The Kohler Co. in Wisconsin, best known for their bathtubs and kitchen fixtures, is just one company that had adopted a two-tiered wage scale sometime around 2010. Even some U.S. automakers adopted similar wage scales. This was as a result of the U.S. recession in 2008, when workers lost negotiating power and the reduction in wages was excused.
New hires, after 2010, were stuck for years on a much lower and slower track for both pay and benefits. This, if expanded out to other companies, may help explain why wages have stagnated for years, even as the U.S. economy came roaring back.
2-Tiered Wages And Worker Morale
The 2-tiered wage scale was starting to take its toll on employee morale at Kohler. Employees were complaining that it creates division and leads to poor workmanship. Poor workmanship leads to increased costs due to flawed products and customer dis-satisfaction resulting in lost revenue which compounds any financial stress.
Closing The Gap
In 2015, the workers at Kohler Co. mounted a strike that lasted more than a month which resulted in a narrowed gap in the two-tiered wage scale. But it wasn’t close entirely and resentment slowly regrew.
A few years later, around December of 2018, Kohler Co. agreed to a five-year contract which would phase out the two-tiered wage scale by 2023. There are reports that morale has finally turned a corner and has begun improving at the facility.