Rewarding the Hourly Worker
Hourly workers—people who are paid a set dollar amount for each hour they work—have long been the backbone of the U.S. economy. But times are changing, and with them so also is the lot of the hourly worker. As they can with most employment conditions, organizations are able to take a wider variety of approaches to managing compensation for hourly workers. And nowhere are these differences more apparent than in the contrasting conditions for hourly workers at General Motors and Wal-Mart.
General Motors is an old, traditional industrial company that until recently was the nation’s largest employer. And for decades, its hourly workers have been protected by strong labor union like the United Auto Workers (UAW). These unions, in turn, have forged contracts and established working conditions that almost seem archaic in today’s economy. Consider, for example, the employment conditions of Tim Philbrick, a forty-two-year-old plant worker and union member at the firm’s Fairfax plant near Kansas City who has worked for GM for twenty-three years.
Mr. Philbrick makes almost $20 an hour in base pay. With a
little overtime, his annual earnings top $60,000. But even then, he is far from the highest-paid factory worker at GM. Skilled-trade workers like electricians and toolmakers make $2 to $2.50 an hour more, and with greater overtime opportunities often make $100,000 or more per year. Mr. Philbrick also gets a no-deductible health insurance policy that allows him to see any doctor he wants. He gets four weeks of vacation per year, plus two week off at Christmas and at least another week off in July. Mr. Philbrick gets two paid twenty-three-minute breaks and a paid thirty-minute lunch break per day. He also has the option of retiring after thirty years with full benefits.
GM estimates that, with benefits, its average worker makes more than $43 an hour. Perhaps not surprisingly, then, the...