Remember this in 2005? Union leaders bad or good?

[SparrowHawk]

So the fully burdened cost of the union jobs was about $30/hour ($20 * 1.5) versus the fully burdened cost of of the outsourced work is about $10/hour ($ * 1.25 for non-union with minimal benefits, if any). That calculates to a savings of $20 per hour for outsourcing or a 66% savings for those job functions. Hard to deny the benefit of selecting this option.

Both you and 700UW are wrong. Unless I see an offer letter from the outsource provider with work at $8/hour. Staples pays better and you're indoors.

First off a fully burdened FTE position, union or not is well above 1.5 times hourly wage AND as wages rise the percentage of burden decreases as many of the elements of the burden rate are fixed and not a percentage of dollars earned.

Second is with an outsource provider you have wage plus burden plus profit in the equation. Remember though that the outsource provider has a far lower burden rate due to not holding billions in capital investments. This leaves more room for profit. Then you have the disparity in Healthcare costs. Most outsource providers offer some type of health insurance. Usually it is quite cheap and offers what amounts to catastrophic coverage only. A fully burdened union member is with all burden accounted for including company overhead somewhere in the 2.5 times average hourly wage range.

Because I don't as an outsource provider have the high cost of amortizing large amounts of plants and equipment my burden rate is lower even if I pay the same wage as the Company. I also don't have restrictive work rules or a pension burden. I may offer a 401K after a year of service but not always. Outsource providers don't make their money by merely being cheaper on the hourly wage side. They do it by working smart with lower overhead which allows them just enough money to make a profit and offer a more cost effective solution.

Outsource providers make a boatload of money in many industries. The dirty little secret, at least in the industry I sold services in is this, If the operation was well run, cost effective and modern it was very difficult to be cheaper and make the sale. There is a lesson in there someplace for Parker

 

[Kev3188]

Sparrow, 2.5x base rate is a little high for figuring total compensation for a benefitted airline employee. Using a DOL table, a person making ~ $20/hr. "costs" a total of ~ 30/hr. all in. Obviously, it'll vary depending on things like medical plan, pension (or 401k) specifics, and so on...

Not for nothing, but during contract talks at NW, we were told the same 1.5x number...

 

[SparrowHawk]

Sparrow, 2.5x base rate is a little high for figuring total compensation for a benefitted airline employee. Using a DOL table, a person making ~ $20/hr. "costs" a total of ~ 30/hr. all in. Obviously, it'll vary depending on things like medical plan, pension (or 401k) specifics, and so on...

Not for nothing, but during contract talks at NW, we were told the same 1.5x number...

Depends how the DOL calculates Burden. If they don't include the fixed costs divided by total number of employees then theirs is a bogus number. When I sold for Xerox a FTE was billed to the customer at 2.3 times hourly wage.

 

[CallawayGolf]

I agree with a lot of your thoughts and it is obvious that you have given a great amount of thought and study to them. I'm sure we are only getting a glimpse of your thought here, but seeing all sides of the argument on here and a lot of the ones that are going on within our country and our nation, I get the feeling that a lot of people (not picking on you) discount one big thing: human nature. Every company, every union, every PTA, every church group, in general anytime there are more than two people involved, at times things come unglued. You can have the perfect system, but you have to account for human nature, and humans will screw up anything. IMHO, that's why communism cannot work. In a completely free market you have to watch for manipulators. With unions you have to watch for people who want the power and care about nothing else. In business if the leaders and BOD put enriching themselves ahead of the best interest of the company, it will fail. It seems the biggest place to watch is government.

Things swing back and forth with power moving around. When it swings too far, or gets stuck in one place, then you have trouble.

Thanks PI. I agree people in private businesses, government, civic organizations, religious organizations and everyplace else can fall into corruption and they can and do inflict harm on people. That's a reality but asking government, which is unquestionably corrupt in it own right, to ensure businesses remain free of corruption is like asking the fox to guard the hen house to make sure the hens all get along okay. In the end the cure is more damaging than the disease. Out of the frying pan and into the fire (can I come up with any more colloquialisms?).

I wouldn't deny that America had its robber barons and elite class of wealthy people who took great pleasure in taking from the poor to fill their greedy palms back in the day, but even they were likely less corrupt that the monarchies and feudal systems America emerged out of (or was trying to avoid). In response to these unsavory sorts operating in America the pendulum swung away from free markets to an environment where legitimate businesses are now forced to compete on a very uneven playing field. China, Taiwan, Mexico, Saudi Arabia, and the like are absorbing our jobs and our money because they can easily compete against the US being altogether unburdened by the same restrictions we have on US businesses today. We don't want robber barons, fine, but let's not drive the entire economy into the ground because a handful of miscreants a century ago scared us away from a free market system.

I'm speculating here, but I would guess that even those robber barons of old would look at Bill Gates, Warren Buffet, Paul Allen, Steve Jobs with a bit of envy and might even decide that having a prosperous working class America is far better for them than having a bunch of people wallowing in poverty. (Just imagine how much better it would be if America's 21st century prosperity didn't have the footnotes after it explaining our $14 trillion debt, our 1.8 trillion deficit, and the millions of people totally dependent on government handouts as we have today). A rising tide really does raise all ships and a prosperous economy really does benefit every class and segment of society better than an anemic or bankrupted one. Free markets can generate that kind of true prosperity while governments programs cannot.

 

[Pi brat]

Thanks PI. I agree people in private businesses, government, civic organizations, religious organizations and everyplace else can fall into corruption and they can and do inflict harm on people. That's a reality but asking government, which is unquestionably corrupt in it own right, to ensure businesses remain free of corruption is like asking the fox to guard the hen house to make sure the hens all get along okay. In the end the cure is more damaging than the disease. Out of the frying pan and into the fire (can I come up with any more colloquialisms?).

I wouldn't deny that America had its robber barons and elite class of wealthy people who took great pleasure in taking from the poor to fill their greedy palms back in the day, but even they were likely less corrupt that the monarchies and feudal systems America emerged out of (or was trying to avoid). In response to these unsavory sorts operating in America the pendulum swung away from free markets to an environment where legitimate businesses are now forced to compete on a very uneven playing field. China, Taiwan, Mexico, Saudi Arabia, and the like are absorbing our jobs and our money because they can easily compete against the US being altogether unburdened by the same restrictions we have on US businesses today. We don't want robber barons, fine, but let's not drive the entire economy into the ground because a handful of miscreants a century ago scared us away from a free market system.

I'm speculating here, but I would guess that even those robber barons of old would look at Bill Gates, Warren Buffet, Paul Allen, Steve Jobs with a bit of envy and might even decide that having a prosperous working class America is far better for them than having a bunch of people wallowing in poverty. (Just imagine how much better it would be if America's 21st century prosperity didn't have the footnotes after it explaining our $14 trillion debt, our 1.8 trillion deficit, and the millions of people totally dependent on government handouts as we have today). A rising tide really does raise all ships and a prosperous economy really does benefit every class and segment of society better than an anemic or bankrupted one. Free markets can generate that kind of true prosperity while governments programs cannot.

I absolutely agree and I believe government needs to kept to a minimum, but as you said is necessary for defense,oversight, infrastructure etc. It tends to be the easiest and fastest way to corruption. Checks and balances, and a short leash on the leaders.

 

[700UW]

So the fully burdened cost of the union jobs was about $30/hour ($20 * 1.5) versus the fully burdened cost of of the outsourced work is about $10/hour ($ * 1.25 for non-union with minimal benefits, if any). That calculates to a savings of $20 per hour for outsourcing or a 66% savings for those job functions. Hard to deny the benefit of selecting this option.

DL isnt union and they make that much, Jetblue isnt union and they make more than you, so keep trying,

 

[700UW]

When US outsourced the overhaul to AL for the first 10 airbus, the first plane out of ST MAE made three emergency landings, and had to be taken out of service for US mechanics to fix the shoddy work on the flight controls.

The paint they used to touch up spots on the airplane didnt even match!

One of them came right from MAE and do D-Con and loaded passengers up till the FAs couldnt arm the MED slide, come to find out the latches that the girt bar attached too were gone, missing, not there.

Flight cancelled, how much did they really save?

I can go on and on and on, but you anti-union, pro-business people will never get it.

Just like the Air Midwest crash, outsourced and outsourced again to a company that didnt know what they were doing and everyone on that plane died for their negligence and we were just lucky the pilot made sure before they crashed it didnt go into the main maintenance hanger.

And I will tell you I was in Aviation over 20 years, vendors only pay $8-$12 an hour, why do you think they are always hiring and when a station is outsourced, ground damage to airplanes increase?

 

[CallawayGolf]

DL isnt union and they make that much, Jetblue isnt union and they make more than you, so keep trying,

I never mentioned DL or Jetblue. I used your numbers, fairly standard and conservative labor burden factors and very simple math. Which of those factors do you find fault with?

I've said on these boards before that companies will very readily pay a premium to keep unions off the property. The hidden cost of working with unions goes far beyond the basic wage scales. Having Labor Relations, Legal, HR, and other support staff to administer work rule provisions and handle grievances (valid or bogus), not to mention the inability for management to easily respond to changes in the marketplace are all financial burdens that go into having a union on the property. Thus DL & Jetblue are wise and are making good financial decisions to pay good/excellent wages to non-union groups to encourage them not to go the collective bargaining route. I can't image a single management team at any American company who would not be willing to pay a premium and give generous benefits when the alternative is having a union installed which would be far more damaging to the business, while actually putting less in employees pockets.

That's why I think the whole seniority fight over the NIC is sad, but almost comical. If the pilots dumped USAPA tomorrow and told Management they were willing to trust them to do the right thing, I firmly believe Management would take every reasonable step to ensure all pilots, east and west, were given full and fair consideration for their wage and upgrade concerns. Why would they not? Management knows the legal cost of this whole battle and they know that pilot wages will have to go up under a new contract, so why not erase the pilot issues, provide reasonable wage increases, and try to stay ahead of the pilots considering collectively organizing again.

Oh, and I really don't care what happened in 1992. If management back then was stupid enough to expose themselves to being further unionized by not understanding the implications, then they got what they deserved. DL and Jetblue are indeed excellent examples of how to do it right today. US back in 1992 is obviously an example of really poor and shortsighted management.

 

[SparrowHawk]

I've said on these boards before that companies will very readily pay a premium to keep unions off the property.

Someone very well known as a avowed unionist once told me "Bob if the company treated employees right there would never be a need for a union." this person is correct in so many ways. Not every way as no company in aviation has a better relationship with their employees than Southwest yet they are the most unionized workforce and the highest paid.

That's why I think the whole seniority fight over the NIC is sad, but almost comical. If the pilots dumped USAPA tomorrow and told Management they were willing to trust them to do the right thing, I firmly believe Management would take every reasonable step to ensure all pilots, east and west, were given full and fair consideration for their wage and upgrade concerns.

Here we disagree! Doug Parker through word and deed has shown nothing but contempt for both customers and employees. It is well documented anecdotally and in print. Doug Parker and Scott Kirby's smug arrogance is equally well documented in print. We know him by his word and deed.

 

[john john]

If management back then was stupid enough to expose themselves to being further unionized by not understanding the implications, then they got what they deserved. DL and Jetblue are indeed excellent examples of how to do it right today. US back in 1992 is obviously an example of really poor and shortsighted management.

Tell us about the HP passenger service agents and why the voted in a union just recently
And when did your ramp and flight attendants and pilots and mechanics vote in a union and WHY???How were pilot pay work rules and benefits before they vote in a union?

Hey Callaway Golf if you are really a HP west Pilot the union you hate so much(hypocrite) past and present keeps your company in check as not to apply E-190/170/175 Dash-8 rates to your little bus and bye bye Boeings

 

[Iclubbabyseals]

There is no reason whatsoever an autoworker who does manual labor deserves $80 an hour, but it's happening. There is no justification for an auto worker to be paid to sit idle, but it happens. There is no reason to give a teacher tenure just because he has been employed three years, but it happens. MERIT needs to be considered. PERFORMANCE should be required...but in many cases it isn't...

I respect your opinion, assuming it is based on fact. I was in back when the crew of the 321 could not find a way to cool the aircraft, PHL-CLT, for the better part of an hour. I was the dude who went to the cockpit to see 98 degrees in the cabin and request high pressure air to run the air conditioning.

Auto workers make $80 dollars an hour when one tricks the system and counts time and a half or two (or even three) times pay. This is not a union decision, it is a management decision as to who decides they will "over pay" some employees in order to not hire more. You are correct, there is no reason to pay a person to "sit idle", so, why does management make those decisions?

I have never heard of a teacher getting full tenure after three years. Mostly it is some modified version of what you and I think of "tenure".

I'd love to see "PERFORMANCE" be a part of every executive's evaluation and resulting pay. Oh, you mean the mundanes, the peons? As long as management makes the decisions they do, unions will have very little control over performance, as you characterize it.

 

[flybynite]

Who pays for people to have a career from a job that doesn't have a career value?
WE ALL DO?
Again if it is a great idea lets make it $100 hour for everyone! All our problems solved!
Wage laws, rent control, etc are all just false shuffling of the economy by government for the purpose of political power. The market can allocate everything better than a law and we all benefit from that.
Your economic understanding is amazingly limited 700. Not suprising coming form a airline employee and a union one at that.

Well now this is interesting. Are you saying pilots and flight attendants have no value? And have no reasonable expectation at a career?

 

[UPNAWAY]

Was speaking about entry level jobs which would be ramp, res and CSRs in the airline biz. They are called entry level because you move up, except in the union world. Hell in NYC people are doorman's for life because it is unionized, think about that a freakin doorman as a career!

 

[700UW]

Once again you dont know what your talking about.

Why dont you read one of the CBAs, there are always room for moving up.

You can become a lead, or work in ops, the tower or OCC.

Your blind hatred for unions is unreal.

No one's job is safe life, get out of the cubicle and see the real world, you dont even comprehend the truth and facts when presented to you.

Put down Doogie's spiked koolade and take the time to educate yourself.

 

[UPNAWAY]

700, I would say you're the one living in a false world, unions are dying a self imposed suicide wake up dude! I have no hatred for unions, except maybe their leadership and their power within this White House - the most anti worker administration in US history!
Lets compare Texas to Michigan over the last 40 years which one has had jobs and population growth? One is very pro union the other could be considers hostile to unions that is not a coincidence which one is prospering and which one is dying.