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.