Delta cancels upcoming interviews

[cale42]

ACLPILOT, Thanks for recognizing that even though our ideals may disagree significantly people can in fact have a reasonable conversation on these things if they can keep their emotions in check.

To answer your question, I think we are facing a brave new world in how this economic recovery will happen. Traditional wisdom would in fact support that jobs drive the economy and we need to enable people and companies to create jobs. However I'll make 2 arguments as to why this is no longer true. First, inadvertently companies learned exactly how much more they could really get out of their workers when it was necessary. When times got lean and everyone was cutting back and workers were happy to have a job they busted their humps and companies quickly learned how efficient the American worker could really be. I think(and this scares me a little) that was a paradigm shift that will never go back. People talk about re-creating lost jobs.. I don't think that is going to happen. Many of the jobs that were lost in the last 2 years will never come back because companies realize they don't really need them. And future job growth will be slower because companies realize that new growth that once required them to hire 100 workers can really be done with only 65. Those are 35 jobs are gone forever.

Second part of my argument is that your premise is if we allow companies to make more money they will hire more and grow more. My answer is that if that was true why hasn't it already happened? We just watched the second quarterly round of massive corporate profits. Many sectors including our own are reporting record profits the likes of which haven't been seen in nearly a decade. They've been making these profits for upwards of 6 months now. And yet job creation and job growth have remained stagnant. If companies were hiring like gangbusters now and extending the tax cuts would help keep that going I would be all for it. However they are not, and I have no reason to think extending the tax cuts will have any effect other than contributing to corporate profit.

So if we can't build on job growth, what do we build on? Consumer confidence. The reality is that while 10% unemployment is bad, it is no where near historic highs. Lots of people still have jobs, they are just scared to death to spend because they don't know what the future holds. I think a lot of that stems from worries about the national debt, worries about losing social security, worries about how they will pay for health insurance. To me eliminating the tax cuts is the government starting to say, hey we are overextended. We have to get more money in the coffers, and get our debt under control so we can continue to provide services for our citizens. Stabilizing the debt and proving that government programs are in fact sustainable would be a big step towards drawing out consumer dollars, and my bet is that is where the back bone of this recovery needs to be.

 

[ACL65PILOT]

ACLPILOT, Thanks for recognizing that even though our ideals may disagree significantly people can in fact have a reasonable conversation on these things if they can keep their emotions in check.

To answer your question, I think we are facing a brave new world in how this economic recovery will happen. Traditional wisdom would in fact support that jobs drive the economy and we need to enable people and companies to create jobs. However I'll make 2 arguments as to why this is no longer true. First, inadvertently companies learned exactly how much more they could really get out of their workers when it was necessary. When times got lean and everyone was cutting back and workers were happy to have a job they busted their humps and companies quickly learned how efficient the American worker could really be. I think(and this scares me a little) that was a paradigm shift that will never go back. People talk about re-creating lost jobs.. I don't think that is going to happen. Many of the jobs that were lost in the last 2 years will never come back because companies realize they don't really need them. And future job growth will be slower because companies realize that new growth that once required them to hire 100 workers can really be done with only 65. Those are 35 jobs are gone forever.

I will respond to all of it in a little bit, but the reason that jobs are not returning is simple. We had one good quarter, and these companies do not want to grow in the face of massive tax hikes that will take a great deal of their fluff away. They do not understand the implications of the national health care programs, they do not know if the "Bush" tax cuts are the only sort of tax change they are going to see, the Health care taxes are going to be in force in three to four year, and a plethora of other things. Simply put they cannot forecast out enough to make sure they can maintain the margins they are now enjoying.

I have been a business owner and if I cannot forecast or have decent probability going forward that I will be able to grow and reap a return on that CAPEx, I will just stay static and squeeze what employees I have for any efficiency we could find. It is calling standing back and taking the safe gamble.

Second part of my argument is that your premise is if we allow companies to make more money they will hire more and grow more. My answer is that if that was true why hasn't it already happened? We just watched the second quarterly round of massive corporate profits. Many sectors including our own are reporting record profits the likes of which haven't been seen in nearly a decade. They've been making these profits for upwards of 6 months now. And yet job creation and job growth have remained stagnant. If companies were hiring like gangbusters now and extending the tax cuts would help keep that going I would be all for it. However they are not, and I have no reason to think extending the tax cuts will have any effect other than contributing to corporate profit.

So if we can't build on job growth, what do we build on? Consumer confidence. The reality is that while 10% unemployment is bad, it is no where near historic highs. Lots of people still have jobs, they are just scared to death to spend because they don't know what the future holds. I think a lot of that stems from worries about the national debt, worries about losing social security, worries about how they will pay for health insurance. To me eliminating the tax cuts is the government starting to say, hey we are overextended. We have to get more money in the coffers, and get our debt under control so we can continue to provide services for our citizens. Stabilizing the debt and proving that government programs are in fact sustainable would be a big step towards drawing out consumer dollars, and my bet is that is where the back bone of this recovery needs to be.

Ok, To the second part where do I start.

I will dovetail what I said in my first response to answer the second response. I am "Joe Consumer" I am not spending because I do not have any confidence in the return from historic lows that we have had. I am not confident that the world economy with major banking issues though out the globe will still not fail. We have propped them up, but it is like adrenaline in a heart that has stopped. It works for a little bit, but that machine better start its own work before it wears off.

IMO, if the government has any past practice of cutting these huge programs that have run their course, citizens of this country may be more willing to see new ones start up. Problem is that once a program always a program no matter what it is. NASA may be the first government program that gets scrapped. No that is not a right comment, that is just my take.

On to the flow of the economy. People are also not spending because either them or their neighbor are out of work. Again, consumer confidence. How do you increase confidence. America as a nation was built on the tenant of; "Anyone can succeed with hard work." We can never forget that, nor can we try to minimize it. Reality bites, and for those that are not willing to go to any means to provide, means they expect the government to step in. Not a path to success in my opinion.

Government needs to be an accumulator in the system, not the reservoir. Everything has its place. They used to say 5% unemployment was the min, well we broke that mold.

We as a nation need to pay down debt, quit spending, and return to basics. People that want to work should be able to work. More workers makes more income to tax. We have lived on credit for so long, that many people do not like the prospect of living within their means. I was one of them, and then decided to make it work, no matter what. I cut up every credit card I had, went to cash, and saved for purchases. It sucked, because I had to wait. Well, on the back side of the pain, I get it.

Putting people to work is the key. Stating that those jobs are gone forever is just a straw man. History proves that jobs or Skilled trades leave every day. Jobs change, give ppl the tools to change to. It is not different than when bar codes were invented, or computers, or even air travel. People will follow the jobs, but you have to allow the innovators and corporations some incentive to take on risk, have a reward, and grow. Looking at tax raises, and fewer consumers to buy the prospective product makes any person thinking of taking that risk less likely to do so.

At a point in the future we need to pay off the 14 trillion in debt, but we do not do it when the economy is just starting to come back. We do it with more jobs, more taxable income, and fewer programs the government is paying for. It is called balancing the federal budget. Both parties are to blame. We need to find a solution that returns this country to prosperity, and not on fiat money.

I too agree, lets argue the issue, and not attack the person. It gets less heated that way.

 

[ACL65PILOT]

Oh and to ties this to the topic of this thread

DAL will not hire more than it absolutely has to because they cannot predict that the economy will go the other way. We will still be short, and pilots will still be working their tails off. DAL will grow marginally but no more until the jobs and consumers return to the market place. Why? They do not trust the economy.

One more note. The last two quarters of growth better has happened give how low we went and how quickly we got there.

 

[cale42]

Fantastic post ACLPILOT. I had to put some real thought into how to respond. The tricky part is we are nearing a point where we both hold opinions that while different are exceptionally hard to prove.

I will respond to all of it in a little bit, but the reason that jobs are not returning is simple. We had one good quarter, and these companies do not want to grow in the face of massive tax hikes that will take a great deal of their fluff away. They do not understand the implications of the national health care programs, they do not know if the "Bush" tax cuts are the only sort of tax change they are going to see, the Health care taxes are going to be in force in three to four year, and a plethora of other things. Simply put they cannot forecast out enough to make sure they can maintain the margins they are now enjoying.

I agree that this is a contributing factor. However I think that the increased productivity and the lack of a need to add back jobs that once existed is a larger factor. Say 75% latter and 25% former. I don't think it's possible to prove one way or the other, if you interviewed 100 CEO's you would probably hear a mix of both of those answers as well as various other ones.

I will say however that we are an an interesting cross roads in society due to the global economy. It scares me how many good jobs have been sent overseas. It started with blue collar jobs and manufacturing in China, then it grew to service jobs with customer service, tech support, and reservations and purchasing agents. Then it jumped to white collar with high level technical support as well as coding, software design and development and even the management of these positions. Every one of these jobs has left the US for the same reasons, the pursuit of the almighty profit. Labor costs less where the jobs went. Companies made more money, they grew more, and they added more jobs overseas.

Now if you want to make the argument that as American workers once had to adapt to moving across the country to find work we know have to move across the world to find work, you can make that argument. But is that really the road we want to go down? I've asked myself that question? I'm lucky to have a type rating in a high demand aircraft, I could go fly easily in Nigeria and Ethiopia, India, Japan, or in Afghanistan and Iraq. Is that my responsibility as a "new" American worker to uproot my family not just from our city but from our country to go find work. And possibly move them to a dangerous situation? I think that is going too far.

We don't just need job creation, we need job creation in America. Extending tax cuts in no way guarantees that is going to happen. Possibly I'm a cynic, but I feel that we are past a point where any major corporation will ever truly care for it's employees again. That being said there are only 3 reasons they will want to hire American workers. 1. They are the cheapest. 2. The government forces them too. 3. The government changes the rules so that jobs you can only require Americans to do requires more people. Number 1 can't ever happen. An average salary in China is $400/month. No one in the US can survive on that. Just not doable. 2 and 3 both require more government intervention, which means more government programs and more tax dollars. I know that sounds horrible, but I just don't see any other way to make it happen.

In the effort to tie this to the original topic as well let's use the Delta example. Now, I'm going to go out on a limb here so you can shoot be down if I'm wrong. I'm going to bet though that like almost every other carrier out there Delta guys are flying more hours with less days off right, and for sure less pay. If you were to take the average line value and the average days off for a DAL pilot in 2000 and apply that today, how many pilots would Delta need to hire just to cover the current flying? I'm gonna guess quite a few. So jobs are gone because of increased efficiency. How do we get more pilot jobs at Delta. Well one of three ways as I mentioned above. Hire cheaper labor, hasn't happened at DAL yet, but that is pretty much what the UAL-Aer Lingus deal is right. So those jobs went overseas. 2. Government forces them too hire more. Well that will never happen unless the government reregulates or changes how pilots can be scheduled.. which leads directly into point 3 from above. One of the best hopes we as pilots have for job creation is new flight and duty time rules that require more pilots.

So to summarize(and I know this post was a bit fragmented), I agree job creation is an important component in getting the economy moving. However it is about the right jobs and thinking that extending tax cuts will produce the right jobs is erroneous in my opinion. We need to create the right jobs and to do that will require government intervention which is going to require higher taxes.

cale

 

[ACL65PILOT]

Cale;

The philosophical difference I am seeing is that I look to business for answers on jobs, and the government for answers in protecting American's and America. The government can fight legislatively for protection of American workers without a government program or spending American tax dollars.

I agree that it is about the right jobs, but those innovators are not going to "invent" the technology to create the jobs unless there is an incentive to do so. In all countries that is money in their pocket. Extending a nominal tax cut or only letting some of the tax cuts expire and renewing other ones is a step in the correct direction.

In regard to taxes, there are a great number of taxes that the smart business man sees coming. The taxes have been levied on them, but they have not started paying yet. Items like national health care as mentioned in my previous post will have their taxes come in to effect in a few years. CEO's etc see this coming and do not want to grow their business until they are living in that taxable world. Once living in it they may grow. Extending some or all of the "Bush" tax cuts allows them to grow a little now while waiting for what these laws and taxes really mean for their business.

The same thing for airlines. They do not see consumers returning, but they do see margins. In many instances if has not been proven to be a house of cards.

In response to your comment about not seeing any other way. Well the American Businessperson has always had the answer and will continue to have the answer if given the correct environment to grow in. That has and should always be the beauty that makes America, America.

Loops holes should be closed, but that does not mean you go after business with more taxes. They always react like a turtle, and stick their extremities back in the shell to protect them. Maybe government should try to pay for all of these new programs by getting rid of the ones that have run their course. Better yet, sunset them as to make sure there is enough warning for those that still get some benefit out of them. I have a few I can think of.

 

[Going2Baja]

From what I can piece together anyone offered an interview after Aug 5, 2010 was offered the option to keep their date and go in a pool if successful, or wait and get called when hiring resumes. These pilots interviewing are the ones that will be done prior to that date.

3 months of hiring with bypassers getting 1st choice provided they give 30 days notice, next is 29 pilots from Compass/Mesaba and the remainder are from off the street. Total number of 305 still holding for this cycle. Good luck to the 4 guys in matching suites interviewing today (even though you gave me bad directions!)

Baja.

 

[ACL65PILOT]

Now how did I give you bad directions?

If you are talking about your class, welcome back. I think it is the same room it has always been in.....

 

[ACL65PILOT]

Cale;
Part of it is that many are trying rely upon the government to create business ethics when it is the consumer that should be doing that. Government to protect, consumer to decide.

Companies that have realized that a content not spoiled but content employee are the ones that have the keys to success in a sheltered or global economy.

Even places like McDonald's that are having to recall Happy Meal glasses are realizing the cost of going cheap.

 

[Data]

Um.. alright, since you brought up the CNBC link again we will have to derail this thread again. Two views you can take here, cynical or pragmatic. Lets look at both.

Cynical - Deutsche Bank analysts probably take home in the range of 7 figure salaries and bonuses. The vast majority of their clients probably make 500K or more. They have a vested interest in seeing these tax cuts remain so they will make the data work for them. They say as bad as 1.5% but probably more like 1.1% decrease in GDP. So whats the as good as scenario, there is only the bad and the best guess presented. Maybe best case their is a small growth? But that doesn't help their clients invest more money with them.

Pragmatic. Maybe letting the cuts expire does directly affect the GDP slightly. However it does not predict how much consumer confidence might swing when the American people see the government doing something to help address the debt. How much of a gain might we see out of that? Where is that in the analysis.

Lastly, it says the GDP may shrink by 1.1%. Most of this discussion has been about tax revenues, nowhere does it predict how those might change. Even with a decrease in GDP tax revenues may rise significantly.

Oh.. and lets not forget most of these expert analysts predicted that there was no housing bubble and the economy couldn't crash in 09. So take anything they say with a big honking grain of salt.

More importantly.. Baja, you saw someone today going for a Delta interview tomorrow? That would be exciting.

cale

It's your buddy Laffer again. Here's a relevant passage...

"During this era of ubiquitous tax cuts, income tax receipts from the top 1% of income earners rose to 3.3% of GDP in 2007 (the latest year for which we have data) from 1.5% of GDP in 1978. Income tax receipts from the bottom 95% of income earners fell to 3.2% of GDP from 5.4% of GDP over the same time period."

http://online.wsj.com/article/SB10001424052748703977004575393882112674598.html

 

[Going2Baja]

Cale;
Part of it is that many are trying rely upon the government to create business ethics when it is the consumer that should be doing that. Government to protect, consumer to decide.

Companies that have realized that a content not spoiled but content employee are the ones that have the keys to success in a sheltered or global economy.

Even places like McDonald's that are having to recall Happy Meal glasses are realizing the cost of going cheap.

Not you ACL....you're already here. I needed directions to fingerprinting and chatted the guys interviewing...they were good fun. Hire them all for personality. Thanks for the welcome...STOKED to be here. Some great opportunities. Looking forward to the future.

Baja.