Profit Sharing and Auto Workers' Earnings: The United States vs Canada

In response to the 1981-1982 recession and demands for concessions, the United Auto Workers (UAW) accepted contracts that shifted away from the 3-decades-old annual improvement factor and included profit-sharing plans. In Canada, the Canadian branch of the UAW negotiated wage increases that differed from those in the US and that did not include profit sharing. The impact of the different negotiating approaches are examined by comparing the earnings of auto assembly workers at General Motors (GM), Ford, and Chrysler in the US and Canada from 1980 to 1989. It is found that, in terms of direct monetary earnings alone, from 1982 to 1989, American auto workers received less than their Canadian counterparts. In current dollars, the cumulative difference in pay between 1982 and 1989 for US and Canadian auto workers was $13,402 at GM, $1,755 at Ford, and $8,721 at Chrysler.