OK, OK: Profit-sharing didn’t become part of the UAW contracts until the early ’80s. It caused a split with the Canadian division, which broke off from the UAW to form the CAW.
And for about three decades, payouts were rarely significant, at least at General Motors. Only once did they crack four digits, for 1999, when the General paid out $1,775 on average. Ford was at $8,000 that year and then-DaimlerChrysler edged it out at $8,100.
Chrysler Corp.’s $8,000 average payout for 1994’s results, when adjusted for inflation, was worth $14,588 — nearly as much as the $14,670 that Stellantis is paying out now.
When GM paid out $50 to union members after earning near-record profits in 1989, workers in Flint burned their checks in protest, recalled Kristin Dziczek, policy adviser at the Federal Reserve Bank of Chicago’s Detroit branch.
A new, simpler formula adopted in the 2011 contract — after the taxpayer-funded restructurings of Chrysler and GM — has made the process less opaque. GM and Ford pay $1,000 for every billion earned in North America. Workers at the former Chrysler get a set amount — now $900 — for each percentage point of profit margin in North America.
Not that a simpler formula makes for more sharing.
“What has led to higher profit-sharing is higher profits, period,” Dziczek said in an interview last week on the “Daily Drive” podcast.
Indeed, since the Great Recession and bankruptcies, automakers have thrived: first with a long-growing economy, then with high per-vehicle profits during the pandemic. This was hardly a given four decades ago.
Many then — and some now — worry about workers’ livelihoods being tossed about by trade disputes and disasters and interest rate hikes and all of the unknowns the future holds.
Workers who had earned the second-tier wage, making less than $40,000 a year, could see about 20 percent of their income hanging in the balance. That’s a scenario many unionists would prefer to avoid.
Given how many business school graduates see the role of management as only to maximize profits for shareholders, it can make sense for unions to take the opposite side and see their role as taking as much of the revenue for workers as possible to leave less for management and ownership.
Indeed, as in a court of law or a debate, having two distinct sides can be a system to work toward justice. Everything is an argument about where and how to draw lines.
But in a globally competitive industry, it can also make a lot of sense to work toward common goals. Yes, profitability and financial sustainability, but also worker health — avoiding COVID-19 as well as repetitive-stress injuries — and product quality for customer satisfaction and loyalty.
Using profit-sharing to align workers’ financial interests with those of management may not be a perfect system, but it can be a very good one — especially in good times.
