Will GM and Chrysler's White Collar Bonuses Draw UAW Ire?

Edward Niedermeyer
by Edward Niedermeyer
will gm and chrysler s white collar bonuses draw uaw ire

Bloomberg reports

GM plans to pay bonuses to most managers equal to 15 percent to 20 percent of their annual salary and as high as 50 percent to less than 1 percent of its 26,000 U.S. salaried employees, said one of the people, who asked not to be named revealing internal plans. Bonuses for Chrysler’s 10,755 salaried workers will average about $10,000, with a small group getting as much as half of their salary, one of the people said.

And with GM and Chrysler heading into contract negotiations with the UAW, this is not going to be winning the manufacturers many friends among the union.

“The union is going to be very angry about this,” Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts, said in an interview yesterday. “If these kinds of bonuses are paid to salaried workers, then the union’s demands will increase, knowing management can’t claim an inability to pay.”

But wait, isn’t GM giving hourly workers the biggest bonuses in company history? What’s going on here?

According to the Bloomberg report

GM, which earned $4.77 billion in the first three quarters of last year, plans to pay its 53,000 unionized hourly U.S. staff profit-sharing checks of more than $3,000 per worker, two people familiar with the plan have said. That is about 5 percent of an hourly worker’s annual pay, said Sean McAlinden, chief economist for the Center for Automotive Research.

Chrysler, which lost $652 million in 2010, said Jan. 31 that it would pay each of its union workers a bonus averaging $750. That is about 1.3 percent of an hourly UAW worker’s annual pay. Chrysler Chief Executive Officer Sergio Marchionne said that all eligible employees would receive a performance bonus for 2010, when the automaker worked on introducing 16 new or refreshed models.

Ford, which posted 2010 net income of $6.56 billion, said it will pay an average of $5,000 to each of its 40,600 hourly workers, or about 8.3 percent of their base pay.

“If bonuses are a lot more on average for all of salaried workers, the UAW workers will be cheesed off and want a bigger signing bonus this fall,” McAlinden said in an interview yesterday. “It’s going to be tense down at the plant.”

So, the issue isn’t that workers aren’t being treated as well as they have been in the past… the problem is that their bonuses are smaller as a percentage of their salary. Meanwhile, the union isn’t the only voice being raised in opposition to large salaried bonuses for GM and Chrysler’s managers. Chaison adds

“Politically, it’s a bad thing to do. These companies are still not on solid ground yet, and it makes the auto companies look like banks” that distributed large bonuses.

If the anti-bailout crowd and the UAW agree to hate on something, you know it’s a feather-ruffler. But what’s a bailed-out automaker to do?

Join the conversation
2 of 21 comments
  • George B George B on Feb 12, 2011

    How about giving bonuses in the form of stock options? The value of the options goes up with increasing stock value and the vesting schedule provides a "golden handcuffs" effect to retain employees.

  • Zas Zas on Feb 12, 2011

    It's good that the lowly salaried employee, who had to sacrifice pay increases, bonuses, and everything else so that the union workers would be able to keep their job, are getting bonuses. Why does it surprise people that those workers are getting bonuses after sacrificing so much for the "better" of the company? Do they not deserve those bonuses simply based on the fact they are salaried and aren't compensated for any over time when asked to work more than 40 hours? That they gave up their bonuses and incentives over the past 6 years so management could stay in place? I'd like to see the day when a union worker agrees to work overtime without pay like salaried workers do all the time...(even the LOWLY salaried worker gets asked to work overtime without pay).

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