The Detroit Big Three are expected to hand out a record-setting $800 million in profit sharing checks to 130,000 hourly workers, providing an economic boost in states laden with UAW-represented workers. Last year, 125,000 workers shared in $780 million in profits, which was the previous record.
The economic impact in Michigan alone exceeds the combined impact of Super Bowl XL in 2006, Major League Baseball’s All-Star Game in 2005 and the National Hockey League’s recent Winter Classic: all events that metro Detroit has hosted in recent years, according to the Detroit News. Other states, such as Ohio and Texas, are also expected to see a significant uptick as well due to the significant number of UAW employees there.
While individual amounts given to each worker are expected to exceed last year’s totals, not all employees are pleased with the results because the automakers’ earnings are expected to take a big jump this year compared with last year.
For that reason, some workers are complaining that the amounts should be higher, senior executives are overpaid and that the profits should go to reinstate some benefits, such as pay raises, cost-of-living adjustments and dividends given up as part of concessions meant to help the Detroit makers survive the recent recession.
“Don’t worry about announcing ours,” wrote Jeff Jones on the UAW Ford Department’s Facebook page. “It’s pennies on the dollar compared to salary workers and CEOs. Announce theirs!!!! I guarantee its far far more then ours.”
Another expressed appreciation for the profit sharing, but had other concerns.
“I am thankful we get it, but my husband has not got a raise in 12 years,” Karen Doederlein Lowrey wrote on the page. “No raise was supposed to keep our co-pays & insurance down. It has all gone up! Everything keeps going up but his pay!”
It’s difficult to determine if the majority of employees feel this way, but there were several other comments expressing similar sentiments.
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The workers will get an average of more than $6,150, but the amount they’ll actually receive depends upon the profitability of each automaker. Ford is expected to post profits between $8.5 billion and $9 billion, which translates to checks of $8,500 to $9,000 for each UAW-represented employee. Last year, Ford paid each employee an average of $8,300.
GM employees are expected to average $6,750, which is what they received last year, while Chrysler workers checks will range from $2,750 and $3,250 depending upon where Chrysler’s net profit fall. Analysts are planning for profits between $3.3 billion and $3.8 billion.
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The formula for determining profit sharing changed with the 2011 contract. At GM and Ford, the formula is based on automaker profits in North America, not just from the U.S. Employees get $1 for every $1 million in North American pre-tax profit, on average. At Chrysler, workers get $1 for every $1 million in profits, based on 85% of Chrysler’s worldwide profit.
Checks may not exceed $12,000 per person and automakers are not required to pay profit sharing if profits do not exceed $1.25 billion, the News reporter. Bonuses for salaried, or white collar, employees are not included in these totals.
It is the third straight year all three automakers have paid workers at least $1,500 on average while GM and Ford have done it for four consecutive years. Before that the automakers paid very little in profit sharing as they dealt with difficult financial situations, including the expedited bankruptcies of GM and Chrysler.