This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
11/14/2005
Delta Airlines Pilot Strike Understandable
Delta Airline pilots are planning to strike should their employment contracts be rejected through the bankruptcy hearing. Delta states that at this point they don’t know if this act of 6,000 people walking off the job is legal or not. Delta is currently determining whether or not they have to ability to obtain a court order to stop the employees from perusing this action. The second disturbing issue is the concern over the defined benefit pension plan and if this plan is going to continue when Delta emerges from chapter 11. There are many employees that have dedicated their entire careers to Delta and for a corporation to eliminate its allegiance towards the employee after years and years of loyalty, in my opinion is immoral.
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3 comments:
-1 on Tyler's post for spelling errors.
Which is more immoral? Setting up a defined benefit plan and inadequately funding it, or cutting one now because it was inadequately funded in the past? I'm not sure there is a good answer for that.
There is a "law" for this. It is called the Pension Benefit Guaranty Corporation. It is a Federally mandated, unfunded company, which says they'll back up Delta. This, of course, does not encourage Delta to make wise decisions when faced with the moral hazard of a government guaranty.
Dr. Tufte mentioned how the Pension Benefit Guaranty Corporation will back up companies when they go under. I feel bad for the people who lose their pensions, but why is the government rewarding companies that make bad choices and declare bankruptcy? Companies in these situations have little incentive to work hard if they know they can just start over anytime. They have recently tightened the personal bankruptcy laws (though they still need to be more strict); the corporate rules should be tightened as well.
To extend that, why are rewarding employees for putting their faith in management about their retirement, when they may not have trusted or likes those people when they worked for them? They bought into a paternalistic system, and perhaps they should've known better.
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