General Motors and the Plight

General Motors and the Plight of the New Contract Worker

It is well-known that the American auto industry has been struggling. It is also well-known that the American Auto Workers Union (UAW) is one of the last unions to preserve high wages, strong retirement and good benefits for their members even though workers in other industries have seen falling wages and a loss of benefits. However, recently the UAW, in an effort to help the auto industry from complete collapse and to retain employment for its members has made many concessions that are now affecting jobs.

The union agreed in its 2007 contract to the second-tier wage, which starts at about $14 an hour, and a larger worker contribution to health insurance

. Nonetheless, the industry plummeted and offered buyouts of then current workers to cut costs, thereby creating a large loss of membership to UAW.

Now that the industry is beginning to repair to some degree, and General Motors is releasing its new line of more fuel-efficient vehicles, it released a statement that it will soon be hiring again. However, it will be hiring part time hourly workers for second and third shifts at some of its plants. These new hires will be at the reduced $14 rate with minimal benefits compared to long-term staff. However, one must recognize the benefit of this new hiring policy as compared to the independent contractor relationship that GM has been building over the past couple of years. Although these new workers will be lower wage earners than their full-time predecessors, they are still employees in the legal sense of the word. Therefore, they are guaranteed the benefits that UAW has been able to retain for its members including health care, retirement and a measure of stability in the workforce.

Over the past year and a half, almost 9,000 Teamsters have lost their jobs to unqualified, non-union haulers who transport vehicles for GM under independent contractor agreements

. Such agreements are devoid of stability for the hiree, lack all benefits and limit the company's liability for on-the-job injuries. According to Mitch Ackerman, executive vice president of the Service Employees International Union, "employers like the flexibility of having not to pay benefits -- that's harmful to workers, the community and the economy," he said. "Workers like the flexibility, but not if they have to trade off guaranteed hours, health insurance or a secure retirement.

" the reality of the independent contractor relationship for the new hiree excludes paid vacations or sick days, health insurance or tuition assistance. Additionally, because of increased competition for jobs, most new contractors are working for about twenty percent lower wages than just a few years ago.

A large concern for new hires is that companies often misclassify contract workers as independent contractors in an effort to avoid paying benefits. The more control a company has over the hiree, the more likely the hiree is an employee of the company and not an independent contractor. Therefore employees who were fired and are being brought back to perform the same job in the same conditions for less pay on a contract basis is still an employee regardless of classification. However, according to Ackerman, there have been wide spread incidences of wage theft, labor law violations and health violations with part-time, contingent and independent contracting work