Well, this sends a nice message to the American worker...

Discussion in 'Politics, Religion, Social Issues' started by JayMysterio, May 1, 2017.

  1. JayMysterio macrumors 6502


    Apr 24, 2010
    Rock Ridge, California

    "American Airlines agreed this week to do something nice for its employees and arguably foresighted for its business by giving flight attendants and pilots a preemptive raise, in order to close a gap that had opened up between their compensation and the compensation paid by rival airlines Delta and United.

    Wall Street freaked out, sending American shares plummeting. After all, this is capitalism and the capital owners are supposed to reap the rewards of business success.

    “This is frustrating. Labor is being paid first again,” wrote Citi analyst Kevin Crissey in a widely circulated note. “Shareholders get leftovers.”

    Indeed, major financial players were so outraged by American’s decision to pay higher wages that they punished airline stocks across the board. American itself took it hardest on the chin, of course, but the consensus among stock analysts was that higher pay at American could signal higher pay at other airlines too, with negative consequences for the overall industry.

    But taking a broader view, this blinkered Wall Street perspective on labor compensation is, arguably, exactly what’s gone wrong with the American economy. Any given company obviously benefits when it’s able to get away with paying its workforce less. But one company’s workers are another company’s customers. A world in which labor never gets paid is ultimately one in which nobody has much of anything but leftovers.

    Wall Street analysts hate the idea of paying workers
    JP Morgan’s Jamie Baker was even more scathing than Crissey.

    "We are troubled by AAL's wealth transfer of nearly $1 billion to its labor groups,” he wrote, suggesting that the move was not just contestable as a matter of business strategy, but somehow obviously illegitimate."



  2. s2mikey macrumors 68020


    Sep 23, 2013
    Upstate, NY
    Honestly - I HATE Wall Street and obnoxious shareholders. They're never happy and dont pay nearly enough in taxes. Employees and customers should come FIRST, then the shareholders. if they dont like it then dont invest. Duh?
  3. VulchR macrumors 68020


    Jun 8, 2009
    Wall Street can go **** itself. Have of them should be in jail. You'd of thought recent events of crew/customer interactions would have highlighted the need to manage airline staff so that they are treated and as as valued professionals.

    The idea that a company is run solely to enrich stockholders will be the downfall of capitalism. It was a stupid idea when it was first introduced and it is a stupid idea now. Indeed, people refer to the fiduciary requirement to maximise returns for stockholders, but no law exists that requires this. It's just an urban myth that's ruining us. Now, if shareholders could not sell they shares once they invest, and become personally liable for any debt the company incurs, then they might have a case. The fact is, though, that they can sell their shares quite easily and minimise their losses. Thus, their actual investment is low because they can always opt out of being a shareholder of a given company.

    All shareholders are taking a risk when they invest. If the investment does not have a good return, then boo-hoo. Don't bet if you cannot afford to lose.
  4. AlliFlowers Contributor


    Jan 1, 2011
    L.A. (Lower Alabama)
    Shareholders act like they are employees who don't have to do any work. WTH.
  5. BeeGood macrumors 68000


    Sep 15, 2013
    Lot 23E. Somewhere in Georgia.
    Actually, in this case, many of the shareholders are employees (just not necessarily American Airline employees).

    73.8% of AAL is owned by institutional investors, most of whom are mutual funds that make of 401k's and pension funds. So the line between ownership and labor isn't always black and white.
  6. TonyC28 macrumors 65816


    Aug 15, 2009
    Seems like a knee-jerk and stupid reaction from Wall Street. It does seem like a targeted response and like a punishment. Strange story.
  7. Huntn macrumors P6


    May 5, 2008
    The Misty Mountains
    “This is frustrating. Labor is being paid first again,” wrote Citi analyst Kevin Crissey in a widely circulated note. “Shareholders get leftovers

    ******* bankers.

    My money! My money! No real clue about how how a service industry relies on good service to compete. :mad:

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