Ending GM’s Two-Tiered Labor System is UAW Members’ Top Demand — And Part of a Bigger Fight Against Worker Classification

Originally published in The Intercept on September 26, 2019.
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Since last week, nearly 50,000 GM workers have been on strike, in part against a two-tiered system enforced by the auto giant that leaves “temporary” workers doing the same jobs as permanent staff for substantially less pay and fewer benefits.

The striking workers, represented by the United Automobile Workers union, or UAW, are demanding a defined path to “permanent seniority” for GM’s temporary workers — who make up about 7 percent of GM’s U.S. workforce. GM has also entrenched inequality in its ranks by contracting out some jobs, like custodial work, that were traditionally staff roles.

“I work right across from a temporary employee who’s been there for two and a half years,” Chaz Akers, a Michigan-based autoworker who has worked at GM for 3 1/2 years told Reuters. “I install the passenger side headlight. He installs the driver side headlight. I make more money than he does. I have better health insurance than he does. It ain’t fair. It ain’t right. If you’re going to pay people to do a job, pay them all the same.”

The workers’ demands are part of a broader push against worker misclassification, a tactic used by employers to lessen their labor costs. The fight has been playing out most aggressively in California, where Democratic Gov. Gavin Newsom signed a sweeping bill last week to transform the lives of workers in his state. The law — known as AB5 — sets strict limits on who can be classified as an independent contractor, rather than an employee, and is the most serious legislative threat to the gig economy in years. The law also provides new momentum for advocates considering similar reforms in other states.

Coming to an agreement on temporary workers has become the most difficult issue in the GM-UAW negotiations, according to the Detroit Free Press. Both sides are reportedly holding strong to their positions. The Free Press also reported that resolving questions around temp workers was union members’ top request when UAW leadership surveyed them last year.

Protests of temporary workers by the UAW is “not a brand-new development” said Jake Rosenfeld, a sociologist at Washington University in St. Louis and author of “What Unions No Longer Do.” “But it does seem really foregrounded now in the union’s complaints, and that seems new. These classification disputes, from my perspective, seem to be growing and tracks on to the same battles over classification in California with Uber and Lyft.”

GM, like Uber and Lyft, is pushing back against the workers’ demands by claiming that such “flexible” workers are necessary for its business model. Right now, GM is trying to convince permanent, full-time workers to accept raises and more job security in exchange for freedoms around temps.

For example, GM has reportedly proposed a boost to the company’s profit-sharing formula, financial gains that would only go to permanent, full-time employees. GM workers typically earn about $1,000 for every billion in GM’s North American pretax profits. In 2018, eligible employees earned payments up to $10,750.

Temporary workers, who often do the same work as traditional employees, are paid less, entitled to fewer benefits, and are easier to get rid of. “That’s a trend that we’re seeing all over the economy as companies try to shed conventional, full-time employees in favor of independent contractors, subcontracted workers, or franchised employees,” said Alexander Hertel-Fernandez, a political scientist at Columbia’s School of International and Public Affairs. “The difference with the auto manufacturers is that their temporary workers are covered by the UAW and its contracts, unlike in most other sectors of the economy.”

In 2007, under pressure from the financial crisis, UAW leaders agreed to a two-tiered contract, in which new GM hires would be paid at lower rates than workers hired before. To get out of this arrangement, widely deemed unfair, the union negotiated a new contract in 2015, in which new hires would still have lower starting salaries, at $15 an hour, but could “grow into” the full UAW hourly wage of roughly $30 an hour after eight years. Union leaders — citing GM’s clear improved financial position with billions of dollars in profit — now want to shorten that process, under the basic principle of equal pay for equal work. GM and the UAW did not return requests for comment.

GM’s current arrangement with temporary workers is one of several ways that employers have managed to fissure their workplaces over the last few decades, said Nelson Lichtenstein, a labor historian at the University of California Santa Barbara. Another example is by spinning off portions of their companies, like in the 1990s, when GM spun off its parts factory, Delphi. “What that meant was all of a sudden, Delphi was competing with lots of other non-union companies and went bankrupt [in 2005] and so then, of course, in the bankruptcy proceedings, you manage to transition to lower wages,” Lichtenstein said. Another way is by contracting out custodial staff who used to be company employees.

“In the auto industry, janitors used to be employed by the auto companies and got the same wages as autoworkers,” he said. “In fact, autoworkers would often become janitors as they got older because it was easier labor and still good pay,” said Lichtenstein. “Eventually, all the companies said, ‘OK, janitorial work is not part of our core business — we’ll just outsource it.’”

In general, there has been an upward trend in companies like GM moving toward temporary workers. In 1990, according to the Bureau of Labor Statistics, 42 percent of all temp workers in the U.S. were in clerical positions, compared with 28 percent of temp workers in the manufacturing and industrial sectors. But by 2000, just a decade later, 47 percent of all U.S. temp workers would be working in the manufacturing and industrial sectors.

The UAW, for its part, has a record dating back to the early 1980s of negotiating concessions around labor costs if economic conditions sour, with the understanding that if the company’s fortunes improve, those concessions would be phased back out, Lichtenstein said.

GM, Ford, and Chrysler all say that they may need to increase their use of temporary workers in the future, pointing to the fact that they’re competing with non-union foreign manufacturers that have more temporary workers and lower labor costs. In June, the Los Angeles Times reported that workers at rival auto plants run by Toyota, Nissan, and Honda make $50 an hour in wages and benefits, while GM workers cost $63 an hour. Temporary workers make up about 20 percent of the Japanese automakers’ plants.

A former GM temp worker, now in a skilled trades apprentice program, told Michigan’s public radio station last week that being a temp was one of the worst times of her life. “They have a way of pitting you against a permanent employee where you feel like, if you go the extra mile, if you work a little bit more than your union brother or sister, that will give you an opportunity to eventually get hired in full time and that’s not the case,” she told the radio station.

Lichtenstein believes it’s clear that these two-tiered systems are weakening labor organizations. “And it’s not just a humanism or good-feeling thing,” he said. “It’s also a recognition that this is going to divide and then destroy the union.”

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The Biggest Strike in America Is About How Much Bosses Can Gut Your Healthcare

Originally published in VICE on September 18, 2019.
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When about 48,000 workers went on strike Monday against General Motors, they launched the largest American labor stoppage against any business since the financial crisis. The striking union—the United Auto Workers—is confronting vicious headwinds in the form of always-cheaper foreign labor, reduced car sales, and pressure to invest in electric and self-driving vehicles at a time of impending climate catastrophe.

On top of all that, workers formed picket lines because GM is trying to effectively cut their hard-fought healthcare benefits. According to the Center for Automotive Research, a Michigan-based think tank that receives some funding from auto companies, the average UAW worker pays about 3 percent of their health care tab, compared to 28 percent paid by the average American worker. Crain’s Detroit Business reported on Monday that GM’s initial contract offer asked workers to start paying 15 percent of their healthcare costs.

While such a move by an employer may seem fairly ordinary by contemporary standards, it wasn’t that long ago that Americans would have viewed this request as a huge scandal. In fact, experts said, that a once-mighty labor union is fighting tooth and nail to save generous health plans speaks to the economic precarity most Americans have grown to numbly accept.

“Having to pay large amounts of your health-care, that is still a fairly recent phenomenon,” said Erik Loomis, a labor historian at the University of Rhode Island and author of A History of America in Ten Strikes.

Loomis pointed to a 1983 labor stoppage where thousands of copper miners and mill workers went on strike for almost three years against the Arizona-based Phelps Dodge Corporation. “One of the key issues of that strike was that workers were so outraged by the request that they pay part of their health care,” he explained. “It was unprecedented, and yet today it’s become so normalized. Everyone complains about it, but employers just slowly force more and more of their costs onto their workers.”

Rather than ask why UAW workers pay so little in healthcare costs relative to others, Loomis said, the conversation should be framed around “workers defending what they have, and not letting companies cede more and more of their responsibility.”

Employer-based health insurance was actually something of a historical accident in the United States, led partly by labor unions that were barred from negotiating over wages during World War II. That led unions to begin focusing on other types of permissible fringe benefits, including employer-sponsored insurance. Many non-union companies followed suit, facing pressure to compete with unionized firms. Subsequent changes to the federal tax code made offering health insurance even more attractive for employers, so much so that 70 percent of the population was covered by private health insurance in the 1960s, up from nine percent in 1940.

Today, of course, when “job hopping” is common and the so-called gig economy means many workers are not full-time employees, it’s become painfully evident that tying health insurance to work is less than ideal.

Shaun Richman, who directs a labor studies center at SUNY Empire State College, said there is a strong case for “getting the boss out of the doctor’s office” altogether. Employer-based health insurance, he argued, “is plainly outmoded and is absolutely killing unions.” His thinking is partly strategic: Every time a union starts a round of contract negotiations, they almost invariably begin by fighting back against proposed healthcare cuts. “There’s simply no round of bargaining that employers won’t put healthcare on the table, and it’s been devastating,” Richman said.

Indeed, the fight over healthcare benefits is central to understanding the last few decades of labor disputes in the United States.

“The major issue we saw during labor walkouts in the 1990s and 2000s had to do with the restructuring of healthcare plans,” said Jake Rosenfeld, a sociologist at Washington University in St. Louis and author of What Unions No Longer Do. “Wages were really the secondary concern.”

Whether the auto workers can make their fight for affordable healthcare resonate with the broader public may be key to the UAW sustaining support for the strike in general. Alexander Hertel-Fernandez, a political scientist at Columbia’s School of International and Public Affairs, said auto workers might struggle to engender the same level of enthusiasm that striking teachers have across the country beginning last year. In fact, they might not even reach the same level of support as workers at other recent service-sector strikes like those at Stop & Shop grocery stores and Marriott hotels.

“My research and the work of others suggests that it may be easier for workers to build solidarity with their broader communities when they have daily interactions and are in the same social networks as the public,” Hertel-Fernandez said.

Still, as Rosenfeld pointed out, one thing working in the UAW’s favor is the clear profit margins enjoyed recently by U.S. auto companies. “GM is highly profitable now, and was bleeding money during the last 2007 walkout,” he said.

While the last UAW strike in 2007 ended after just two days, at least one union leader suggested Monday this labor stoppage could go on for much longer. On Tuesday, the White House reportedly began trying to broker a deal to end the strike, but GM also announced that it would be cutting off its share of strikers’ health benefits, shifting the burden to unions and telling workers they could apply for COBRA. On top of this financial blow, the average full-time UAW will be paid just $250-per-week while the strike stretches on—assuming the union’s strike fund holds up.

“They’re in a war for their lives, and the company is basically putting a gun to the unions’ head,” said Richman. “They’re saying we’ll reopen one of these factories if you agree to all these other concessions. I don’t think the UAW has much choice but to stand and fight, but this is not public education—schools can’t be shipped overseas. These jobs very much can be shipped overseas and have been. That threat is very real.”