Don't talk about economic recovery to the workers at Bay Shipbuilding Corp., a $50-million commercial ship-yard in Sturgeon Bay, Wis. Because of the severe slump in commercial shipbuilding, the company's full-time work force dropped from a high of 2,000 employees in 1979 to only 200 in 1984. Last August, Bay Shipbuilding decided to pay newly hired employees lower wages than employees who have longer tenure with the company, even when the jobs are similar.

Two-tiered pay scales are nothing new, especially in the beleaguered shipbuilding industry. Bay Shipbuilding, however, has added an unusual twist: Employees earning lower-tier wages may move into the upper tier if their performance is satisfactory for at least 16 months. Base starting pay in the lower tier is $5 an hour; in the upper tier, it is $7.57.

"The system gives us temporary relief from high starting wages," says personnel and industrial relations director Jordan Woods. "It cuts labor costs, and enables us to bid more competitively on the few contracts that are still available. More importantly, the opportunity to mesh with the upper tier prevents new employees from feeling like permanent second-class citizens."