Jan 302011
 

Ford, in reporting its biggest profit in more than a decade Friday, disappointed Wall Street but pleased UAW workers with bonuses averaging $5,000.

The profit-sharing bonus was two-thirds larger than the amount Ford was required to pay under its contract, said UAW President Bob King.

“What’s really important for our members to know is they didn’t have to do this,” King told the Free Press.

With about 20,000 Ford hourly workers living in Michigan, the checks, due in March, will help lift the state’s economy.

via Ford made $6.6 billion in 2010, workers get $5,000 profit-sharing checks | Detroit Free Press | freep.com.

Time for some quick math. If each of the 20,000 hourly Ford workers in Michigan gets a check for $5,000 how much might that boost the Michigan economy?

Let’s assume that the check is for the full amount and that each worker on average will spend 60% of it in the 30 days after they get it.

20,000 (checks) * $5,000 = $100,000,000

At a 60% spend, one hundred million dollars will generate $60,000,000 in economy boosting cash flow. It will be interesting to see how the Michigan economy does in the months of March, April and May. It would seem likely that dining out will increase and that fuller restaurants will equal more tips for servers. Will the general sense of optimism create a measurable up tick in consumer confidence? I for one believe it will and time will tell if that is an accurate prediction of what will occur.

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