Profit-Sharing Checks Replace Autoworkers Raises

fromMR

Ford Motor Company will soon hand out record profit-sharing checks to its hourly employees. At General Motors, profit-sharing checks are expected to be pretty fat, too. Profit sharing appears to have permanently replaced the expectation of a guaranteed hourly wage increase at Detroit's Big Three.

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The Ford Motor Company also announced its earnings yesterday, saying it had a pre-tax profit of $8 billion for 2012. And that gives union employees a reason to celebrate. They will each get a profit sharing check of $8,300 - a record high amount.

There's also some good news coming for General Motors workers, as Michigan Radio's Tracy Samilton reports.

TRACY SAMILTON, BYLINE: GM hasn't announced earnings yet, but the company was roughly as profitable as Ford in the first nine months last year. So unless GM's fourth quarter tanked - which no one expects - its union workers will get big checks, too.

Kristin Dziczek of the Center for Automotive Research says it's a welcome source of income, even though profit-sharing has permanently replaced what many workers like even better - a raise.

KRISTIN DZICZEK: We have to, you know, balance this $8,300 check against eight years of no annual wage increase. Costs have gone up in eight years.

SAMILTON: The check makes the biggest difference for entry-level workers, representing nearly 25 percent of their regular earnings. As to what workers tend to do with the checks - it runs the gamut, from paying bills to a down payment for a car made in their own factory.

Mike McKenzie is with Royal Oak Ford.

MIKE MCKENZIE: A lot of times people have been waiting for that profit-sharing check. Hopefully that means more car sales for us.

SAMILTON: And more car sales means more profits for the automakers.

Chrysler workers can expect profit-sharing checks, too, but they won't be as sizable. That's because the smallest of the Detroit three is also generating the smallest profits.

For NPR News, I'm Tracy Samilton in Ann Arbor.

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