Please write the peer review comment on the below paragraph 4-5 sentence.

Pay/Wages:

In the Case:

The topic that is researched on the next few pages, is about pay and wages. The management believes this is an important topic for a couple of reasons. The first is that it is a big point of discussion during every contract negotiation. During the last negotiation in 1959, one of the major demands of the union was increased wages. The union successfully won increased wages, an increase of four cents as opposed to the proposed seven cents. The current wage of the 3625 production workers at the Indianapolis plant is $15.09 and the wage of the 175 skilled maintenance employees is $16.05. The average wage of the Little Rock plant is $10.80 per hour. Additionally, the current contract contains an escalator clause that affects wages. The clause is confusing but from what I understand the clause increases wages by three cents for each .4 point increase in the consumer price index. During a three year contract, workers receive a seventy-five cent increase in wages, forty cents of which come from the escalator clause. There are also two shifts at the Indianapolis plant. Employees that work the second shift gain an extra $1.10 per hour premium. The second reason management believes this is an important topic is because the company president wants to add a new wage system. The company president would like to add a two-tier wage system. A two-tier wage system is where all workers hired after the new agreement would receive pay rates below those of the current employees. The company president even went so far as to say, two-tiering could be the salvation of this company.

(Appendix: Mock Negotiation Problem, Pg. 435-440)

Textbook:

The textbook was able to provide a lot of useful information relating to the topic of pay and wages. According to the text, wage and wage-related considerations have always been the leading causes of strikes and this continues to the present day. Another idea introduced by the textbook is comparative norm. Comparative norm states that, a collective bargaining relationship should keep up with the crowd but never lead it. The wages at the Indianapolis plant are currently $15.09 and $16.05 which are both much higher than the wages at the Little Rock plant, which has better sales. If the union tries to argue for higher wages, management could use this information to deny the claim. Comparative norm has a lot of restrictions but I believe in this scenario, it could be a very helpful tool for management to use.

The second method of wage determination under collective bargaining is ability to pay. Ability to pay means whether the organization has indicators that they can pay a higher wage to their employees. The Indianapolis plant has relatively good finances according to the case itself. This could be used against management in negotiation if the union workers would like to raise wages this way. However, how the organization intends to use the profits is taken into consideration when using ability to pay. In the past, Auto Products gave 65% of their profits in dividends and held the other 35% as retained earnings. Also they have an outstanding loan. All of these factors could affect the ability to pay argument if it's used by the union members. The last method of wage determination is cost of living. Auto Products already uses the escalator method to steadily increase wages which renders this argument invalid if brought up by the union members.

The next aspect of pay and wages that the textbook covers is two-tier wage systems. According to the text, two-tiered systems can strengthen an employers competitive advantage and income statement but can also cause problems in the form of employee unhappiness and worker retention. Also, the workers that are in the first tier arent very happy either. They usually feel like the system puts a target on their back. However, tiered compensation is still quite popular. An estimated 30 percent of labor contracts still stipulate lower wage rates for newly hired workers, and this percentage may once again now be growing. Some unions even use the tiered compensation as a method of getting what they want. The 121,000 members of District Council 37 gained wage increases by cutting the pay, vacation, and sick days of payroll newcomers. One way I could see implementing a tiered system is similar to an example in the textbook. A California company transitioned from a two tier system to instead raising the time it takes to get to the top pay scale to 6-9 years. This would reduce the amount new employees make while still giving them an opportunity to earn a high amount if they worked hard for a long time. Overall, the textbook provided a lot of helpful information that I believe will be very useful for my team in the upcoming negotiation.

Web:

According to an article by Bloomberg law that was published in April 2020, The average wage increase unions negotiated in the first year of their collective bargaining agreements so far this year fell a tenth of a percentage point to 3.3%, according to Bloomberg Law data. Thats the lowest the figure has been since early January when limited numbers made the figure more prone to movement. Additionally the article states that, No industry was spared from more conservative first-year wage increases. Public sector, manufacturing, and nonmanufacturing workers all saw contracts with lower pay hikes. Also the article states that, Manufacturing workers have received an average 3.1% increase Lastly a Bloomberg Law analyst states that, But with this downward trend starting all the way back in mid-February, it looks like management might have been gaining the upper hand at the bargaining table even before everyone was thinking about the fallout from the virus. The pandemic has lessened the wage increases expected by union members. Additionally, the manufacturing industry was hit hardest with the changes which the Auto Parts Indianapolis plant is a part of. I believe that bringing up the point of reduced labor wage increases across the nation will help argue against any wage increases the labor side will try to push through.