Per diem increase vs. pay increase

[rumorhasit]

With all the contract issues would it benifit the company as well as pilots to increase per diem to say $2.00 hr away from base vs. a modest per hour increase?

 

[CitationLover]

well if per diem is paid the minute you are away from base, then it is a no brainer.

 

[SkyWestCRJPilot]

Well, let's say you are away from base 300 hours a month. For a $0.50 per diem raise (say $1.50 to $2.00) then 300 x .50 = $150/month more. Let's say you fly an average of 85 hours a month. $150/85 hours = $1.76. You would need a wage increase of at least $1.76 more per hour to make the same increase as a $0.50 per diem increase. That's not including taxes though. Plus the IRS may not like a per diem of $2.00/hr unless it's taxed. Consult a tax lawyer. Plug in the numbers for your airline and do the math.

 

[StuckInASaab]

define modest?

 

[jarhead]

I don't believe it's a matter of choice. The IRS has a say in what constitutes allowable 'per diem', due the the tax exempt provisions in the tax code. To use an extreme hypothetical example, why not have pay at $6.50 an hour (minimum wage), and per diem set at $650.00 a day. It would not fly with the tax boys! There is always the tax code to deal with (sadly)