier II employees earn a base wage of...
Words: 551 - Pages: 3
...1. Having a two-tier system of wages of production workers is not as favorable as downsizing to reduce operating costs for the company in my opinion. The only problem with doing so is that it would be illegal to let workers go due to the amount of money they signed on for. The alternative of having a two-tier system subjects the company’s workers to jealousy and resentment due to the fact that people doing the same job they are get paid significantly more simply because they signed on at a different time. It makes sense that the company would switch to a two-tier system of wages to make sure that they do not overpay starting workers as they were able to do in the past, but they have to be ready to deal with the problems that having a two-tier...
Words: 399 - Pages: 2
...1. The difference between a cost-of living adjustment and an annual improvement factor is that a cost-of living adjustment is An adjustment made to Social Security and supplemental security income in order to adjust benefits to counteract the effects of inflation and an annual improvement factor is a provision in a labor contract calling for an annual increase in the hourly wage rates of the workers so as to provide a constantly rising standard of living. 2. Five reasons pension plans became popular are the populations increased longevity and commensurate lengthening of the number of postretirement years. The spread of union-spawned seniority and labor provisions in labor contracts as well as the illegalization of compulsory retirement for most jobs. The modest level of benefits provided by social security system. There was a growing managerial awareness of an organizations obligation to employees after retirement and seniority supervision. 3. Closed Shop- Belong to union before getting the job. Union Shop- Can join union after 30 days of being hired. Maitenence of Membership- Can decide whether they join the union or not. Agency Shop- Non union members of bargaining unit must make financial contribution, but no one is compelled to join the union. Preferential Shop- Gives union members the preference of hiring but allows the hiring of non-unionist. 4. A "checkoff" is a dues-collection method, where the employer agrees to deduct from the employees pay monthly...
Words: 901 - Pages: 4
...TRUE/FALSE 1. The majority of private sector union contracts do not contain a cost-of-living adjustment (COLA) clause. 2. The majority of private sector employees participate in a profit sharing plan. 3. Most unions consider gain sharing plans as an adequate substitute for traditional negotiated hourly wage gains. 4. The global economy of today has made it easier for employers to pass labor cost increases on to consumers by raising product or service prices. 5. Skill-based pay sets the wage rate according to a job's title (type). 6. Wages and other economic benefits represent income to employees, costs to an employer, and a basis for tax revenue to the government. 7. The majority of private sector union contracts contain a two-tier pay plan. 8. Union leaders favor job evaluation more than managers for use in designing the wage structure. 9. If a union wishes to encourage solidarity within its membership at a particular firm, it should not negotiate for a two-tier pay plan. 10. Labor market wage surveys are not used to ensure that a firm's wage structure is externally equitable. 11. Wage comparability is a fairly easy concept to apply to set wage rates for different jobs. 12. The monetary value of employee benefits provided by unionized employers exceeds the value of employee benefits provided by nonunion employers. 13. A Scanlon plan, Rucker plan, and Improshare plan are all examples of gain sharing plans. 14. Supplemental unemployment benefits...
Words: 1302 - Pages: 6
...TRUE/FALSE 1. The majority of private sector union contracts do not contain a cost-of-living adjustment (COLA) clause. 2. The majority of private sector employees participate in a profit sharing plan. 3. Most unions consider gain sharing plans as an adequate substitute for traditional negotiated hourly wage gains. 4. The global economy of today has made it easier for employers to pass labor cost increases on to consumers by raising product or service prices. 5. Skill-based pay sets the wage rate according to a job's title (type). 6. Wages and other economic benefits represent income to employees, costs to an employer, and a basis for tax revenue to the government. 7. The majority of private sector union contracts contain a two-tier pay plan. 8. Union leaders favor job evaluation more than managers for use in designing the wage structure. 9. If a union wishes to encourage solidarity within its membership at a particular firm, it should not negotiate for a two-tier pay plan. 10. Labor market wage surveys are not used to ensure that a firm's wage structure is externally equitable. 11. Wage comparability is a fairly easy concept to apply to set wage rates for different jobs. 12. The monetary value of employee benefits provided by unionized employers exceeds the value of employee benefits provided by nonunion employers. 13. A Scanlon plan, Rucker plan, and Improshare plan are all examples of gain sharing plans. 14. Supplemental unemployment benefits...
Words: 1302 - Pages: 6
...Maximum wage legislation would mean that there would be a cap on what different people could earn in different professions. For example a Doctor may be able to earn a maximum of £200,000 per annum whilst a footballer may be limited to £1 million per annum. Unequal distribution of income is were groups of the population are receiving a much higher income then others. For example in the UK the average income of 90% of the population as whole in 2012 was £12,969 whilst the top 10% was earning around £79,000 and the top 1% having an income of £271,888 [The equality trust income inequality in the UK report 2013]. There is an unequal distribution of the income here because the top 10% of the population are earning around 600% more then the rest of the population. Maximum wage legislation could help reduce unequal distribution for several reasons. The main reasons is due to the simple fact that if the people at the top of the pay chart were to have caps placed on their incomes, then their incomes would most likely fall to this cap or below it and therefore the difference between the top and lowest incomes would be reduced. This would be a good way of reducing unequal distribution of income because unlike a minimum wage this legislation would be unlikely to cost firms money but in-turn save them money. This is because the firms would gain the surplus of the money already being paid to employees in comparison to the cap whereas a minimum wage can sometimes mean that firms will have...
Words: 1283 - Pages: 6
...mile and emphasizes the importance of acknowledging and fixing mistakes when made. The culture also encourages employees to take responsibility for customers’ satisfaction. Shangri-La Philosophy was to develop local talent to world class expectation. The company launched its culture training program. * Care Module 1: Shangri-La Hospitality from caring people. * Care Module 2: Delighting Customer * Care Module 3: Recover to Gain Loyalty * Care Module 4: Take Ownership The three-tier compensation structure was designed to support organizational goals at various levels. At the first level, compensation included a salary and a bonus. The bonus was tied to financial results to help hotels reach goals. Compensation for the second tier, level two and three employees, was linked to financial results and, more specifically, to customer satisfaction and customer loyalty scores, which were key indicators of how well Shangri-La executed its strategy. In the third tier, level four and five employees, there was a common bonus pool that linked compensation not to individual performance, but to an overall company performance. Shangri-La’s five-level organizational structure was also supportive of its strategy execution as it allowed them, within limits, to directly address guests concerns. At each level in the organization employees had a specific dollar amount that could be used to address customer requests that might fall outside of normal operations. The front-line...
Words: 856 - Pages: 4
...ELECTRONICS INDUSTRY IN ASIA Research Paper Series No 3 In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea Jiwon Han, Wol-san Liem, and Yoomi Lee Research Institute for Alternative Workers’ Movements, South Korea In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea © 2013 Asia Monitor Resource Centre Asia Monitor Resource Centre Flat 7, 9/F, Block A Fuk Keung Industrial Building 66-68 Tong Mi Road Kowloon Hong Kong Tel: (852) 2332-1346 Fax: (852) 2835-5319 Website: www.amrc.org.hk The paper may be reproduced in any non-profit publications; credit is requested. In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea By Jiwon Han, Wol-san Liem, and Yoomi Lee (Research Institute for Alternative Workers Movements) February 2013 Edited by Asia Monitor Resource Centre Research team: Jiwon Han, Wol-san Liem, and Yoomi Lee The Research Institute for Alternative Workers Movements (RIAWM), Seoul, South Korea, was established in 2010 to contribute to the revitalization of the workers movement in South Korea and beyond. RIAWM is working to critically analyse the conditions workers face amidst the structural crisis of capitalism, and develop concrete policy for workers movement that both improves workers’ lives and strives towards an alternative political-economic system. RIAWM is affiliated to the social movement organization People’s Solidarity for Social Progress, founded in...
Words: 6463 - Pages: 26
...In recent years, an often topic debated is that what fundamental problems British society is concerning, such as life, legal security, health, education, employment, standard of living, care and support, power and voice. Both immigration and youth unemployment are two problems being the most noteworthy in the UK. These issues have detrimental effects on many sections in Britain, such as culture, jobs and security The Executive Summary is identified by Equality and Human Rights (2014). In order to demonstrate this view, the essay will be started with the background of immigration and youth unemployment in a few years recently. Then we shall consider the adverse effects of two problems in British society, and then either immigration or youth...
Words: 1874 - Pages: 8
...The Minimum Wages Act, 1948 generally specifies minimum wage rates on a per day basis,[20] and extends to the entire country and is revised within a period of not less than five years, however there is a provision to increase dearness allowance every two years. The norms in fixing and revision of minimum wages were first recommended by ILC, 1957.[21] Revision of minimum wage rates is based on a ‘cost of living index’ and wages can be fixed for an entire state, part of the state, class or classes and employments pertaining to these categories. The fixation of wages is based on the norms mentioned and a wage board (different for different industry). Under the Minimum Wages Act, State and Central Governments have the power to fix and revise minimum wages. The act specifies that the “appropriate” government should fix the wages i.e. if the wages to be fixed are in relation to any authority of Central government or Railway administration then the Central government fixes it. However if the wage rate is to be fixed or revised for a scheduled employment, the respective state governments fix it. The Centre fixes the National floor level Minimum Wage that is lower than most states' respective minimum wages.[22] The ambiguity and overlap in the jurisdiction of both these tiers of government have caused debates and controversies. One of such debates revolves around fixing wage rates of MGNREGA scheme, an employment guarantee initiative by the Central Government[23] As per Section 5 of...
Words: 510 - Pages: 3
...Wage Methodology for the Temporary Non-Agricultural Employment H-2B Program This Rule document was issued by the Employment and Training Administration (ETA) Action Interim final rule; request for comments. Summary The Department of Homeland Security (DHS) and the Department of Labor (DOL) (jointly referred to as the Departments) are amending regulations governing certification for the employment of nonimmigrant workers in temporary or seasonal non-agricultural employment. This interim final rule revises how DOL provides the consultation that DHS has determined is necessary to adjudicate H-2B petitions by revising the methodology by which DOL calculates the prevailing wages to be paid to H-2B workers and U.S. workers recruited in connection with the application for certification; the prevailing wage is then used in petitioning DHS to employ nonimmigrant workers in H-2B status. DOL and DHS are jointly issuing this rule in response to the court's order in Comité de Apoyo a los Trabajadores Agricolas v. Solis, which vacated portions of DOL's current prevailing wage rate regulation, and to ensure that there is no question that the rule is in effect nationwide in light of other outstanding litigation. This rule also contains certain revisions to DHS's H-2B rule to clarify that DHS is the Executive Branch agency charged with making determinations regarding eligibility for H-2B classification, after consulting with DOL for its advice about matters with which DOL has expertise, particularly...
Words: 14477 - Pages: 58
...low-skilled and long-term unemployed remains difficult. Their wages, if they can find a job at all, have come under increased pressure in recent years due to the extensive outsourcing and offshoring activities of German firms. They are the obvious victims of globalization. As the ex-Communist countries and India, accounting together for no less than 45% of mankind, decided to participate in the market game, equilibrium wages for ordinary labor in the industrialized world, including Germany, have fallen. Berlin is considering introducing minimum wages to fix this problem. This is at least what the Social Democratic Party and its labor minister, Franz Müntefering, demand. Chancellor Angela Merkel's Christian Democratic Party, the coalition leader, is still reluctant to endorse this proposal. But its opposition is eroding in view of the public support minimum wages enjoy. Left-wing politicians and journalists dominate the debate. Minimum wages, they say, are necessary to maintain the living standards of the poor. They argue that minimum wages pose no problem for the economy: After all, most other European countries have them already. They fail to acknowledge, however, the negative experience these countries had with minimum wages. The vast majority of empirical studies show they tend to cost jobs. In France, for example, a 1% increase in the real minimum wage reduces the employment probability of a young man by 2.5%. If the minimum wage is sufficiently low, as is the case in the U.K. and...
Words: 841 - Pages: 4
