Christmas Bonus

As Christmas approaches, many American workers look forward to receiving a Christmas bonus, usually a lump sum of money added to their December paycheck. This Christmas gift from employer to employee may have been inspired by English Boxing Day customs.

Although the Christmas bonus began as a voluntary gift, it evolved into an expected increase in one’s December salary. By the late nineteenth century many American employers had adopted the custom of distributing Christmas bonuses among their workers. These personalized exchanges often takes place at office Christmas parties, another new, late nineteenth-century custom. The boss himself usually presented each worker with their presents or money.

Often the employer tied the gift to the employee’s performance during the year. Christmas bonuses became increasingly common throughout the last decades of the nineteenth century, but between 1900 and 1920, these kinds of personalized exchanges all but disappeared. Labor unions, which grew in numbers and in influence during this period, began to bring the issue of the Christmas bonus to the bargaining table. Unionists argued that workers depended on these bonuses and needed to know in advance approximately how much they would receive. They objected to the nineteenth-century practice whereby the bonuses were distributed according to the whims of managers and bosses. As the twentieth century rolled on, their arguments prevailed. Christmas bonuses were increasingly calculated according to agreed-upon formulas. These formulas often took into account such things as salary level and years of service.

In recent years the number of companies giving Christmas bonuses has declined. Some firms have switched to year-round incentive programs that reward effective employees. Others provide employees with a lavish Christmas party or a day off in lieu of a bonus. According to the Bureau of National Affairs in Washington, D.C., about nine percent of companies with 1,000 or more workers distributed Christmas bonuses in 1999. Workers in small companies were luckier, with about 25 percent of their employers offering modest cash bonuses at Christmas time.