Penny Wise and Pound Foolish: A look at wages and job security

Oct. 1, 2003

Penny Wise Pound Foolish
A look at wages and job security

By Stephen P. Prentice

I noticed in the newspaper the other day that flight attendants at Southwest Airlines are still waiting for their new contract long after expiration of the old one two years ago! How can this be? The airline is profitable, the pilots are well paid, and the mechanics seem to be satisfied for the time being, as far as I know. Now, as mechanics we certainly support the flight attendants in their seeking a wage package at least equal to the pay received at the major carriers such as Delta, United, and American. That's all they are asking for! After all, these carriers have been broke for years and still manage a higher flight attendant wage. Flight attendants are the closest contact with the public and typically are paid the least. An airline is penny wise and pound foolish for scrimping on these wages. Enough people in this business have recently been alienated from management . . . and for good reason! It's time it stopped.

Management complains about having to deal with the pilots', mechanics', and flight attendants' unions and the associated costs. Labor relations departments, management supervision, and all the rest add up to big dollars. If they took better care of the rank and file there would be no need for unions!

On the other hand, maybe the pressure should be on executive wage packages. These arrangements should be made public and the stockholders should be permitted to vote on them. The recent disclosure of so-called executive retirement funds at various companies shows how management takes care of itself. In the past executive pensions were paid from the general assets of the company, like everybody else. If it went bankrupt the executives got in line with the rest of the creditors. Now, with new types of secured trust arrangements for their pensions, some executives own their retirement money, whatever happens. The company even pays the taxes on the income. Add to this their pay, perks, and other deals, and you soon see where all the money goes. Many have to laugh when told that the reason for these deals is to retain their executives. I wonder where they would go if they ever left?

Contract delays
The primary reason for the delays in wage contract settlements is simply that extended time periods are permitted by the archaic Railway Labor Act (RLA) under which all airline labor contracts are governed. Recently we saw prolonged negotiations at Northwest, American, and others. The Southwest flight attendants delay is nothing new as far as tactics by management are concerned.

The whole theory behind the Act is to keep the parties talking and meeting for the longest period of time before allowing a strike to take place. The Act was designed from the start to prolong the negotiating process and provide for arbitration and mediation at every turn. The government National Mediation Board administers the Act. The President even gets involved if there is a significant threat to transportation. Delay of course is to the advantage of management. Things just go on according to the law. Mediation and arbitration seems to continue forever.

A strike is the very last option available after prolonged negotiations. Only informational picketing is allowed. Everybody and his brother gets into the negotiations which are all designed to stop a strike from taking place. The workers lose the only leverage they have! Absent the real threat of a strike a company will not put forth its best deal for the workers. This is just a fact of life under the Act. If a company is shut down by a strike or feels it is imminent, the incentive to provide an acceptable deal is compelling.

The difference
The National Labor Relations Act which came after the RLA is the rule transportation should be under. When a contract expires under the RLA it continues indefinitely until amended. Under the more flexible National Labor Relations Act contracts expire on a certain date, after which employees are free to strike. Settlement comes much quicker. What is needed is a more modern treatment of the RLA that will place collective bargaining in transportation under the NLRB rules to provide a quicker and more efficient settlement process.

Salary survey
Mechanics on the other hand have a more difficult time demanding a better wage that lies somewhere between the pilots and the flight attendants. AMT's salary survey in the August career issue provided some interesting statistics. Mechanics in the general aviation field are paid somewhere between $18 and $25 per hour. In the airlines the rates are higher averaging up to $38 per hour. The top dogs are the avionics techs who earn the highest in journeyman positions. Corporate aviation types fall somewhere between general aviation and airline salaries. It is interesting to observe that good-paying unskilled jobs in the general labor field are paying as much as some of our certificated mechanics earn and are much more stable and secure.

As we all painfully know, for the near future and possibly longer, jobs and pay will be tight. Airline pay has been "voluntarily" reduced they say for the short term. But, don't count on it. It's going to be a long haul.

Some in the industry talk of a shortage of mechanics in the next 10 years. This is just not true. As long as the FAA and Congress continue to allow the wholesale exportation of our mechanics jobs overseas we will have no shortage. Unless the FAA and Congress decide that there is a problem we can just forget about training any more mechanics. Airline management has stated time and again that the only place for the A&P will be in the line support position. (Where actually few specific skills are needed.) There is still the issue of airworthiness dispatch and release for which the A&P is required. They maintain that since most of the repair and inspection process will be farmed out there will be little need for the traditional A&P. America West tried this some years ago and came to grief over it.

As we discussed last month, outsourcing is the thing today. New startup airlines and most of the old guard continue to outsource work at an alarming rate. You may have noticed for example that both Southwest and Jet Blue outsource virtually all major checks. I just read where Jet Blue completed a deal to have all of the inspection work on its 45 A320's done in Canada for $145 million. Our U.S. unions had better wake up and notice that they won't have anything to do in the near future because they won't have anybody left to represent.

All union contracts should include a provision to the effect that the company shall not perform any regularly scheduled heavy check maintenance in a non-U.S. location. If our Congress will not pass legislation to prevent outsourcing to foreign locations it is up to our union representatives to demand such protection! At Northwest the Aircraft Mechanics Fraternal Association (AMFA) has an agreement to cap outsourcing of line and heavy maintenance at 38 percent of the whole. This is certainly a good start at the outsourcing problem. AMFA's president O.V. Delle-Femine has recently said that "Outsourcing will become an integral element of management if we allow it to be . . ."

Have you noticed the number of U.S. jobs that have gone overseas? Even telephone help lines? I called a computer help line and found out I was talking to somebody in India! Jobs going to foreign locations were less visible during the booming '90s. Now, with things getting tough, this has become more obvious. Many feel that soon we will see a huge reduction of the living standards of the U.S. middle class. This may already be occurring in many areas including the aircraft maintenance field. With the continued expansion of JAA overseas maintenance facilities it will occur at a faster rate. Take a look at This should convince you that the European Union will soon be managing your life in the aviation maintenance field!

We have to keep in mind also that since airlines have recently received large amounts of federal aid they should feel morally obligated to keep jobs at home and in house rather than sending this work out to foreign shops. So far most don't seem to care. The bottom line controls. The cheaper the better! Or is it, penny wise and pound foolish? Please send comments and questions to [email protected].

Stephen P. Prentice is an attorney whose practice involves FAA-NTSB issues. He has an Airframe and Powerplant certificate and is an ATP rated pilot. He worked with Western Airlines and the Allison Division of GMC in Latin America, servicing commercial and military overhaul activities and is a USAF veteran. E-mail: [email protected]