When will wages rise with inflation?
 

At what point do wages start to rise since inflation is getting bad?

You mean road rage? I imagine that will come back soon with traffic as people go back to the office.

I think the regionals will play the "we are recovering from COVID and can't afford anything" card for a bit. The pilot shortage was delayed a bit, but the movement will quickly start to hurt them again. I know that Envoy has had over 25 people leave the past two months. That is way higher attrition than the company has projected when they stupidly furloughed 227 pilots in October. At some point, the regionals are going to have to do more than throw a bonus at new hires and hope that it is sufficient to keep everyone happy. Pay rates have to rise, but management groups will do everything that they can in order to avoid doing so.

The legacies will be playing the same debt card. They burned billions of dollars that have to be paid back with interest, which leads to fewer dollars available to legacy or regional employees. I wouldn’t expect significant contractual gains from any company for a while.

It will be interesting to see how much office rush hour will be permanently reduced.

Most people I've talked to are being told they'll be back in the office. These are white-collar pros who have to collaborate and coordinate in a team. They're "hoping" to get one day/week at home, and that's not unreasonable to have a heads-down day to catch up on emails, etc. One guy I know who's an exec expects to allow one day at home, and it will be either wed/thur with employees evenly split, or maybe just wed only. No "freebie" 3-day weekends and he wants max opportunity for physical in-person meetings and collaborations, so the whole team will be in the office three or four days/week.

Some government employees *might* get to do telecommuting but only by claiming environmental benefits.... even that's iffy because the inevitable cases of fraud, waste, and abuse (ie GS "telecommuting" from the golf course, boat, etc) will trigger severe political blowback. Private sector can eat that as a cost of doing business and it won't make the six oclock news, but not .gov.

Some lower-end "widget" type productivity jobs will stay at home, as long as they can easily quantify your productivity. Maybe some accountants, etc. Computer programming was largely already telecommute pre-covid, where it made sense.

Even one day at home for many folks would make a dent in traffic, but it probably won't be on Mon or Fri as much (3-day weekend perception).

I think Fridays at home will be fairly common.

Some people will work from home exclusively with coming in to the office for meetings, perhaps one day a week.

Some people will be giving the option to move and work significantly away from big cities.

Taxes and regulations have an impact on this.

Elon Musk, with much of his companies, are relocating to Austin. HP, except for R&D, is relocating to an outer suburb of Houston. Both are moving out of Silicon Valley. This last year is the first time in history that California lost population.

Of course, much of their meetings will be by Zoom. However, they may actually increase business travel, compared to an entire company being located in one location.

I've heard it said elsewhere, if you can do your job remotely, so can someone else for far less money. That should be a real concern for anyone wanting to work remotely a majority of the time.

Depends. If any aspect of your job requires interaction/interface with actual people then language, cultural nuances, and inter-personal relations matters... and that applies to internal as well as external customers. The higher your job pays, the more that's true.

Software engineering and para-legal work doesn't offshore very well for example, although people keep trying. Ask Boeing how that worked out.

That will obviously be the case, for those who have the luxury of teleworking out of town... they'll need to show face at the head office periodically, either on the company's dime or their own. Especially if they want to be on the short-list for promotion... and not on the short-list for layoffs. Every place I've been involved in management maintained an updated layoff list, which included the post-layoff work transition plan. One time we executed on 14 hours notice... managers (those not being laid off)were told to stay late, first thing the next morning the soon-to-be-ex-employees were intercepted at the door as they arrived for work and diverted for their HR out-brief.

You won't want to be the employee that everybody jokes about, known mainly for the cat avatar you use instead of live camera on zoom. Or be like my kid... she made a ten-minute video loop of her just sitting there attentively with a headset on, which she then set as her zoom background for school :rolleyes:

But from what I'm seeing most employers will want at least a few office days each week, although some folks might do a weekly commute and crashpad arrangement if they can spend 4-5 days/week back home, wherever that is.

Point of order:

Regional airlines derive their revenue from the major they are flying for, meaning their ability to raise wages is limited by the major airline’s ability to make money. Several airlines have gone rather deeply in debt to survive COVID, notwithstanding the PSP. The debt generally takes the form of either bonds or loans.

Most of the loans are essentially pegged to inflation by being a certain percentage over some commercial rate, such as the LIBOR plus 2%. What that means is as the inflation goes up the debt service on those loans will instantly go up.

Many of the bonds are relatively short term - five year to ten years or so - and often were sold for the purpose of buying equipment. And when the bonds were sold and the aircraft backing them were new, most got a pretty good rate - sometimes as low as 2-2.5%.

Since then the bond ratings of the companies have cratered and the new aircraft have become used aircraft and I think only one of the legacies is currently rated above ‘junk’ by the rating agencies. Now if the airlines had the cash flow to pay off the bonds at term, that wouldn’t be all that important, but that seems unlikely at present, meaning they will have to refinance - to issue new bonds to pay off the old bonds. But lower bond ratings and older collateral and higher inflation means the coupon on the new bond debt will have to be higher - perhaps considerably higher. Even now - with the fed pumping money into the system junk bonds are commanding a 4% coupon. If inflation goes even higher the fed will eventually stop pumping money in and interest rates will trend toward their historic norms.
https://i.ibb.co/wp6YYTk/7-A72-B397-...9-BB1-C4-D.jpg

https://www.bloombergquint.com/markets/bond-investors-take-ever-riskier-bets-in-hunt-for-greater-return

Even 2015 levels of inflation could easily see junk bond rates doubling what they are now, and for an airline with $40 billion in debt ( just to grab a number out of the air) their debt service alone could rise to over $3 billion a year, just for the interest alone.

That’s not an environment where they are going to feel free to be generous with their junior partners.

Wages rise based on supply and demand. Companies raise wages when they aren’t getting what they need. So we shall see.

These companies are going to need to post a profit first, lol

^^^^THAT^^^^

And companies deep in debt still need to make the debt service on their bonds and even THAT just means they are treading water. Ultimately you must make enough to pay off the principle of those bonds before the underlying value of the equity disappears entirely. So how long will it take an airline to come up with $40 Billion in profit? A decade, if all goes well? What sort of profits were even the legacies making before COVID?

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https://i.ibb.co/Xxx2vCh/D881-E285-8...BF9-FB5179.jpg

mmmm, no

Labor is a resource that a business needs to produce its product and it buys what it needs for the best price it can get. Not fundamentally different than lumber or jet fuel or office space.

If the business is being constrained but in adequate labor, it will pay more. Doesn’t matter whether it is profitable.

The head of the IATA has a different opinion.

https://www.travelpulse.com/news/air...-capacity.html

An excerpt:

IATA obviously has an international perspective. The US airline industry is in much better shape than the global industry. Overseas airlines are not done with the pain by a long shot. That might even be good for us.

This really depends on where you work. My wife's department is cutting their lease on an entire floor of office space and everyone will permanently be working from home 4 days/week. Everyone I know with a white collar job will be permanently working from home much more after COVID.

After a year and a half, people have gotten very proficient working from home. Capitalism is survival of the fittest and working from home saves overhead on office space, utilities, supplies, parking, etc. Companies already outsource manufacturing to China, so why not outsource white collar jobs to Indiana?

Also, I get that collaboration may be easier in person, but most people I know don't really 'like' or trust their co-workers. 'Toxic work places,' which can be caused by just a handful of people, are massive drags on office productivity and employee retention. It's a problem that a lot of corporations have been struggling to solve for a long time, and everyone I know has said it's a lot easier to manage the gossip and politics working from home, which objectively increases productivity.

I don't think WFH will be as prevalent in a year or so, but for a big chunk of the market, it'll be permanent.

I don't think this will kill business travel, but it'll definitely change it. I doubt a company will chance a million dollar business deal on a Zoom call. I do think some meetings will be handled over Zoom instead, but I also think a lot more people will get jobs that allow them to 'super commute,' because it'd be cheaper to fly from Rochester to NYC twice a month than to live in NYC.

REI in Seattle SOLD A NEW HEADQUARTERS they had not even moved into. The new headquarters is GONE. Working there is no longer even an option for REI:

https://i.ibb.co/C0StBGV/1-B14-D31-A...0-CC336-A2.jpg

Now I’m not pretending any of us at this point can accurately predict the extent to which work at home will replace office work - even management experts are debating that -

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-or that Zoom will replace travel, but it is probably likely that at least to SOME degree and for SOME duration there WILL be an effect.

And yes, Rick, while it is indeed not impossible that this will “be good for us,” that sound a little bit like the kid digging through the manure pile hoping to find a pony. Not impossible, certainly, but clearly on the optimistic side..;)

REI is not so much a business as an activist collective, I wouldn't consider them to be a bell-weather for business or industrial trends. They have always prioritized employees over their bottom line, and in fact don't even have a "bottom line"... after spending their revenue on whatever they want, they return the leftovers to the membership.




Remote meetings was already trending years before covid... covid pushed it as far as it could physically go but now it's going to snap back to some reasonable level because many or even most long-distance business meetings which could practically be done remotely were already there anyway before covid. Covid didn't permanently change that setpoint, it was based on the practical realities of human nature.

The covid impact on business is not good for "us" (but aren't you a cargo pilot now anyway?). Obviously traditional business travel will take a hit, but it's not existential. I expect we'll see some *new* business travel from super-commuters showing face at the office. Net business travel will obviously be down from 2019 levels for a while.

The head of IATA can say whatever he wants. Doesn’t exempt airlines from supply and demand. Raises will rise when they can’t get enough labor

Wages will rise when they can’t get enough labor THEY CAN GAINFULLY EMPLOY. If labor isn’t a limiting factor in being profitable, there is no incentive to raise wages. Delta could probably empty out the regionals by offering CJOs to everybody AT CURRENT WAGES, but why would they? They don’t have the aircraft the routes, or the pax to gainfully employ another 30,000 pilots.

gainfully and profitably are separate concepts. They need X labor to be a going concern. Obviously they aren’t going to hire 2X. Majors are unlikely to see pilot shortages. Other areas likely will.

a distinction without a difference:

https://i.ibb.co/JBSS25D/D3-CE99-B1-...010803-D24.jpghttps://ibb.co/WxRRFg

Objectively there'll be about 20k retirements from the majors in the next 5 years and there're only about 20k regional pilots. The AF only trains about 1200 pilots/yr, the USN trains even less, and they're already in full panic mode from their own pilot shortage.

Keep in mind that not every regional or military pilot wants to go to the majors (not to mention a fair share of mandatory regional retirements), so where are all of these pilots going to come from? The retirement wave is supposed to go on for at least another 10 years. And even if the majors can remain fully staffed, 40% of all flights in the US (IIRC) are regionals; so whose going to support those routes?

If I were at the top I'd be working with the FAA right now to make some special Airline 141 schoolhouse that could bypass the FAA 1500 hour rule. AF pilots can fly C-5s after 200 hours of UPT (about half of that now, thanks to their 2.0 UPT or whatever), so why not set up a similar program with highly standardized training for the airlines? Maybe if they start working it now, it'd be producing pilots in 5 years when they really need them. A bigger shortage means a bigger lifetime paycheck for me though, so I'll just watch the system implode.

They have a sanctioned program in place that cuts offa rather larger percentage of the requirements.

The demand for labor at the regionals will be reduced somewhat as airlines phase out the 50 seat aircraft since replacement aircraft are not available. The regional model will be left with a few 550’s for United, and everyone else operating the existing 70/76 seat aircraft. “The pilot shortage is real this time” narrative and shiny jets will attract people to enter this profession just like it always has. Most of us didn’t get into this due to good working conditions all the way up the ladder, we did it because we wanted what was possible if we made the climb.

Is that current system flooding the market with new pilots? From what I can tell, it's barely keeping up with current demand and the retirements have just begun.

From a numbers perspective, to become a CFI and get 1,500 hours, you have to train roughly 13 people from 0 through their CPL. That's a very unsustainable pyramid scheme, considering the most popular way to get 1,500 hours is by being a CFI. Going a half million in debt at ERAU will only take you down to 1,000 hours, which still has the same problem, and the Guard/Reserves have very limited UPT slots. I don't see where all of these pilots are going to magically come from.

This 100%. For every pilot who completes the hour requirement, at least 3 need to drop out at some point. The training system right now is a pyramid scheme and will collapse. Hopefully to our benefit.

Wouldn't worry about that, it's always been that way and somehow there's still a niche for career/professional CFIs.

1. Not all students pursue commercial aviation.
2. Not all commercial pilots pursue airlines.
3. Not all pilots complete training.
4. Pilots need BFRs, IPCs, club/insurance checkouts, etc
5. At some schools, insurance requires dual for some training which is technically FAA-legal to solo (IMC, ME, XC)

Also the *minimum* dual given is nowhere near the realistic dual-given to get most students from zero to CFI.

Also most people start with about 300 hours from their own training, so they only need 1200 hours instructor time (less for R-ATP).

Also most people acquire a few extra hours along the way doing ferry flights, odd jobs, fun flying, etc.

Basically agree with rickair… but

That’s dependent on a robust GA pilot training population and it’s shrinking. The concept of cfi supply exceeding demand isnt entirely fanciful

That's true but it does not appear to be happening fast enough to really impact anyone right now.

Worst case the airlines have to pay for time building (assuming they can't successfully lobby the gov to change the FO min experience requirement back to 190 hours).

I see what you're saying, but my point was that there'll be a real bottle neck in a few years to get from 250ish to 1,500 hours. Most CPLs with 121 aspirations would probably prefer to fly pipeline, charter, 135 corporate in a Cirrus, etc, but the majority of jobs available for CPLs are as CFIs, so that's why so many people do it. CFIs typically cobble together their hours from #1-5, but that still requires a lot of people who won't make it to the airlines through what is currently the most popular avenue.

1) I think this number is fixed, regardless of airline demand

2) Same as #1

3) Sadly, this is currently how CFIs get most of their hours. Maybe more airline hopefuls would mean more washouts

4) This is a fixed number and just supplements CFI flying, if you want 1,500 hours in <10 years

5) Same as #4


Maybe the 'standard pathway' of the future will be buy a cheap 152, fly it for 1,000 hours for roughly $70k of gas and half an overhaul, then sell it to the next guy, but I digress. The issue is there won't be a huge change in the demand for CFI jobs. If more CFIs are needed to train new airline hopefuls, then what happens to the trainees when they get their ratings and a dozen of them are competing for the CFI job? Maybe a few fail out, one gets a pipeline job, but what about the other 8 guys?


Like I said, if this were my problem and I had the power to make decisions, I'd be lobbying the FAA for a quicker path to get pilots from CPL to ATP, because it's going to cause a shortage further down the logistics chain.

Aside from the fact that the 550 is a total joke - kneecapped by scope with its reduced MGTOW - bringing the regional-type flying back to the majors isn’t a bad idea. I know on paper the solution is simple: bring it all in-house. That’s what they keep talking about in endeavor forums with flow and something about a DL contract having 900 rates. Anyway, in practice it would be a nightmare. Onboard the thousands of pilots, majors having to shell out benefits and getting these guys on their payroll (oh the humanity), not to mention liquidating and shuttering the entire regional airline industry.

But in the long run this is ideal, albeit a pipe dream. Even CRJs are getting tired. The DC9s and MD80s were tired. The 717s are looking tired. It was always funny to me back Jen my DTW days, seeing us doing a route on a CRJ and landing at an outstation, only for a DL 717 to push back and fly back to the base we just departed from. I’ve heard all sorts of stories like...Western 727s flying into Butte. And I frequently see a mainline plane show up in places like MFR and EUG and countless other places that usually see regionals.

If we all got got absorbed into majors, I would be absolutely over the moon. I couldn’t care less what I fly, but getting the pay and benefits of a major is what we all want. The future is already creeping upon us and Covid accelerated that. If A220s and EJet E2s could be built fast enough, they could erase the regional game overnight. They could, and they should, even though it’ll never happen. Again I don’t care what equipment I fly, but an A220 has some serious SJS appeal and I’d love it.

Anyway. I agree, the whole 50 seater market is done for sooner than later. The E145s and 200s are next on the chopping block. Skywest might mange to keep a few for their prorate flying to podunk USA, but the rest need to go. The rest of the CRJs are close behind, excluding a handful of next gen 900s that are only a few years old. But when you look at the fuel burn of a RJ versus A220s and the NEOs, there’s a clear winner. You can’t ever really beat the fuel economy of a 25 year old fully-paid-off-years-ago 200 burning 1200 per side, but no one will be sad to see them go. But when you see a CRJ900 burning 1800 lbs/side and an A220 doing similar (based on figures I’ve tried to look up in the past, correct me if I’m wrong), the A220 and E2 just look better from a passenger and an operator standpoint.

No. That's where we started from (190 hours total time to the right seat of a jet airliner 20 years ago), and there's a reason for the ATP/1500 hour requirement, history written in blood at the regionals. Foreign airlines still crash narrowbodies and widebodies for the those same reasons.

If airlines need to pay for their pilots to build time, that will happen. Look at the recruiting bonuses they were paying, time building costs are in that ballpark. If they're paying, the airlines could call the tune and specify crew operations to share the time (hood, or FAA add a reg to allow some non-hood shared time in an airline-prep format). Bonus for pilots is that the regionals couldn't eat that cost, it would be passed on to majors who would probably want some control and a good ROI so flow would likely become the norm.

Airlines could run their own academies or more likely farm it out to existing operators... such academies would provide a time-building combo package of dual given and sponsored time building, so you wouldn't miss out on the CFI experience.

But that's all hypothetical, pre-covid I think the problem was not enough commercial student starts, I don't recall there being a problem with rated CPL/CFI's languishing for years unable to build time to 1500 hours. Now some of the entitled crowd might be bummed if they had to hustle or something like that...

As long as the airlines pay for it, the problem is solved. The issue isn't hard work, it's piling another $70k (minimum, gas alone) of debt into an already prohibitively expensive profession. Flight school, plus 4 year degree, plus 1,500 hours if you can't get a job has a price tag of $270k. If you're cheap, maybe you can get it all down to $150k. ​​​​​​

Is anyone really paying for 1500hrs of time building

No. It's a hypothetical discussion. Because there are not a bunch of CPL/CFI's languishing without any means to build time. If the regionals experience a shortage, and that's the bottleneck, then paid time building might become a thing.

If the airlines really need to mass produce flight time, single seat electric planes will become viable

I was thinking that too. I think they're already viable for some training missions at schools which are large enough to have people in the pattern constantly.

They could also be useful for maneuver work IF a suitable practice area is within 5-10 minutes flight time.