Airlines took $25 billion in payroll subsidies from the federal government. The idea was to keep workers attached to their jobs until the pandemic was over and passenger demand returned in the fall.
Taking the money meant not laying anyone off until October 1. Airlines cheated though: the law said they couldn’t reduce rates of pay, and they couldn’t furlough workers. So they reduced hours and required employees to take unpaid leave. That way they could pocket the difference.
The carriers will tell you the government money didn’t pay their entire payroll, and that is true. But airlines were never going to lay off 100% of their employees, either. American Airlines says that about three-fourths of last year’s payroll was covered by government funds.
- Airlines have substantially reduced their payrolls through leaves, early outs, and ‘voluntary’ layoffs in lieu of October 1 termination.
- Southwest says they will not even furlough anyone this year without additional government money. So the $4.5 billion they’d get from a ‘clean extension’ of payroll support is for what, exactly?
- Layoffs at other airlines could be 30% or more minus the voluntary leaves and retirements they get
So why are airlines calling for a ‘clean extension’ of payroll support? It’s the most expensive unemployment program there is. While Congress and the President wrangle over how much to cover in additional unemployment for laid off workers, airline workers would get 100% of salary not to work and the government would effectively be paying airlines a 100% premium to do it. Airlines would be receiving far more in payroll subsidies than the cost of the people they’d otherwise lay off.
Here’s the American Airlines flight attendants union calling on leaders to come up with cash quickly. Notably they address the President, the Treasury Secretary, and Speaker Pelosi – asserting (as others have) that Senate Majority Leader McConnell has been reduced to irrelevance:
Time is running out. Hundreds of thousands of US aviation jobs may soon be lost. Flight Attendants, pilots, mechanics, agents- all US aviation workers are standing at the edge of a financial cliff. If our leaders in Washington act now, we can save the aviation industry from irreversible damage and stand ready to re-ignite economic regrowth throughout our communities.
We have reached a critical point. Without new stimulus relief legislation, airlines will have to go through with their plans to furlough thousands of workers.
Poorly written as this is – they cannot decide whether it’s tens of thousands or hundreds of thousands of jobs at risk – this gets our priorities exactly backwards, paying a captain $200,000 to stay home. But furloughs would come a month before the Presidential election (getting Republicans on board) and they’re mostly union jobs (getting Democrats on board).
At the end of the next six months though passenger demand still will not have recovered, and airline employees will be… furloughed. IATA says it will be four years before we see demand equal to 2019. American Airlines CEO Doug Parker says even if Covid were a distant memory next summer that his airline would be 10% – 20% smaller.
Spending $25 billion for airline employees who aren’t needed not to work, on the fiction that they somehow still have jobs, pushing back the transition of employees to other industries six months is simply six more months it takes for the economy to become productive again. That hurts everyone.
Better to focus on people throughout the country whose jobs are lost and are legitimately scraping by, rather than pilots who worked half time with a side business to begin with or flight attendants who will have to find themselves a new job in April anyway.