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Wage Inequality In The Automobile Industry

Updated on March 11, 2010

Wage Inequality in the United States

There are two different kinds of wage inequality that are generally thought of when someone talks about wage inequality in the automobile industry.  The first is between workers and management.  In the United States, the gap in pay bewteen the average worker and the CEO of a car company is in the order of hundreds at least, and that doesn't even look at potential bonus and incentive packages.  Clearly, this angers some people, but others say that it's wrong to envy success, and that those who worked hard enough to become CEO's in their life should not be penalized for it.

Wage Inequality Globally for the Automobile Industry

There is also a commonly cited wage inequality when one takes a look at the international system as a whole.  US workers were paid far more than Japanese or German auto manufacturers because of their powerful auto Unions and their outdated contracts.

When the recent financial crisis hit and the automobile industry was damaged, the Unions and management in many American auto companies decided to renegotiate their contracts from one that simply gives X benefits to one that ties their benefits to stock, as in the success of the company as a whole.  In effect, the industry is being partly owned by the worker.  Whether it works, however, has yet to be seen.

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