The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

First-Tier Buying Power Collapses

Nov 14, 2011

Two days after the UAW declared the Chrysler contract ratified, Chrysler/Fiat CEO Sergio Marchionne said that two-tier wages were “not a viable structure” long-term.

Sergio of course meant that the first-tier wage earner has to get ready to plunge down. But in fact the plunge is already taking place.

First-tier workers have not had a meaningful base wage increase since 2003, and the cost of living allowances have been by stages diverted, frozen, and eliminated. Meanwhile inflation erodes the wage: a worker making $28 an hour in 2003, in order to maintain that buying power, would have to make $34.53 an hour this year!

Sergio’s goal is being pursued from both ends. The second-tier workers are gradually to be brought up to merely the average U.S. manufacturing wage of $19.28; the buying power of the frozen first-tier wage is falling toward that level, every week, every month, every year.