Two-Tier Wages

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Recommended: Impact of the american automobiles industry

1. The renewed job growth in the automobile industry in the United States is an effect of the use of two-tier wages. Two tier wages are pay structures that consist of different wages for old and new employees. Workers are getting paid at different rates. This happened to boost the job growth in the automobile industry significantly by providing a cost efficient pay scale for companies. Also, the labor cost of vehicles decreased, which knowingly helped companies. 100,000 people were employed in the late 1900s. The number was reduced to 550,000 during bankruptcies and the recession. The two tier wage helped stop this problem by increasing employment by a few hundred thousand.
2. It is not very sustainable for job growth to be based on two-tier wages. This type of pay structure was not viable, and it was implemented for a quick solution to the automobile job market. Mr. Marchionne stated that is was not a viable structure because two classes of workers worked within an industry. This type of structure is not built for unison, which is needed for long-term success. High turnover rates and strikes are potential drawbacks of a two tier wage. The drawbacks are expected to materialize when the structure has been used for too long.
3. The use of non-GM workers at the Chevy …show more content…

I believe the two-tier wage structure will go away in the near future. It has served its purpose in the automobile industry and was only needed to quickly boost the job growth. It does not have longevity in this industry. In this pay structure, employees are not getting paid equally for their tasks. The drawbacks will eventually outweigh any advantages that the industries benefit from, which include short-term cost reductions. Ford converting its Tier 2 workers to Tier 1 wages for a small fraction of the $6.9 billion North American profit earned is taking advantage of employees. I understand that the goal of a company is to make money, but I believe that the personnel deserves more pay for their

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