I Can’t Find Enough Skilled Workers! (At the Crappy Wage I’m Offering…)

February 12th, 2014 at 3:32 pm

I thought this WSJ article on starting pay levels for airplane pilots of regional carriers provided an excellent microcosm of a point that is widely underappreciated.  And that point is this:

When you hear employers complaining about how they can’t find the skilled workers they need, remember to plug in the unstated second part of the sentence, “…at the wage I’m willing to pay.”

A widening shortage of U.S. airline pilots is spotlighting the structure of an industry built on starting salaries for regional-airline pilots that are roughly equivalent to fast-food wages.

The shortage’s toll rose Tuesday, as Republic Airways Holdings Inc…said it would remove 27 of its 243 aircraft from operation because it couldn’t find enough qualified pilots…

Starting pilot salaries at 14 U.S. regional carriers average $22,400 a year, according to the largest U.S. pilots union. Some smaller carriers pay as little as $15,000 a year. The latter is about what a full-time worker would earn annually at the $7.25-an-hour federal minimum wage.

As the piece points out, it takes a significant investment to become a certified pilot and the cost recently went up due to new requirements that increase the minimum levels of flight experience.  It’s also the case that the pay structure in the industry has much higher salary tiers for experienced pilots at the big airlines.  But the magnitude of the mismatch between what it costs to become a pilot and starting salaries will look to any economist as a recipe for a labor shortage.

In a market economy, such shortages should push wages up, but current arrangements between the majors and the regionals appear to preclude such adjustments.  The major carriers outsource regional flights to small carriers, who contract with the majors for unrealistically low costs.  They then can’t find the pilots they need yet are unable to raise wage offers and stay within the constraints of the under-priced contracts.

Far too often, labor shortages of skilled workers get blamed on the low quality of our workforce or our education system.  And of course serious barriers to quality education do loom large for many in our economy.  But there are, I suspect, an ample supply of Americans who would like to be airplane pilots.  The problem is, if you want a skilled worker you can’t expect to pay them something close to the minimum wage.  Or at least if you do, do the rest of us a favor and don’t go around complaining about how no matter how hard you look, you just can’t find the workers you need.

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27 comments in reply to "I Can’t Find Enough Skilled Workers! (At the Crappy Wage I’m Offering…)"

  1. Dave says:

    We should probably create an FAA regulation requiring the airline to print the salary of the pilot on each customer’s ticket. Then each customer can decide if they want to fly on a plane piloted by somebody making minimum wage.


  2. MikeDonnelly says:

    As an American job creator, I’d like to vent my frustration here on this blog. For over 10 Years, I’ve been attempting to staff a maid, waiter, butler, car driver, and librarian. All full time positions, and can’t get a single qualified person to fill any of these 5 jobs. The first qualification is they accept the starting wage (under the table) of $1 per day. The second is they must have a Ph.D. No takers yet, proving you just can’t get good help these days.


    • Tammy Gottschling says:

      I’m still waiting from Professor Paul Krugman if my thesis has been awarded a degree and if so from what institution? Princeton? I have no idea what way to request this (common etiquette and completely academically reasonable request [meaning I’m not bribing him]) and he has yet to answer me either way. That’s fine because I’m currently under his mentorship. However, I can’t verify this other than I know his sense of humor(totally humbling experience). I don’t know.


    • sw says:

      Haha and its a Maid, waiter, butler, car driver and librarian? What are you hiring them to do “….walk into a bar?” Lol


  3. Tammy Gottschling says:

    This question may seem off topic but I’m curious if you have read Nicholas Carr’s work? http://www.theatlantic.com/nicholas-carr


  4. Gaius Baltar says:

    Same thing with the tech industry. They claim they need more H1-B visas because they can’t find enough qualified American tech workers. Yet tech wages are stagnant.

    Of course, that fact that H1-B visa holders cannot threaten to walk unless they get stock is irrelevant. But their demanding stock would be a Kristallnacht, as Tom Perkins surely would agree.


  5. Kevin Rica says:

    What’s the old saying? “There is no such thing as a shortage of labor. It’s only a shortage of wages.”


  6. Robert Buttons says:

    Of course the logical corollary is that when thousands apply for a few hundred minimum wage Wal Mart jobs, one would have to agree offered wages are too high.


    • Kat says:

      There’s a problem with that statement. I work in a Walmart in the back office, and I can tell you that not every person who applies is actually considered for hiring. Once you weed out applicants with little availability to work, who don’t pass background checks or drug screens, who want full-time work when it’s not available, etc., you get closer to 10 applicants than 100. We’ve been experiencing shortages too, so every bit of what’s said here applies.


      • Robert Buttons says:

        So you are saying there is a large cohort of people unemployable even at minimum wage. So raising the MW will only make the problem worse.


        • AmyLynn says:

          Actually, it sound like what Kat’s saying about Walmart supports Jared’s point. She admits herself that the eliminating conditions include “wanting full time work when none is available” and “having little availability to work”. Given that retail, esp. at a 24-hour-a-day store, is notorious for giving workers erratic schedules at low wages (too little to afford day care, that’s for sure), it sound like they are at least in part to blame for their own worker shortages. I bet they would find a lot more qualified workers willing to work if they would provide predicable schedules, with a reliable number of hours, and if they would provide more full-time employment.


  7. Dave says:

    Thank you, Jared. I have a network of people I can bring into these discussions if they think the discussion sounds normal to them. I’m pinging old friends…

    Look here, dudes…


  8. Dave says:

    Joke?

    Good. Laugh. Joke intended? Not really.

    As bad as politics seems, this is the reality of how it takes place.

    No, I’m not joking.


  9. urban legend says:

    Let’s say a reasonable starting salary for a regional carrier pilot is (no less than) $45,000, which is $30,000 more than a minimum wage salary. So one of these guys or gals makes, say, 600 flights a year carrying an average of 60 passengers, or 36,000 passengers for the year. That’s about 80 cents more per passenger (or 80 cents less per passenger for overhead, administrative costs and profits).

    C’mon, you titans of industry, you ought to be able to think outside the box on this one.


  10. DH Fabian says:

    Of course it’s a fallacy, but it has served powerfully for decades, enabling US businesses to either slash wages or move our jobs out. I assume a portion of skilled workers still have enough money squirreled away to be able to afford being picky. Most Americans no longer have that option, which is why we have well-educated/trained people bagging groceries and selling burgers. This is a country that shipped out a massive portion of our jobs since the 1980s, then wiped out our poverty relief programs. Most have to take whatever they can get, knowing that the whole “upward mobility” thing is over.


  11. Doug K says:

    Very interesting – this is a job that cannot be outsourced, yet wages have been driven down to subsistence level even so. I suspect the problem is that flying is a lot of fun, so some people will still do the job for benefits not measured in coin.

    For programmers, the competition as noted above is indentured labor (H1B), or odesk.com where the average rate after odesk’s percentage, is about $12/hour. I can make that as a lifeguard at the local pool, or as a janitor – why would I spend $100k or more to get a STEM degree ?
    Insufficient skills, my foot..


  12. purple says:

    Clearly, the solution is more union-busting.


  13. dr ngo says:

    In 1928 the conservative American Governor-General of the Philippines had this to say: “To some of the employers of labor who complained that the Filipino would not work, it was suggested that they add ‘unless paid.'” (Quoted in N.G. Owen et al. THE EMERGENCE OF MODERN SOUTHEAST ASIA, p189)


  14. ChrisH says:

    Late to this game but wanted to chime in. My cousin was an airline pilot for a year or two and found he could make more money and be closer to his family in a marketing position he was offered and off he went. He related stories during those few years about how poor the salaries were for early pilots and that they didn’t improve that quickly.


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