Two-Tiered Wage Agreements

Two-tiered wage agreements, or b-scale wages, are a form of concession bargaining that first arose at American Airlines in 1983. The b-scale refers to a wage rate applied to workers solely on the basis of their having been hired after a specified date. The plan is, therefore, prospective in benefit rather than immediate. Once in place at American, the two-tier system rapidly proceeded through the ranks of most carriers, and was readily adopted. By 1986, with the exception of Braniff and Con­tinental, all major carriers had the system in place for at least one craft of employees, and 70 percent of all union contracts carried b-scales.

The agreement typically involves a gradual “payoff,” or a limited period during which the new employee will be paid under the reduced pay scale. The plan typically will be merged with the higher wage scale, usually within five years. The wage reduction historically has ranged from 20 percent to 45 percent.