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Economy is prosperous but insecure



Published: Sat, September 2, 2006 @ 12:00 a.m.



By PETER A. BROWN

MCCLATCHY-TRIBUNE

One of the current political mysteries is why the economic statistics have looked so good for some time while polls show Americans are worried about their financial futures.

My wife's cousin Bud came to visit last week and we got talking about how the vagaries of capitalism have changed his life -- made it at times less secure, but by any analysis more prosperous. His economic situation is one that goes a long way toward explaining this seeming paradox.

Bud has benefited from the forces of open markets and deregulation, but those same forces make it possible, but not probable, that he could be vulnerable to changes that would be disastrous for him and his family.

Bud is an airline pilot for DHL, the German version of Federal Express. DHL bought Airborne Express, where Bud had been a pilot, and which had been a laggard in the U.S. domestic package delivery market. DHL is now trying to compete with FedEx, United Parcel Service and the U.S. Postal Service in overnight delivery.

Here's the interesting thing worth thinking about. Twenty years ago when Bud tried to get a flying job, he knocked on every major U.S. airline and was turned away. He had to settle for a job with Airborne, a position that then paid less and carried much less cachet than flying for United, American, USAir, Northwest, Continental or Delta. Pilots for the freight carriers were then considered second-class citizens in their business.

At the time Airborne offered less money and job security than the firms in the passenger airline business. Those were the days just after industry deregulation and those companies -- now called "legacy carriers" because of the high labor costs that are a result of union deals made long ago -- were fat and happy.

Global economy

No one could then imagine the pressures that deregulation and the global economy would put on these airlines -- that they would face constant fare wars and that upstarts like Southwest Airlines, Jet Blue and AirTran would come into the marketplace and eat the big boys' lunch.

But that is exactly what happened. Virtually all of the "legacy carriers" have had to renegotiate with their unions, cut back on their routes and slash fares to compete with the upstarts. Some have gone bankrupt.

As the companies adjust to the new competitive environment, their pilots have had to take less money and make other concessions to keep the airlines in business.

But Bud is sitting pretty. He makes more money than many of the more senior pilots at the "legacy carriers" and his job seems a lot more secure.

But Bud knows that the same forces that worked to his benefit could take it all away.

The company he works for actually contracts with DHL to provide the pilots for its flights. There is always the possibility that DHL could find another contractor to provide its pilots when this agreement expires in several years.

Of course such a move would be expensive and cumbersome for DHL. It is unlikely to do so because such a change might make it, at least during any personnel changeover, less efficient. That would make it less attractive to its clients, which could cost DHL market share to its rivals.

But this lack of security for both labor and management -- pilots are worried about their jobs so they do everything they can to help the company make money, while DHL can't risk alienating customers with a service disruption -- creates an atmosphere that works for everyone.

That doesn't mean everyone isn't worried that something could come along that would upset the apple cart. It's why people are anxious even at a time when many, but certainly not all, are doing well.

Peter A. Brown is the assistant director of the Quinnipiac University Polling Institute and a former editorial columnist for the Orlando Sentinel. Distributed by McClatchy-Tribune Information Services




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