Charts and Data

Here are charts of the inflation-adjusted raise pools for the last several contracts.

Profs:
Techs:

The projected inflation for 2009-2012 is based on the 1988-1991 time period, when we had a fairly deep recession, with 4 to 5% inflation.

Note that in 2007, a year for which firm data is available, the previous contract paid out roughly 1% when adjusted for inflation. This means that lots of members (who didn't get the full pool amount) got negative raises. Government data for 2008 only goes up to Sept as of this writing, but we appear to be headed for 4% inflation this year, maybe a little higher.

This is why we need a contract with inflation protection. we don't necessarily need COLA like the IAM gets, but we need something better than the joke language in the contract which only pays out when inflation exceeds 10%.

Inflation Protection

I've gone over the current proposed SPEEA contract for 2009-2012, and I applaud the negotiators for getting a reasonably good deal out of Boeing.

I have one criticism, however, and it's a big enough one that I'm voting NO on this contract and also am voting to authorize a strike.

The existing SPEEA contracts have inflation adjustment language that is carefully constructed to never, ever pay out. Look at this link:
ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

Although the formula is probably simple, the contract language describing inflation protection is very convoluted, and I'm not really sure I'm reading it correctly. But if I'm right, the old language (2005-2007) would only never have paid out once in the year between WWI and today. The new language (2009-2012) will pay out if inflation exceeds 10%, which is essentially no protection at all.

IF we have 5% inflation, this contract provides NO RAISE AT ALL. Indeed, since the raise pool is an average across each skill code, if we have an inflation rate that approaches the pool, many members will get negative raise. And we are currently experiencing in 2008 annualized inflation near 4%. (some authorities predict we'll hit 5.1% by year end)

This has already happened in 2007, where the Dec-Dec inflation was 4.1%. Example: If you look at the inflation-adjusted raise pools over the last 20 years, you can see that on many occasions the raise pool was just barely over 1% (profs) or even as low as 0.6% (techs). If the pool is 4%, but inflation is 3%, then your guaranteed 2% raise is actually a 1% PAY CUT.

Everyone knows we're headed into a recession, the question is:

• Is this a recession like 2000-2002, where inflation was around 3%? If so, we're OK.
• Is this a recession like 1988-1991, where inflation was around 5%? If so, we're hurting.
• Is this a recession like 1978-1981, where inflation was around 12%? If so, we're totally screwed!
  

We've become seduced by almost two decades of 2-3% inflation. we can't assume that tomorrow will be like yesterday.

We are heading into terra incognita with the economy right now. The economists look like deer in the headlights in TV interviews. One guy predicts massive inflation, another guy predicts deflation, and the honest guy says, "We just don't know what the heck is going to happen - no one has ever seen economic conditions like the ones we're experiencing right now." Debt is up, inflation is up, unemployment is up, and the government is pumping mega-billions into the economy to try to keep the ship from sinking. when no one knows what the future will bring, we need some sort of protection from inflation >3%.

We don't necessarily have to get traditional COLA like the machinists have to get some inflation. If the contract would simply say that the company guarantees the raise pool will always be at least 2% greater than the annual CPI change, we will have all the protection we need. And it won't cost the company a dime if the inflation rate stays in the 2-3% range. This small change in the contract would be enough for me to whole-heartedly endorse the proposed contract.

We have the greatest leverage we've ever had over the company, with all the 787 delays and the IAM strike, and we are facing the greatest economic uncertainty we've felt in decades. Under these conditions, we can't be expected to approve a 4 year contract without inflation protection.

This is a good contract, and the negotiators did a good job.
This is probably the best contract we can get without a strike.
But it is not good enough for me or my family.
I have enough savings to go 60 days without a paycheck.

I'm voting NO, and voting to authorize a strike.