The Globe and Mail is reporting that two-tier wage scales are becoming more common as corporations attempt to deal with the current economic context and try to stay competitive on a global level. Two-tier wage scales, whereby newly hired employees are paid at a lower rate than their colleagues performing the exact same work, are said to not only be a form of discrimination, but also bad for morale and ultimately production. From a management perspective, it is a way to cut down on labour costs and to stay afloat. Interestingly, in the cases of Ford and GM cited, cited in the article, the two-tier wage scale is not meant to last forever, as new hires will be able to reach the top salary scale within 10 years.

Two-tier wage scales may not necessarily increase in all places. In the province of Quebec, for example, the Act respecting labour standards prohibits disparity in treatment when it comes to one of the enumerated labour standards between employees performing the same tasks in the same establishment when this disparity is based solely on date of hire.

Are two-tier wage scales in some ways discriminatory or do they represent a good solution in tougher times?


  1. Will two-tier wage scales run afoul of legislation requiring that women be paid the same as men for the same work (and in some jurisdictions for work of equal value = ‘pay equity’)? The fact that the people newly hired at the lower rate will be paid the same whether they are men or women will not change the fact that newly-hired women will be paid less than previously-hired men doing the same work.

  2. David Collier-Brown

    Further to that…

    Were I an evil employer, I’d carefully arrange for the jobs to fall into a “pink collar” ghetto, and show the wages for new male employees were comparable to the low wages formerly paid to females only.

    One example might be the “communications” (voice telephony) branch of a “communications and computer services” group. A former employer had a pink collar ghetto via that dodge that was hard to remove, that would be a fine place to put male computer nerds, in order to justify the lower wages for the new hires.


  3. Tier wages are old hat and old school. New hires have always found themselves at the bottom of the wage scale and move up by “step by step” until they hit the ceiling. Hiring lower than the entry level scale rate raises its head every now and then and disappears fairly quickly. Those with long memories will recall the 1980s when this took off under and with the encouragement of US President Ronald Reagan. For the last 100 years research in organizational structures and processes have loudly proclaimed the highly interdependent nature of civil and political society.

    So little can create as much dissent, and lack of diligence as two tier wages. For the exempted, the question is who is next and will the firm survive; for the “low tiered” they want to show they belong. The behaviours which are exhibited as overzealousness and lack of diligence are fatal to the firm’s structure and processes. The unwritten work rules which “grease” interactions are deliberately not followed either because they are not known (new hires) or lapsed by the “higher” tier.

    Much unhappiness.