Global Breaking News - Thursday, September 19, 2024

Waging War on Wages

The parent company of American Airlines filed for bankruptcy last week to, among other things, cut labor costs. Seeking Chapter 11 protection is not uncommon in the airline industry — American was just one of the last big carriers to do so. Why don’t other industries and companies declare bankruptcy to slash wages?

* The Best People Leave First
Companies skirting the edge of solvency can file for Chapter 11, but they risk losing their best workers.
 
* Strategic or Suicidal?
Companies generally do not file for bankruptcy unless there is a serious structural problem with their labor costs.
 
* Costs and Risks
To survive and possibly thrive from bankruptcy, companies should think beyond cutting labor costs.
 
* The Stigma Is Gone
But it's too cynical to say that AMR is just slashing wages and dumping pensions on the government.