GM's New Hires Will Earn Fewer Benefits

A combination of an aging workforce and a new tentative union contract has given General Motors the opportunity to accelerate its buyout offers to longtime workers and create a second tier of workers with far fewer benefits. GM is expected to hire thousands of workers.

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Now, when you think about job opportunities, General Motors is probably not the employer that springs to mind. After all, the company got rid of more than 30,000 workers in recent years, and it's one of the few U.S. companies where workers still go on strike, as they did last week before they reached a contract with the United Auto Workers.

But GM is actually expected to hire thousands of new people in the coming years.

NPR's Frank Langfitt explains.

FRANK LANGFITT: Last week, GM pushed responsibility for retiree health care onto the union. That was the big story from Detroit. But there was another important item in the contract that got far less attention. The union agreed to let the company hire some support staff at half price. That seemingly small change is a big deal. It's the first step in GM's strategy of creating a younger, lower-wage workforce to compete with Asian rivals like Toyota.

Aaron Bragman works for Global Insight, a financial analysis firm.

Mr. AARON BRAGMAN (Global Insight): How it would work basically is that new hires would come in to the GM factories, manufacturing plants, as non-core roles, they are called, in maintenance, in janitorial services, in areas that are not directly assembling vehicles.

LANGFITT: They would also take jobs arranging parts and working in the paint mixing room, and they would earn 14 to 16 bucks an hour. That's about half the $28-an-hour union workers make right now.

GM isn't growing, so openings for those lower-wage jobs would have to come through retirement. Fortunately for GM, its workforce is older and expected to turn over soon.

Sean McAlinden with the Center for Automotive Research in Ann Arbor explains.

Mr. SEAN McALINDEN (Center for Automotive Research): In the next five years, up to 63 percent of these workers will be eligible for a full retirement. And under the conditions of the new agreement, it looks like a majority of these workers, if they leave, would have to be replaced.

LANGFITT: McAlinden thinks GM will offer people money, perhaps $35,000, to retire. Those working lighter jobs, like setting up parts trays, might want to stay. But McAlinden thinks the company will pressure them and push them back to the assembly line.

Mr. McALINDEN: What's left are going to be the hardest jobs on the line. If you want to make $28 an hour from General Motors, you're going to have to lift an air gun over your head 45 seconds out of every 60 seconds. And you know, frankly, the older workers, if they know the only way that they're going to earn 28 an hour is to hold that air gun over their head, they're going to retire, and the company knows it.

LANGFITT: The new lower wage should cover at least 7,000 positions, close to 10 percent of GM's union workforce. Although the jobs don't pay as much, Michigan has a high unemployment rate and McAlinden thinks people will jump at them.

Mr. McALINDEN: If you put a sign up at a GM assembly plant that they were hiring at that wage level, I think you would have 20,000 people outside of that plant within 48 hours.

LANGFITT: Greg Gardner thinks the lower wages could save GM up to half a billion dollars a year. But Gardner, an analyst with Harbour Consulting in Troy, Michigan, says cutting costs isn't enough. With so many concessions from the union, the company now has to build cars customers want to buy.

Mr. GREG Gardner (Harbour Consulting): They have key vehicles coming to market in the next two to three years that have to be better than anyone expected. The Chevrolet Volt, the electric plug-in hybrid; that car's got to be bulletproof.

LANGFITT: As for hiring new workers, it's not clear when that could begin. But Sean McAlinden thinks that GM could need 1,500 people next year.

Frank Langfitt, NPR News.

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