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Orion, MI, United States (AHN) – An agreement between General Motors and auto unions to cut wages in half for hundreds of workers paves the way for the automaker to produce a low price subcompact car at a profit using union labor in the United States.

United Auto Workers officials have agreed to a deal announced Thursday that sees 60 percent of the workers at the Orion, MI, plant earning standard wages while the other 40 percent would work for half that amount.

Standard wage for auto workers is about $28 per hour, or $58,240 per year, while the sub-standard wage is $14 per hour, or $29,120 per year.

Although the second-tier wage was initially proposed for new employees, many laid-off GM workers who originally earned $28 an hour will be paid $14 when they are called back to work under the new agreement.

The Orion plant formerly produced a mid-size vehicle. The conversion will allow it to produce a more fuel-efficient auto for American consumers while competing with similar cars produced in Mexico, which has a lower cost of living than the United States, and, therefore, lower labor costs. GM previously had sub-compact cars manufactured outside the U.S. to compete with similar models manufactured by non-union labor.

Economic conditions in the U.S. were ripe for labor concessions on wages. The ongoing recession in the U.S. means that workers are willing to work for lower wages in order to have any income at all.

On Friday, the U.S. Bureau of Labor Statistics announced the economy had shed 95,000 jobs. In addition, on Sept. 24 the Pew Research Center released a report on the economy that revealed how many Americans had been severely affected by the recession. Some 55 percent of Americans either struggle to pay their basic monthly bills every month or are unable to do so because they either lost their job during the recession, have not found another one or they are working for less money than they formerly earned.

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