To what extent is the renewed job growth in the automobile industry in the United States due to the use of two-tier wages?

1.   To what extent is the renewed job growth in the automobile industry in the United States due to the use of two-tier wages?

2. To the degree job growth (and increased car sales that come from more competitive labor costs) is based on two tier-wage structures, how sustainable is this approach? Consider, for example, that Fiat and Chrysler CEO, Sergio Marchionne stated that “Long term, (the system) is not a viable structure. It creates two classes of workers within the plant. It doesn’t work in the same direction we are working…to get this organization to work in unison.” Why would Mr. Marchionne make this statement? What are the potential drawbacks of a two-tier structure? When would we expect any such drawbacks to materialize?

3.What about the use of non-GM workers at the Chevy Sonic plant? What might Mr. Marchionne feel about that approach?

4. Will the two-tier wage structure go away in the near future? Summarize the pressures to eliminate it as well as the pressures to keep it. Be sure to consider labor costs and productivity of workers and plants at other companies and in other parts of the world. You may wish to do some research on the new Volkswagen plant in Chattanooga, Tennessee. Also, consider that the Automotive News estimates that the Ford Fiesta (a competitor to the Chevy Sonic) plant in Cuautitlan, Mexico may have labor costs as low as $150 per vehicle.