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GM bankruptcy hints at risks to non-unionized employees

June 30th, 2009  |  Matt Pavich

>The judge presiding over the General Motors bankruptcy last week denied an application by the General Motors Retirees Association (GMRA) to form a benefits committee that would advocate for the beleaguered car manufacturer’s salaried retirees in the bankruptcy proceedings. The company, ruled the judge, had the right, pre-bankruptcy, to modify or terminate the retirees’ health and life insurance benefits and the retirees cannot now challenge that right.

“While I do understand the importance of this to the retirees,” said U.S. Judge Robert Gerber, “I can’t guarantee the retirees rights that they don’t have outside of bankruptcy.”

But not all the GM retirees have been left to fend for themselves. The hourly retirees who comprise the majority of GM’s retirees have been, and continue to be, represented by the United Auto Workers. Those employees will have a voice in the future of the auto company and their benefits; indeed, the UAW is now one of the largest shareholders in the “new” GM. The salaried retirees, who worked as engineers, clerks and project managers, stand to lose two-thirds of their benefits, including the total elimination of dental, vision and long-term disability coverage. These retirees are not guaranteed any input whatsoever and have been forced to turn to Congress for protection.

This ruling raises several issues. Is it just that one group of retirees will disproportionately sacrifice? What, if anything, can Congress do to protect these retirees? Would offering anything beyond basic protections to the retirees only feed the perception among big industry that the government will step in to correct their mistakes? And why would unions not use this as an example in their organizing drives?

Proponents of the Employee Free Choice Act have long argued that employers take extraordinary means to thwart organizing. They further argue that now, more than ever, employees need the strength of a union to protect them. Whatever the reasons for the non-unionized nature of the GMRA retirees, it is indisputable that they are receiving poorer treatment than their unionized counterparts.

Retirees were always going to have to make sacrifices in order for GM to eventually emerge as a profitable company. All retirees will, in fact, experience cuts to their benefits. But the non-unionized retirees will, by far, have the worst of it. To paraphrase George Orwell, all retirees will suffer equally, but some will suffer more equally than others.