United Auto Workers members in Kokomo and the rest of the U.S. could be better poised to make more money in the next year or two, according to industry analysts.
If workers are going to have larger pay checks in the near future, it could go one of two ways — or both together. UAW could succeed in negotiating pay raises this summer. Or the union could bargain better deals for performance bonuses, labor experts said.
Joe Ashton, UAW’s vice president who negotiates for General Motors Co. employees, told members of the news media this week he wants to push during summer contract talks to bump up entry-level workers to better pay than their second-tier wages.
Kristin Dziczek, a labor analyst with the Center for Automotive Research, said a deal for better performance bonuses for all workers would be more likely to happen than increasing wages.
“I think you will see more variable pay checks,” said Dziczek, who directs CAR’s Labor and Industry Group. “I don’t know if you will see a bump in an hourly rate. Companies do not want to get locked into paying a higher wage.”
Paying workers depending on how much money the company makes is a practice more common among growing global competition.
General Motors, which employs roughly 700 Kokomo workers through subsidiary General Motors Components Holdings, gave out $3,000 performance bonuses to GMCH employees earlier this year — GM workers got $4,000 — based on GM’s $4.9 billion profit during the first three quarters of its 2010 fiscal year.
Chrysler Group’s more than 4,500 hourly workers received an average of $750 in performance bonuses despite a $652 million loss in 2010. The company’s first quarter of 2011 brought in a $116 million profit, the first since leaving bankruptcy.
With better earnings predicted this year — Chrysler expects to profit between $200 million and $500 million in 2011 — workers stand to earn larger bonuses.
“You pay when the company is doing well, and not when they’re not,” Dziczek said about performance pay. “And it’s going to be difficult to claim that this is a tough year.”
Chuck Davis, a labor studies professor for Indiana University-Purdue University Indianapolis, said performance pay is what the corporations would be more willing to consider, rather than increasing pay rates.
Davis agreed UAW members have a strong chance at earning more over the next few years, but corporate health and the overall economy will be key factors.
“It all depends on where the industry is,” he said. “Management always wants to tie wages to performance. ... As a bargainer, I certainly would not want to tie [pay] increases to the performance of my members.”
Rich Boruff, president of UAW Local 685 in Kokomo, said what the union’s national representatives have planned for negotiating pay this summer is “all hearsay.”
“There’s all kinds of things that could be made,” he said. “It could be too early to speak about it really.”
When it comes to paycheck sizes, Dziczek said, Detroit’s automakers are in a situation where they will want to recruit more skilled workers. But they need to keep expenses down to keep up with global competitors.
While increasing workers’ compensation could make it harder for companies to compete, higher pay could attract more skilled and productive workers, which ultimately could lower company costs. What potential pay changes will depend on will be how much Ford, GM and Chrysler spend per vehicle they produce, she said.
• Daniel Human is the Kokomo Tribune business reporter. He can be reached at 765-454-8570 or at firstname.lastname@example.org.