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Hiring contractor doesn't entirely speak unethical to me

Of course not, but that's just it, when engaged in as a practise to deprive long term workers of benefits, it is unethical, at least to me.

Certain jobs aren’t as valued as others. Hence less pay and benefits. Is there something unethical about that?

Probably yes, but aside from that, this tactic is moving upmarket and starting to affect the 'more valuable' jobs too.