LABOR FLAKE OUT:

In a tight US labor market, unionized workers have been demanding more. But labor is perhaps starting to lose the upper hand.

Following the failure to reach a contract with its union, Kellogg's said it is permanently replacing striking workers. Some 1,400 hourly employees, who are part of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, walked off the job across four cereal plants in Michigan, Nebraska, Pennsylvania, and Tennessee starting Oct. 5.

The rejected contract offer would have included a 3% wage hike for legacy employees and increases for newer hires. The company proposed eliminating the cap on the share of lower-tier workers, but some union employees were worried that would put downward pressure on veteran workers' wages if lower-tier workers became a majority.

The food manufacturer has been on a hiring spree to replace the striking workers. The hourly rates for replacement workers posted on the Kellogg's job board are $21.72 an hour for "general labor" and $34 to $37 for "skilled labor", depending on the role. That's comparable to the pay for the unionized legacy employees, who make on average $35.26 an hour, according to Kris Bahner, a company spokesperson.

The fact that the replacement wages are more or less the same as the previous pay suggests the labor market may not be as tight as union activists believe.

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