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.
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?Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.