Rick Romell

Milwaukee Journal Sentinel

Kohler Co. production workers on Sunday overwhelmingly approved a new labor contract that will largely erase the much-disliked pay differences between longstanding employees and newer hires.

Negotiations on the five-year pact with the United Auto Workers contrasted sharply with those of 2015, when the union struck the Sheboygan County manufacturer for 32 days. The two-tier pay system, enacted in 2010 and providing significantly lower wages for new employees, was a major issue leading to the breakdown of talks and the walkout three years ago.

This time, UAW Local 833 President Tim Tayloe praised what he described as the company’s collaborative approach.

“I can honestly say I’m proud to work at Kohler and hold my head up high with what this contract did,” Tayloe said.

In a statement, company president and CEO David Kohler said, "We are proud to be an employer of choice in Sheboygan County, and we recognize the valued contributions of our associates. For 145 years, Kohler Co. has provided meaningful work and invested in the careers of all our associates.This new agreement will help sustain the long-term competitiveness of our Sheboygan-area operations, as well as ensure future opportunities for rewarding careers with skills training and advancement for our associates.”

Negotiated a year before the most recent contract was due to expire, the new pact was ratified by an 87% margin among well over 1,000 Local 833 members attending a meeting at Sheboygan Falls High School.

The contract provides immediate raises of $1.25 to $3.25 an hour to the lower-tier employees, Tayloe said. Over the life of the agreement, their pay will rise by $4.15 to $7.70 an hour, taking them “pretty much up to” the pay of Kohler’s longer-tenured workers, he said.

The agreement comes amid a strong economy and a tight labor market that has pressured employers to boost pay. Sheboygan County’s 2.2% unemployment rate is among the state’s lowest, and Tayloe said Kohler Co. has about 150 open production jobs.

Local 833 represents 2,044 employees at the firm’s kitchen- and bathware plant in the Village of Kohler and at a generator factory north of Sheboygan. About 800 of the workers, Tayloe said, are in the lower pay tier – people hired since the 2010 contract.

Until three years ago, those employees averaged $12.50 to $13 an hour, according to the union. The company said at the time that the average was $14.69 an hour, but detailed data from the firm itself showed the average could be no more than about $13.40.

In any event, the 2015 contract boosted their pay, and the latest agreement will raise it further.

As an example, Tayloe pointed to material handlers, one of the largest – and lowest-paid – labor groups at Kohler. Their current pay of $16.95 an hour will increase to $18.60 on Monday and to more than $20 by 2023, he said.

For workers in the upper pay tier, the contract provides a $1,000 bonus immediately and, beginning in 2019, four annual raises of 50 cents or 55 cents an hour.

Current wages for the upper-tier employees vary widely, but many make $22 to $24 an hour and some as much as $34, Tayloe said.

He said the contract also provides lower-tier workers with significant increases in company contributions to their 401(k) retirement accounts.

“It’s impressive,” Tayloe said of Kohler’s action on the 401(k) plans. “I like what they did.”

Lower-tier employees also will qualify for two weeks vacation after a year, double the previous benefit.

Wages for workers in the two pay tiers doing comparable jobs will be within 5% of each other by the end of the contract, and most workers will be that close after a couple of years, Tayloe said.

Unions accept two-tier wage contracts only reluctantly, viewing them as divisive and as violating the principle of equal pay for equal work.

The Great Recession sparked a wave of such contracts. But as the economy has improved in recent years, labor negotiators in some cases have won concessions on the hated two-tier systems.

U.S. automakers have agreed to contracts that gradually eliminate two-tier provisions. So has Fond du Lac’s Mercury Marine in a contract signed early this year with the International Association of Machinists and Aerospace Workers, according to the Wisconsin State AFL-CIO.

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