Opinion

On Consumerism: How to approach a Christmas bonus

By ARTHUR VIDRO
By Arthur Vidro

I was 22 when I got my first Christmas bonus.

The boss walked around the tiny offices, giving a $20 bill to each worker.

Twenty dollars was worth more back then. Minimum wage was $3.35. I was getting paid $4 an hour to do typesetting. To me, that bonus represented five hours of hard work.

I hadn’t known about Christmas bonuses. It surprised me (just as ten or so months earlier, I had been surprised to see taxes withheld from my paycheck). At first I tried to decline.

“But I’m J–”

“Bonuses for everyone,” he cut me off. So I thanked him and pocketed the money.

Looking back, I think now he gave the bonuses more for his sake than ours. It made him feel generous. The rest of the year, each payday was a dash to the bank, because the last worker there would find insufficient funds to cover the check.

As I progressed through adulthood, the bonuses progressed too. My job elsewhere a year later netted me a Christmas bonus of $150 in cash. A few years later, at yet another company, most of us got a week’s pay – via check, less deductions – as our bonus. At all three firms, when it came to bonuses, all workers were treated identically.

But in other industries, bonuses varied tremendously. Huge companies might look at sales target figures, sales generated, and then compute an individualized bonus for each employee.

My best friend, a salesman for a Fortune 500 company, relies on a bonus that represents a very large percentage of his total pay. He works himself into a tizzy all year to maximize that bonus – which I don’t think is healthy.

But nothing had prepared me for the decade I spent on the fringes of the stock-trading industry.

In one of the suburbs close to Wall Street, I had a small job at a company in which tons of money changed hands every day. I was in the minority in that I was an employee (most folks there were independent contractors). The shrewd owner had decided early on that he wanted to pay high bonuses to his employees. Alas, he did not pay any part of our health insurance.

The high bonuses were an incentive for people to stay on the job. “Well, I’d like to quit, but I want to stick around for the Christmas bonus.”

On the other hand, it was also an incentive to fire people prior to the dispensing of Christmas bonuses.

On Wall Street – and in ancillary industries routed through Wall Street – the Christmas bonus is a big deal. If a company is prospering, bonuses are enormously colossal. If a company is suffering, bonuses are cut back to merely very large. The bonuses often top what a minimum-wage worker earns in a year.

I was shocked by my first Christmas bonus there. Roughly $1,000!

Longtime employees, especially in the very profitable years, got more than $10,000 as a bonus. Some got $20,000. Executives in the industry got six-figure bonuses.

But how one approaches the bonus – that’s the key.

Me, I ignored each bonus until I received it. Then I would figure what to do with it. One year I made four extra car-loan payments, to hasten getting out of debt and to minimize the total interest paid on the loan.

Sometimes I invested in carefully chosen stocks (which helped us, years later, evolve from renters into homeowners) and even savings bonds. Bonds are not great investments, but they keep you from squandering money now that you might need later. Plus I contributed a little to an IRA.

My supervisor at the stock-trading company depended on his bonus. He didn’t wait until he received it. He spent it ahead of time.

Then one year everyone’s bonus took a dip. The Great Recession had started. My supervisor grumbled to me that the company was hurting him by not coming through on a large enough bonus.

Anticipating a much larger bonus, he and his missus had already spent it all – and then some – on a first-class cruise and other goodies. Now they needed money to pay for what they’d bought.

So, with a huge bonus (nearly $10,000) in one hand, he held out his other hand to ask me for a loan. Just until payday.

When it comes to Christmas bonuses, you’re better off ignoring them until they’re given. And then think twice before spending once you receive it.

If you have consumerism questions, send them to Arthur Vidro in the care of this newspaper, which publishes his column every weekend.

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