Fun with numbers for the skeptic part 2:
Thesis:
Swinging for the fence, “restoring the profession”, fighting to win back failed losses from the past, dragging out negotiations years beyond the amendable date, and negotiating by pilot wish list does not work.
Assumption:
We model a post GFC time period from 2010 to the present, and then project ahead to 2026. For this model will focus on pay only, assuming no other gains or losses in other parts of the contract. We agree to forget past negotiations and limit our look back to a 3 year trailing inflation rate at the time of negotiations (9 months prior to amendable date). Further, we agree to index our pay rates to the 3 year compounded inflation rate. Specifically, that trailing rate plus 1.0%. In other words, we don’t need surveys or even negotiators. We create a simple algorithm and it spits out our ask.
We will use Federal Reserve inflation data:
https://www.usinflationcalculator.co...flation-rates/
The model will encompass a total of eight 2 year contracts: 2010-11, 2012-13, 2014-2015, 2016-17, 2018-19, 2020-21, 2022-23, 2024-25.
Finally, we assume ratification at the amendable date.
2010:
Trailing total compounded inflation 2006-2008 - 10.12% or 3.27% annually compounded.
2 annual pay raises of 4.27% or a total increase of 8.71%.
Actual total inflation for 2010-2011 - 4.85% or 2.4% annually.
Result: a total real pay increase of 3.86% or 1.87 annually.
2012:
Trailing inflation - 5.04% total 1.65% annual
2 pay raises of 2.65% - 5.37% total
Actual inflation 2012, 2013 - 3.63% total or 1.8% annual
Result: real raise 1.74% total or .85% annual
Running total: real 5.67%
2014:
Trailing inflation - 7.05% total 2.3% annual
2 pay raises of 3.3% - 6.71% total
Actual inflation 2014, 2015. - 1.7% total .85% annual
Result: Real raise 5.01% total 2.45% annual
Running real total 10.96%
2016:
Trailing inflation - 5.29-% total 1.73% annual
2 pay raises of 2.73% - 5.53% total
Actual inflation 2016, 2017 - 3.43% total 1.7% annual.
Result: real raise 2.1% total 1.03% annual
Running real total 13.29%
2018:
Trailing inflation - 3.02% total 1.0% annual
2 pay raises of 2.0% - 4.04% total 2.0% annual
Actual inflation 2018,2019 - 3.84% total 1.9% annual
Result: real raise .2% total .1% annual
Running real total 13:52% total.
2020
Trailing inflation - 5.91% total 1.93% annual
2 pay raises of 2.93% - 5.94% total 2.93% annual
Actual inflation 2020,2021 - 5.95% total 2.93% annual
Result: real raise .01% total 0% annual
Running real total 13.64%
2022
*assumption: inflation finishes 2020 at 8% and comes back closer to the current 3 year trailing annual compounded rate (4.7%) for 2023 since future inflation is unknown.
Trailing inflation - 5.49% total 1.8% annual
2 pay raises of 2.8% - 5.68% total
*Actual inflation (8.0)(4.7). - 13.08% total 6.34% annual
Result: real raise -8.6% total
Running real total + 3.87%
2024
*assumption: inflation continues at current annual rate of 4.7%
Trailing inflation - 14.96% total 4.76% annual
2 pay raises of 5.76% - 11.85% total
*Actual inflation (4.7)(4.7) - 9.62% total
Result: real raise 2.23% total
Running real total + 6.19%
Takeaways:
We would greatly outperform over the entire timeframe of the model as compared to historical performance. Over a 30 year career we would see a real increase in earning power instead of a huge decrease.
During times of stable or dropping inflation (crisis) we outperform. During times of spiking inflation we underperform.
A recap of annual pay raises:
2010-11: 4.27%
2012-13: 2.65%
2014-15: 3.3%
2016-17: 2.73%
2018-19: 2.0%
2020-21: 2.93%
2022-23: 2.8%
2024-25: 5.76%
This turns out to be an annual compounded rate of 3.3% over the model and looks suspiciously similar to what a non-management employee gets for an annual raise in corporate America. Actually statistics show a net wash for real increases over the last 40 years for corporate America. The above model beats that modestly, which isn’t the real story. We wouldn’t end up greatly trailing inflation over our careers is the story.
Remember, the model generates real rates adjusted for inflation. Ignoring inflation, the above pay raises yield a 67.9% increase in pay over 16 years.
Leaders either know this or they get smart and then persuade their pilots. Going to the table with wish lists that cannot be delivered is not leading. It’s following. Going to the table unable to do math is sad, and doubling down on failed tactics is isn’t leading, it’s dumb.
Conclusion:
We elect toads to follow our direction and not to lead. Always have, always will. We will get historical results as a consequence. Occasionally we get a leader who does a passable job. Sorry boys, hate to **** on your dreams. I’ll be gone from this world when you youngsters pin on your 30 year pin and know the wisdom of my words. I wish you all the best, really.