Leeham News and Analysis
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Leeham News and Analysis
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Boeing strikes new pay deal with Machinists
By Bryan Corliss
March 4, 2019, © Leeham News: Boeing and the Machinists Union have come to terms on a deal that will raise wages for the company’s hourly work force and help the company compete for workers in a tight Puget Sound labor market.
The two sides have agreed on a pact that raises new-hire pay by $4 an hour in all job classifications, and raises pay for experienced workers in 32 specific job classifications by as much as $10 an hour.
In all, as many as 16,000 people are getting raises at Boeing, which is about 55% of the IAM-represented work force.
“Not everybody is getting something here, and that’s hard,” said IAM 751 President Jon Holden in an interview with LNA. “But we were using whatever leverage we could to make some improvement.”
In a statement, Boeing said it is “committed to pay that is competitive within the local marketplace.”
Not the usual negotiations
The agreement is highly unusual, in that the two sides already have contract in place that had locked in wage rates through 2024. That contract was approved – narrowly – by Machinists in 2014, after Boeing threatened to take 777X production away from Washington state.
What’s happened was this:
Boeing’s been trying to hire experienced people off the street to fill specific specialized jobs, such as building maintenance, machine tooling maintenance, avionics techs. But starting pay, which has been frozen since 2014, was too low to attract people with the kinds of skills and experience the company needs.
Language in the contract with the union allows Boeing to offer higher pay than the contract minimum in specific cases — typically when the company needs to bring in experienced workers to fill specialist roles.
The problem, from the union’s point of view, has been that this has resulted in Boeing paying new-to-the-company workers significantly higher wages than it has paid long-time company employees who have earned promotions into the same jobs over time.
“In some cases, it was $8 or $9 an hour,” Holden said. That kind of pay gap was demoralizing to workers who’d put in years working their way up through the ranks at Boeing, he said.
The union last year demanded the right to negotiate an equitable solution to this pay disparity issue, under a legal concept known as “effects bargaining,” which gives unions the right to negotiate new contract terms whenever a company makes significant changes to working conditions or policies. Boeing agreed, talks started in October, and while they were at the table the two sides also negotiated over some other pay practices — chief among them being new-hire pay.
On the original issue – the gap between new hires and company veterans in specialized jobs – Boeing agreed to go back to 2016 (and in some cases, even farther) to review employment histories to determine whether workers who were at the company then have compiled enough experience in their roles to qualify them for the higher rates of pay offered to new hires.
“That was a big deal for us,” Holden said.
Raising pay helps Boeing compete for labor
Meanwhile, the gains the union made on new-hire pay should help Boeing better-compete for talent.
Boeing has been hiring new workers steadily over the past year. The reasons: increased retirements among aging baby boomers, coupled with a need for workers to maintain record production rates.
“These are boom times,” Holden said. “We’re lucky.”
And it’s happening against a backdrop of near full employment in Western Washington. King County (home to Boeing’s Renton and Auburn plants and its Boeing Field flight line) reported a 3.3% jobless rate in December; Snohomish County (the Everett plant) was at 3.6%.
Under the old pay scale, Boeing could only offer new-hire Grade 4 mechanics $15 an hour — which is pretty much the going rate for fast-food and retail jobs in the Seattle area. (McDonald’s, in fact, is currently advertising starting pay of $18 an hour at its Puget Sound locations.)
Under the new agreement with the union, Boeing will increase pay for newly hired Grade 4 mechanics — the bulk of final assembly mechanics fall into this category — to $19 an hour, with pay increases retroactive to Jan. 1.
New pay levels
All IAM-represented workers will make at least $15 an hour, under the deal. That puts entry-level pay at Boeing comfortably above Washington state’s current minimum wage of $12 an hour. (Seattle’s current minimum wage for large employers is $15. But only a handful of Boeing buildings – off the northwest corner of the Boeing Field flight line – are actually within Seattle’s city limits, so only several dozen IAM-represented workers are subject to the wage ordinance.)
Prior to this agreement, average pay for all IAM-represented workers was $35.06 an hour, a union spokeswoman said – or nearly $73,000 a year before overtime.
Boeing’s statement emphasized the need to keep up with market costs for skilled labor.
“We want to ensure we are compensating employees for their valuable work and enhancing our ability to attract, retain and engage employees,” the company’s statement said.
Seems like a nice contract and maybe reality setting in?
That is a costly area to live in.
I wonder if high schools and other institutions are doing a strong enough job of encouraging people to pursue the trades as a means of employment. Statistically, no time in History have men in their core working years (25 – 55) been unemployed or under-employed in such high numbers. Good for the workers at Boeing that are able to take advantage of these conditions! BTW, as a contract work in aerospace for many years, I tried to keep my hourly wage under wraps. People did not seem to understand, the higher wage was for benefits, health care and the under certainty of lay-off…
Sounds like sham contracting, where you do all the things of ordinary workers do but just have a fixed term employment contract. A contractor is far more independent about work hours, how to do a job and might work at different companies from day to day.
You should be getting the same benefits as employees, just you know in advance when the job ends, so get a higher pay for that reason alone.
Do employees who work part time get more per hour because they arent on the same deal as full time ? I didnt think so.
There should be just 3 types, fixed term employees, short/variable hours employees and standard hour employees. An contractors should really be proper contractors -who could be working multiple employers – say 1 week this job and next 2 weeks another job, or maybe work at home and variable hours for different companies.
you clearly don’t understand how it works.
Companies in the US like to keep a certain percentage of their workforce (often in engineering) as contractors vs employees, because you can (generally) terminate a contractor at any moment for any reason, you don’t provide any benefits and don’t pay (directly) payroll taxes. they are accounted differently from employees which has tax benefits, and the stock market hates the very existence of employees.
This also benefits “employees” because in the event of a business downturn, this fungible workforce of contractors are the first to go, shielding employees from some of the volatility.
in exchange for being more disposable than regular employees and not receiving benefits (or even having their payroll taxes paid directly by the company), contractors get paid more, but from this greater pay, they have to buy their own health insurance, manage their own retirement accounts, pay both halves of social security, medicare etc.
it is a trade off that (ideally) provides flexibility for both the company and the contractor, while actually benefiting the regular employees by reducing their vulnerability to layoffs.
in reality it isn’t quite so black and white, every company is different, yadda yadda, but there is no reason to suggest it shouldn’t be allowed.
yay capitalism.
Addendum: Historically, aerospace has used a great deal of contractors, or as they called them a generation ago – “job-shoppers.” This was because of the build-up of employees needed for such endeavors as the “Space Program,” certain defense projects, big commercial airplane programs, etc.,… Most worked through the job-shops (temp services) but some worked as independent contractors or on 1099’s. One time in Denver I met an author who wrote one of a couple books written about working as a contract employee. From my experience many people take a contract position with hopes of becoming a direct employee with the company. This does happen a great deal of the time. I was offered direct employment myself a number of times, but preferred to remain on contract. Some workers did not know exactly how the temp service negotiated their compensation. Consequently, their pay and circumstances were not as beneficial as they could have been. I know at one time Manpower was one of the largest employers in the country. The more the customer needs or wants your skill or experience the better a worker could do. Ultimately, white collar personnel generally are compensated well as opposed to manufacturing assemblers.
Bilbo:
In my case we got paid less, we are permanent full time and we as a group are key to the operation, with Maint, it comes apart at the seams.
So no, outsourced do not get better wages, they are cannon fodder for the system.
We in turn see the other groups get better wages, benefits, bonuses and medical.
Yes I boxed myself in, I have paid for it. I also got injured at work on a item I had put an alert out on (I did not think it would bite me which it did).
So you can add insult to the injury that I was the one that paid.
Yep, its a wonderful life. You have the well know story of UPS that hired more people and then kept their our below full time.
Sucks, fact of life, but its not pretty trade text book, trade off of of of this or that, the system is maximized to the benefit of the Corp not the employees of whatever type, the country.
Its a reason the a good government has laws that are enforced that for all purposes you are en employee then they have to hire you as such.
I once read an eeonc0mosit who described the slave trade as an economic conveyor system.
That is beyond disgusting.
How about factory service jobs at grade A level ? Wondering if this deal will be a pay raise in my job.I have been in factory service grade A for over 19 years.
Yes, it is a blue state.
This was a minor modification, but one more reminder of how unfriendly doing business in the Pacific Northwest has become for employers.
Heading into 2024 I am curious what IAM751 thinks they will have as far as leverage to bring some future Boeing production program to replace the 737/767/747/77x lines.
Boeing 737 8 crashed 6 mins after departure in Africa