Wall Street versus the American worker

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.

Source: Matthrew Yglesias -Vox

In a just society, those who create value ought to be paid first, and passive owners of financial assets ought to get the leftovers.

The advantage of owning stock in a public corporation is that your potential loss is limited to what you paid and your potential gain is unlimited.   What justification is there for wanting anything more?

Workers are more at risk than stockholders or managers.  When management makes bad decisions, it is they who lose their livelihoods, while those who made the bad decisions are held harmless.

LINKS

American Airlines gave its workers a raise | Wall Street freaked out by Matthew Yglesias for Vox.

The global elite are headed for a fall | And they don’t even know it by Damon Linker for The Week.

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