I’m a man who loves video games. I played the original Warcraft and Command & Conquer video games on PC, Halo on XBox and Mario Kart on Nintendo 64. If you talk to my wife, you might even think I have a “pRoBLem.” But I’m cost conscious. (I love a good Steam sale.) Apparently Delta Airlines thinks it’s employees are, too, as Delta ran anti-union posters, saying the $700 annual union dues was better spent on video games.
I don’t belong to a union. My chosen profession – unless you work for the feds, state or a city, you don’t really have the chance to join a union. But full disclosure, I consider myself a “union guy,” as both my parents and a large number of my relatives are and were members of their union. I attribute my relatively privileged upbringing to luck, my parent’s luck, my parent’s hard work, and the fact that they belonged to unions.
What do unions do? They give workers bargaining power. For example, if one worker threatens to quit because they don’t get $1/hour raise, no big deal; but if 50%+ of your workforce decides to quit, that would be a significant issue for any employer. But for any one employee, that one job means a lot. Compare this kind of power this to an employer – where any one employee is rarely irreplaceable. Particularly today, companies get a huge number of applicants for any one job, making it easier for them to pay any one position less money.
So let’s look at the case for Delta by diving into their latest 10-K and proxy.
From Page 51 of their 2018 Proxy: Delta’s median employee made $81,355. Not bad – just over $40 an hour. Granted, that is just the median – half of their employees make less than that.
What about Delta’s CEO, Ed Bastian? In that same year, Mr. Bastian made $14,982,448, or 184 times their median employee. Put another way – he made Delta’s median employee’s wages in just two days of work.
What about their other executives?
Delta’s President, Glen Hauenstein, made $8.4M in 2018 (Page 41 of the Proxy);
Delta’s Chief Operating Officer, W. Gil West, also made $8.4M in 2018;
Delta’s Chief Financial Officer, Paul Jacobson, made $5.7M; and
Delta’s Chief Legal Officer, Peter Carter, made just $4.1M.
So, being against a union, I’m sure Delta must be hurting financially, right? Particularly after compensating their executives so well?
In 2018, Delta’s profits were $3.9 Billion (page 54 of their 10-K) and paid $909 Million to its shareholders (that’s dividends (CASH MONEY), not the increase in market capitalization, page 56 of their 10-K).
So what would, say a $6K/year raise for the bottom half (under the median) of its employees look like?
Per Page 10 of their 10-K, Delta had 89,000 employees in 2018.
Half of that is 44,500 employees.
Times the $6K raise, equals $267,000,000.
Which still would leave $642 Million they could have still paid out to shareholders.
How terrible for Delta and its shareholders.
Pay your people,
The Anxious, Amateur Economist
The Anxious, Amateur Economist 