Are low wages at Usairways working?

[gso-crew]

Moderator please do not move this to the United or Southwest board, this is a US Airways Discussion, thanks.

Low Costs Versus High Wages?
Forbes 04.25.07, 6:00 AM ET

In a radical cost-cutting move, Circuit City announced recently that it was dismissing 3,400 of its most experienced employees. While Circuit City's offer to hire many of those salespeople back at lower wages puts a surreal twist to the tale, in fact, the company is just one of many trying to gain competitive advantage by lowering labor costs.

In the last few years, Detroit automakers have laid off more than 70,000 workers, and most of the nation's grocery, discount, fast food and mall chain stores have undertaken "innovative" approaches to reducing employee wages and benefits to lower their costs. Wal-Mart Stores' (nyse: WMT - news - people ) CEO argues that he has "no choice" but to pay low wages to meet his customers' demand for low prices.

Although offering minimal wages and benefits is the most common way companies try to lower their costs, our recent study of American management practices reveals that such bottom feeding may not be the most effective strategy. In fact, low wages paradoxically generate a variety of negative employee behaviors that add to the overall cost of doing business.

Although mangers rarely calculate these costs, they often turn out to be substantial. For example, employees at low-wage companies have significantly higher turnover rates than those at well-paying companies: Wal-Mart has nearly a 50% turnover rate, and at many fast food, retail and service companies, the rates are even higher. Researchers have computed the total costs of such turnover as the equivalent of one month's salary for unskilled workers and more than a year's salary for skilled ones.

In almost all industries, research shows that the most profitable companies are those with the lowest overall operating costs, and not those that pay the least. For example, pilots at "low-cost" Southwest Airlines (nyse: LUV - news - people ) actually are paid more on average than their counterparts at "high-cost" United Airlines.

The difference between these two unionized airlines--the first highly profitable, the second not--is found in their pay rates and the way they manage their people. Southwest managers do a better job recruiting the right employees, and Southwest employees at all levels are able to make managerial decisions and to work with a minimal amount of supervision.

 

[2clippedwings]

Great article! As discussed on the boards before, it looks like USAirways is trying to attract a young, low paid, entry level work force in the hope that they won't stay.
This artificially gets wages down temporarily (i.e.JetBlue) but fosters poor passenger care because the company is not willing to make the investment in tools and training to maintain employees long term.
We've debated before that working for an airline shouldn't be a career (I totally do NOT agree with that sentiment) but a passing fancy, like working retail for a few years while one is young.
Enough of using the employee wages to make an airline appear to be profitable. Although Southwest is not my particular cup of tea, their manner of employee administration is admirable and proves that profitability does not necessarily equate to lower employee wages.

 

[allstrike]

Southwest managers do a better job recruiting the right employees, and Southwest employees at all levels are able to make managerial decisions and to work with a minimal amount of supervision.

We have the right people,its the second part we dont have.

 

[as the prop turns]

USAir always had the ability to make decisions that would benefit the pax. Now, with this system, we have had all of our ability taken away from us. We were always the highest paid in the industry and it showed through our knowledge of the industry along with hiring the right people. Now folks...welcome to the ghetto!

 

[Elevation]

Southwest managers do a better job recruiting the right employees, and Southwest employees at all levels are able to make managerial decisions and to work with a minimal amount of supervision.

We have the right people,its the second part we dont have.

I bet 30% of US employees couldn't get a job a SWA.

 

[as the prop turns]

Actually, we don't have the right people. The crap this company has hired in the past 2 years is deplorable. Bring it back to being a career and not a job and bring our wages back to where they should be and amazing things could happen! You are correct though, the second half's mentality is the major problem.

 

[Harry Callahan]

Actually, we don't have the right people. The crap this company has hired in the past 2 years is depolorable. Bring it back to being a career and not a job and bring our wages back to where they should be and amazing things could happen! You are correct though, the second half's mentality is the major problem.

Not really anything to add here, except to say in my part of the world we are getting the bottom of the bottom, If should get any that appear to be good they do NOT stay. Just like the one SAT. night that walked off the job mid shift.

 

[jrsygrl]

Think back to the early 80's........anyone remember B-SCALE?

 

[OldGuyinPA]

Hey just think...the In-n-Out Burger chain starts folks at $9.50 hr. Store managers make up to $100,000.00 per year..

Why would you work for less ????

 

[Elevation]

Hey just think...the In-n-Out Burger chain starts folks at $9.50 hr. Store managers make up to $100,000.00 per year..

Why would you work for less ????

We got people that commute across the country for waaay less. It's the industry worst enemy is its own employees that will do anything for an airline job. :down:

 

[Itestwell]

We got people that commute across the country for waaay less. It's the industry worst enemy is its own employees that will do anything for an airline job. :down:

Yup... look at the pilot/ fa pay at Skybus and tell me we ain't screwed.....

 

[EMBFA]

About SkyBus, from wikipedia:

Employee Wages
In order to keep wages in line with their projected low fares, flight attendants will only be paid $9 per flight hour, and will not be paid per day. While this is considerably lower than competing airlines' wages, flight attendants will also receive 10% of all sales made during the flight, splitting all commissions evenly among all flight attendants on-board. Starting pilot wages will also be well below average, starting at $65,000 annually. The average commercial airline pilot wage is approximately $135,000.[9]

 

[Itestwell]

About SkyBus, from wikipedia:

Employee Wages
In order to keep wages in line with their projected low fares, flight attendants will only be paid $9 per flight hour, and will not be paid per day. While this is considerably lower than competing airlines' wages, flight attendants will also receive 10% of all sales made during the flight, splitting all commissions evenly among all flight attendants on-board. Starting pilot wages will also be well below average, starting at $65,000 annually. The average commercial airline pilot wage is approximately $135,000.[9]

Bingo. And these stews are upset with the quality of the trash bags NOW??? Wait till you are picking up every dam cup and snotty tissue with your bare hands because the bags and gloves have been "phased out" due to cost.

 

[BuffaloJoe]

About SkyBus, from wikipedia:

Employee Wages
In order to keep wages in line with their projected low fares, flight attendants will only be paid $9 per flight hour, and will not be paid per day. While this is considerably lower than competing airlines' wages, flight attendants will also receive 10% of all sales made during the flight, splitting all commissions evenly among all flight attendants on-board. Starting pilot wages will also be well below average, starting at $65,000 annually. The average commercial airline pilot wage is approximately $135,000.[9]

There it is, Parker's next acquisition, Skybus. This way he can adapt to their pay rates. :down: :down: :down:

 

[as the prop turns]

Velvet Hawthorne and Rick Brasewell are the reason for CWA members not getting their change of control snapback! All we got was 1.00 more , no ot and no vacation back. You see, this was all agreed by 2 people, right in the middle of all locals new elections. So, good old Velvet and Rick sold our souls to the devil! How are these people still in these jobs? With wage cuts, no snapback how can we live and how can they live with themselves. If IAM wins this fight, there will be "hell to pay" and the two people will be held accountable. I speak for many, many employees system wide!