Setting a new wage-cutting precedent, the United Auto Workers (UAW) on Sunday announced that 40 percent of current workers at the General Motors Lake Orion plant will work at about $14 per hour, half the standard wage, once the temporarily idled Michigan factory begins production on a new line of small cars.
This marks the first time that the $14 per hour wage, which was broadly imposed on new hires through the Obama administration's reorganization of the auto industry last year, will be forced upon existing workers. Workers with 11 years or less of seniority--about 500 of the plant's 1,300 workers--will reportedly be relegated to the "Tier Two" category
Workers were not allowed to vote on the agreement, which lasts through at least 2015, and only learned of its details on Sunday.
The deal is based on vague language in the 2009 labor contract--forced on members with the threat of bankruptcy--that allows GM and the UAW to administer "innovative labor agreement provisions" related to the production of small cars. Obama's Auto Task Force reportedly insisted on the provision as a condition of the auto bailout.
The wage cutting at Lake Orion, located in north suburban Detroit, is the latest salvo in a far-reaching assault on the wages of US workers spearheaded by the Obama administration and its trade union allies. It comes in the midst of a bitter struggle being waged by GM workers at an Indianapolis stamping plant against the UAW's effort to force 50 percent pay cuts to smooth the factory's sale to financier J.D. Norman. (See: "Indianapolis workers face fight against threat to close GM plant")
While workers are being reduced to poverty-level wages, executives and shareholders are reaping the profits. GM CEO Daniel Akerson will receive as much as $9 million in annual compensation, including $1.7 million in cash. His predecessor, Ed Whitacre, will take home $6.4 million for only eight months as CEO, including $300,000 for "staying on" as company chairman from September 1 until the end of 2010. The pay packages were approved by Kenneth Feinberg, President Obama's "pay czar" for firms bailed out by the Troubled Asset Relief Program (TARP).
In contrast, the average autoworker has given up anywhere between $7,000 and $30,000 in pay and benefits through the Obama administration's reorganization of the auto industry, according to the New York Times.
The UAW celebrated the Lake Orion deal. "It worked out--we're keeping jobs in America," said UAW 5960 Local official Mike Dunn. Of course, what Dunn means is that it "worked out" for the UAW executive, who will continue to collect dues from those who will see their wages cut in half. As for workers, Dunn added, "I can't say everyone was happy, but they seemed to understand it."