Originally Posted by
scottm
In a perfectly competitive market you would see wages linked to supply and demand. The market for pilot jobs is controlled by a few customers, with no balancing power from unions with power to withhold services...
It been years since I took macro & micro, and while your theory is right it does not apply here. Free market supply and demand can certainly be suppressed if artificial conditions exist, and some do such as Railway Labor Act, small numbers of demand customers and slow reaction in the supply side due to pilot training lag. But on the demand side, in this case about 25 regionals, is the option to raise prices (wages) if they wish. There is no cap on wages. Yet despite their freedom to raise prices, they do not and it is a voluntary decision.
Truck drivers were for a long time paid wages established by a fluid and slowly evolving demand and supply interaction in the labor market in the US, where were millions of drivers and thousand of companies participated and prices were naturally established. In the mid 1990s there developed a widespread shortage of truck drivers, and yet the market failed to react fast enough. The surprising thing was how long it took for the demand side, the trucking companies, to raise the pay. It looked rather dire at the time. Finally one of the largest firms, JB Hunt Transport of Arkansas, dramatically and suddenly raised its wages by almost double. It was widely accepted as smart move and the company flourished. Everyone on both sides was surprised at both this action and the success it enabled. In following years all the trucking companies followed suit and raised wages.
...More likely, the few corporations that control this market will adjust other factors to bring demand down to meet supply....
Correct and that's exactly what we are seeing. By hook or by crook these regionals will delay wage increase. It is the last solution on the list and for good reason- salary and wages are a huge cost in the airline business. In the trucking example we saw that market reaction to inadequate supply is not always rapid, even in fairly fluid market conditions. I suspect a dramatic wage increase is coming for the regional airline pilots, but not until all other avenues are exhausted.
... Unfortunately, most of those solutions further reduce incentives for new entrants to this profession.
Money talks and the problem can be fixed. However, there will be a lag in flight training supply as word gets out about the salary change and the flight schools tool up for more business.