I Hope The New GM Contract Doesn’t Create A Bunch Of Clark Griswolds

The new labor contract between the UAW and General Motors seems to be a win for both sides, according to what I’ve seen out of the mainstream media.

One of the provisions that caught my eye was that UAW workers will be eligible for bonuses up to $12,500 over the life of the contract, all depending on profitability.    This is a win for the workers because who doesn’t like a bonus? And it’s a win for the company because it keeps these as non-fixed costs, which is good in the new post-automotive-bankruptcy cost structure, as high fixed costs were a huge reason for the previous automaker downfalls.

I hope, though, that this doesn’t create a bunch of Clark Griswolds.

See, one of my favorite movies is National Lampoon’s Christmas Vacation.  In terms of Christmas themed movies, it’s one of the top three (with the other two being A Christmas Story and It’s A Wonderful Life) ever made.

One of the plot points that drives the story is that Clark has put a down payment on a new swimming pool, which he is going to reveal as a  surprise to his family on Christmas morning.  Unfortunately, he didn’t pay for it with money he already had, instead counting on the bonus that he was used to receiving from his company.

Of course (and I don’t think I’m spoiling much here, since everybody’s seen this movie by now, right? Plus it’s over twenty years old!), there were to be no bonuses this year (unless you count the subscription to the ‘Jelly of the Month club’), so Clark is effectively screwed once he realizes that he’s committed to something for which he doesn’t have the funds.

I really hope that workers don’t fall into the same trap.  In the movie, Clark’s ne’er-do-well brother-in-law Eddie, is able to bumble his way into the company giving bonuses anyways, so it all works out in the end.  In real life, though, this wouldn’t happen.  If companies don’t make enough profits to trigger the bonuses, there won’t be any bonuses.

Period.

And if that happens, I hope that nobody finds themselves in distress because they had already built that bonus into their budget.

Bonuses should never be in the budget.  Otherwise, they’re not bonuses!

Do you ever receive a bonus?  If so, do you treat them as extra money or is any of it already spent?

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4 thoughts on “I Hope The New GM Contract Doesn’t Create A Bunch Of Clark Griswolds

  1. Oh my goodness do I LOVE that movie!!!! I wait for the end of thanksgiving dinner so that I can turn it on for the first time of the year (and for the first of several viewings between Thanksgiving and Christmas:)).

  2. This reminds me of a few years back hearing about many of Japan's companies eliminating or drastically reducing their bonuses, which most Japanese relied upon to help pay for things like their mortgage (which was arranged for payment around the time of the expected bonuses). Here's one article of that period that explains it a bit. They basically bought houses based on their total annual income, including bonuses, and their balloon payments were scheduled around the time of the bonuses. Reduced or no bonuses – no payment. 🙁 http://www.debito.org/?p=5480

  3. Great analogy! I liked that 'Vacation' franchise, there were a few good movies there.

    I agree with you. Hopefully, people realize that bonuses are just that and are NOT to be counted on when they're tied to something out of your direct control.

  4. I think the latest GM labor contract will make them less competitive for the future. They didn't address the pension or labor costs that drove them into bankruptcy in the first place.

    I owned about 400 shares of GM and shareholder's equity was wiped out, while the union received 30% of the company. They claim to have paid back 100% of the bailout money, which is malarkey.

    I expect GM to look for another bailout within the next decade.

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