Six unions representing US airline workers want another $32 billion from the government. This is a concept I simply can’t get behind…
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Payroll protection with the CARES Act
The CARES Act, which was passed a few month ago, offers around $50 billion in support to airlines. This includes $32 billion worth of grants through the Payroll Support Program (PSP), whereby the government is essentially taking over payroll for airlines.
A condition of this has been that airlines had to agree not to involuntary lay off any employees through September 30, 2020, which is when the payroll support runs out.
US airlines have already received $32 billion in payroll support
Airline unions want more payroll support
Six major airline unions are asking the government for another $32 billion so that the current payroll support can be extended by another six months, through the end of March 2021.
As the letter describes the idea behind this payroll support:
“Air travel remains a slight fraction of last year’s levels and demand will remain depressed well into next year. Aviation workers account for 5% of the nation’s GDP. Should October 1 arrive without extending the PSP grant job program mass layoffs are inevitable, as airline executives have acknowledged. Hundreds of thousands of workers will lose their jobs and health insurance — not only in aviation, but across our entire economy. Further, the industry would lose a large portion of the experienced and credentialed workforce that will be critical to bringing the sector and the broader economy back to prosperity once the COVID-19 crisis is over. Airline industry employment cannot simply be put back together overnight, and mass layoffs will do great damage to the sector, with potentially irrevocable consequences.”
NEW: Major airline unions says Congress should extend payroll assistance through March or the US will see hundreds of thousands of layoffs pic.twitter.com/hXHQJpWZMv
— davidshepardson (@davidshepardson) June 25, 2020
Why this isn’t a good idea
I respect that labor unions are making this request, because keeping their members employed is kind of their job. Furthermore, I think the government should be supporting industries that are being hit hard by this pandemic. That being said, as we’ve seen over the past few months, the payroll support program isn’t the way to go about it.
I recognize the horrible situation airlines are in. No one likes to see job losses. The problem is that across the board airlines will be shrinking over the next few years. All the major US airlines are retiring planes, and don’t expect demand to fully recover for at least a couple of years.
Payroll support to keep everyone employed could make sense if the belief was truly that things would return to normal in a few months. But that’s not the case, and it’s not even possible, given how many planes have already been retired by airlines. The point is, whenever payroll support stops, people will be laid off. This payroll support only artificially keeps people employed.
If this payroll support is extended, then what happens in six months? Another six months of payroll support? And then another six months? And then another six months? When does it stop?
Don’t get me wrong, I support something being done for the hardworking people in the airline industry. I just don’t think keeping a bloated workforce that won’t be needed any time in the next few years is the way to go about it.
More payroll support just delays the inevitable
Bottom line
US airlines have already received $32 billion in payroll support, under the condition that no employees will be laid off through at least the end of September. Now US airline unions are proposing another $32 billion in payroll support, so that no one gets laid off for another six months.
The problem is that even if this were to happen, they’d make exactly the same request come next year. It’s not like demand will completely recover by next spring, so all this is doing is pushing off inevitable layoffs.
Does anyone see this differently, and think that this payroll support should be extended by another six months? If so, what happens when that runs out?
https://www.cnbc.com/2020/07/02/five-us-airlines-reach-deals-with-treasury-department-for-billions-in-coronavirus-loans.html
I think people misunderstand. The point is to keep people employed and the business afloat. If the business collapse, then all employees falls into unemployment, but they have no employer to return to after the crisis is over. This will probably keep them unemployed much longer if the jobs no longer exists.
If this plan is better than letting the business collapse and people going into unemployment, that is for anyone opinion, but based...
I think people misunderstand. The point is to keep people employed and the business afloat. If the business collapse, then all employees falls into unemployment, but they have no employer to return to after the crisis is over. This will probably keep them unemployed much longer if the jobs no longer exists.
If this plan is better than letting the business collapse and people going into unemployment, that is for anyone opinion, but based on comments, I don't think people understood the point of this.
The Air Force budget is $165 billion. At least half of that is welfare for defense contractors. Civilians working in the airline industry have necessary skills and training if we ever need to fight an air war again, or a land war requiring half a million troops being transported back and forth to another continent. Let's keep the civilians until we're sure we don't need them. And although I share your pessimism that we won't...
The Air Force budget is $165 billion. At least half of that is welfare for defense contractors. Civilians working in the airline industry have necessary skills and training if we ever need to fight an air war again, or a land war requiring half a million troops being transported back and forth to another continent. Let's keep the civilians until we're sure we don't need them. And although I share your pessimism that we won't have a vaccine in six months, why don't you just come out and say it? Because neither of us is a scientist and we know better than to engage in idle speculation?
Once again the pilots unions are looking out for #1. Where were they when the airlines outsourced heavy maintenance out of country which resulted in tens of thousands of mechanics losing their jobs.
Airline employee here, and I mostly agree with you, Ben.
I don't want to lose my job. I don't want to see my colleagues lose their jobs. But the airline industry is going to take more than six months to recover and it's not sustainable to continue accepting government money and saddling ourselves with more and more debt. That's going to make recovery even harder.
What this really highlights is that this country...
Airline employee here, and I mostly agree with you, Ben.
I don't want to lose my job. I don't want to see my colleagues lose their jobs. But the airline industry is going to take more than six months to recover and it's not sustainable to continue accepting government money and saddling ourselves with more and more debt. That's going to make recovery even harder.
What this really highlights is that this country has no social safety net and your financial and healthcare futures are inextricably tried to your job. Regular unemployment (sans the $600 bonus) isn't really a substitute for pay, especially if you're a high earner. COBRA is prohibitively expensive no matter what. It's an awful situation for people to be in through no fault of their own.
This whole situation of only bailing out airlines is ridiculous considering how almost every single industry is affected. Airline employees shouldn’t receive special treatment and get paid to not work. Instead the money should be directed to helping everyone affected, not just airlines, especially when certain airlines (AA, United) are not interested in keeping COVID numbers down and instead would rather fill every plane to the brim.
Only in America does the phrase ‘Liberate yourself!’ mean get back to work. Corporate bailouts, beyond the more well-understood issues of stock buybacks, bonuses and temporary stays of layoffs, act as a mechanism to keep employees under an oppressed system. A system where the work of the many benefit the few. Executive leadership and those who earn their wealth based on the work of others aren’t concerned about public health because their lives don’t occur...
Only in America does the phrase ‘Liberate yourself!’ mean get back to work. Corporate bailouts, beyond the more well-understood issues of stock buybacks, bonuses and temporary stays of layoffs, act as a mechanism to keep employees under an oppressed system. A system where the work of the many benefit the few. Executive leadership and those who earn their wealth based on the work of others aren’t concerned about public health because their lives don’t occur in the same public as everyone else. What do I mean by that? An executive isn’t worried about the strain on the healthcare system when they have private care. An owner isn’t worried about sitting on a crowded plane when they access to a corporate jet.
Unfortunately it's time for a career change for many.
This really is where a social safety net for furloughed or laid off staff would be the way to go, rather than a piecemeal bailout to keep select groups people at work for no discernible reason other than a lobbying arm or a well connected congress critter. But I guess that would be doing a shooshalism. The horror.
Instead put money towards retraining or helping these people find other careers. Millions of people across the country are unemployed and struggling, why shouldn't these guys be treated like everyone else?
Ah, America. Where we give corporations that, through their own fault, have no rainy day fund massive bailouts during an economic slowdown but give an unemployed family a.single check and call it a day.
@ Ben -- None of these groups should receive bailouts. In fact, our resources should be directed towards our healthcare crisis, not towards paying people to not work.
Why don't they agree collective cost reduction through part time and other measures? UFO agreed that with LH, no LH FA will lose their job due to the current economic situation. Part of the truth is that FAs at 4U, XQ and probably EW will be made redundant but there are ways to keep staff through collective bargaining if the staff is unionized.
What about the other industries effected. Let’s talk hotels, mom and pop shops and tourist industries.
I’m ok with aid being provided but we can’t single out aviation just Because they have the biggest lobbying group.
What about the hotels? That industry has been hit just as hard and I would offer the point that those workers, who for the most part are paid way less than airline folks, are in greater need of the relief. At some point the travel industry will have to accept that fewer employees will be needed which is terrible, but reality.
Nice.