How Two-Tier Contracts Hurt Workers and Weaken Unions

Hoffa’s negotiator at UPS is proposing a two-tier contract for package drivers. But Teamsters in other industries have learned the hard way that two-tier contracts are poison.

ups_thumb.jpgTwo tier contracts establish a lower pay rate for new hires. But these concessionary deals don’t just sell out the unborn. Two-tier contracts come back to bite workers on the top tier, too. Here’s how.

Destroying Union Standards

Creating lower tiers opens the door for employers to drive down union standards.

Grocery warehouse Teamsters used to make top dollar in the Northeast. But Teamster officials agreed to two-tier contracts across the industry.

Over time, members on the top-tier shrank to a small percentage of the workforce.

Today, starting pay has dropped as low as $10 an hour. Good Teamster warehouse jobs have become high turnover, low-wage work in the Northeast.

Grocery Teamsters in other regions have maintained higher wages and union standards. It’s no secret why. They kept out two-tier contracts.

Discipline & Contract Violations

Two-tier contracts put a target on the backs of older, higher-paid employees.

Members on the top-tier become targets for discipline and termination by managers who look to replace them with lower-paid new hires.

Two-tier contracts also give employers an incentive to violate our contracts, and direct work and overtime to lower-paid workers.

In Teamsters Local 814, members were sold concessions on the promise that a two-tier deal wouldn’t affect them.

“Within a few years, two-tiers had turned into three and A list guys were sitting at home, while B and C guys worked for less,” said Local 814 member Walter Taylor. “Two-tier deals and weak contract enforcement were destroying our jobs. That’s when we ran a reform slate and took back our local.”

A Threat to Pensions and Benefits

Two-tier contracts can also undermine our pensions and health benefits— another lesson that Local 814 members learned the hard way.

Their commercial moving employers cut costs by paying no contributions to the benefit funds for workers on the second and third tier.

The pension and medical funds both went into the tank. Everyone’s benefits were cut.

“We lost our dental coverage and we almost lost 25 & Out,” Taylor said. “After we elected new leadership, it took almost a decade to undo the damage.”

Divide & Conquer

Two-tier contracts weaken the union by dividing the members. It’s harder to build solidarity when members are doing the same job side by-side but making vastly different wages.

Once employers introduce a two-tier contract, it’s really hard to reverse. In contract negotiations, all your bargaining power gets used trying to undo the damage and bring lower-tier members up to the top.

In 2007 the United Auto Workers agreed to a two-tier contract that allowed the companies to hire second tier workers at lower pay and in a reduced pension plan. Top-tier members saw the low-paid new hires as a threat to union standards and their own job security. Lower-tier workers resented the union.

Eight years later, UAW members finally won a path to top rate for lower tier members, but that victory came at a steep cost.

Members at the top rate got a wage freeze, and the companies cut the wage scales for certain jobs—even though they were making record profits. And the lower tier workers were put on a seven year progression: they are still not up to top scale.

The best way to protect against the damage from a two-tier contract is to stop it from happening in the first place. UPS Teamsters can do just that.

Two-Tier Hurts Everyone

When two-tier came to my warehouse, I got a raise, but wages were cut for the new hires. They told us ‘This doesn’t affect you.’ We didn’t realize we were cutting our own throats.

“Management came gunning for the senior guys who were older and made more money. There were a lot of divisions between the higher-paid and lower-wage workers. “Eventually, the lower-paid members were a majority. Good union wages were a thing of the past in my warehouse—and our benefits went downhill next.

“Two-tier contracts hurt everyone. Just say No. I wish we had.

Bill O’Bayley Local 805 (Ret.), New York

Two-Tier Deals Divide Workers

Ron Kaminkow, a rail Teamster, recalls bitter resentment between trainmen. Members hired prior a two-tier deal got a full day’s pay if they were not given a train to operate on their return trip home. But members hired on the second-tier were only paid for their actual hours in transit home.

“Two members would share a van home. One member is trying to milk more time out of the trip for a better paycheck, while the one who’s guaranteed a full day’s pay is rushing to get home,” explained Kaminkow. “They’d be at each other’s throats.”

Ron Kaminkow BLET Local 51, Reno, Nevada

Threat of Two-Tier at UPS

UPS Package Drivers are some of the highest-paid Teamsters, making $36.89 an hour at top rate.

But Hoffa and Package Division Director Denis Taylor have introduced a contract proposal that would let UPS create a new category of lower-paid package drivers.

Under the Teamster proposal, top pay for lower-tier Hybrid Drivers would be $6.40 less than for regular package car drivers—including for Sunday work.

It’s easy to see why UPS would propose a two-tier deal like this. But why would union officials go along? Cutting the pay of new hires is an old trick to try to get a concessionary contract passed.

Hoffa and Taylor are proposing lower wages for workers who aren’t on the job yet and don’t have a vote on the contract.

Next, Hoffa and Taylor will sell the deal by telling drivers the giveback “doesn’t affect you.”

But Teamsters who have seen their wages, benefits and union standards tanked by two-tier contracts will tell you different.

“They told us ‘This doesn’t affect you,’” said Bill O’Bayley, a retired grocery warehouse Teamster. “We didn’t realize we were cutting our own throats. Two-tier contracts hurt everyone. Just say NO. You’ll save yourself a lot of grief.”

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