Employees at both Ford and General Motors plants around the country will receive a larger profit sharing check this year than in years prior. Profit sharing checks are given out each year as part of a contractual agreement between the United Auto Workers union and the automakers.
GM factory employees around the country who have met a minimum requirement for hours worked will receive pretax profit sharing checks of up to $7,500, 11 percent more than last year’s sum. Ford workers will receive pretax checks of up to $8,800, a 6 percent increase year over year.
The U.S. automakers have negotiated and put the profit sharing system in place with contracted workers to combat wage hikes in contracts, which would inflate fixed labor costs year to year. The system gives employees a direct stake in the company’s performance, so when their employer makes more money, so do they.
“I think that’s going to be the trend [for workers] in the future,” Arthur Wheaton, an auto industry expert at Cornell University told Buffalo News. “I think they’re going to have more at-risk pay, so that in good times they get more money and in bad times they’re not an unnecessary burden on the company.”
GM announced that 48,500 of its hourly workers were eligible for profit-sharing checks this year. The profit-sharing check amounts are based on the automaker’s operating profit in North America, which this year for GM was a record $7.5 billion. White-collar workers at GM will also receive a bonus, though the automaker has not disclosed how much those checks will be worth.