There's an interesting blog post at Star-Telegram about the proposed American Airlines pilots' work slowdown because of wages.
The article said:
The pilots have some legitimate beefs. They took huge pay cuts in 2003 (like everyone else at American), and contract negotiations have dragged on for more than two years with little progress. They're still seething about bonuses that let American executives cash in on a rising stock price in the recent past. Now the pilots want a return to their old wages. They opened their contract talks by demanding a 50 percent raise and holiday pay for Super Bowl Sunday.
This is the kicker. American Airlines hasn't filed bankruptcy but still significantly reduced the wages of its pilots while giving bonuses to executives. Sound familiar? Right now millions of Americans are taking huge pay cuts because they are afraid of job losses . But even if they don't experience job losses directly these pay cuts significantly decrease their ability to effectively pay their debts and continue their current lifestyle.
Furthermore, the lost wage levels may never be regained as experienced by the pilots in this article. For the pilots, they have worked six years at significantly reduced wages. Is that the future of workers today who are taking pay cuts to avoid job losses? What will happen to the overall quality of life for Americans if they are working at reduced wages for an extended period of time? Well, first off they are more likely to face foreclosure if they purchased their home based on their past income.
Their income is reduced but their mortgage remains constant or increases if they have an ARM. They may be unable to pay off credit card debt because the debt was created under their old/higher salary. If a debtor is suddenly making $500 less each month this is a significant blow to his/her ability to repay debt.
Those workers who have experienced salary reductions instead of outright job losses are also less likely to save for a "rainy day" or retirement because they have less income. When people experience salary reductions, often they don't assess their situation properly, they just "buckle down" and try to endure; but living on a reduced salary while you have huge debts such as a mortgage, student loans and credit card bills is not a solution in the long-term.
Eventually, those debtors living on a reduced salary are going to run up against the many pitfalls (ie. medical emergency, financial emergency, divorce, birth of a child etc.) that will send their financial house of cards tumbling down. This is why it is important that workers who are facing a job loss or salary reduction should consider bankruptcy to discharge or repay their debts under an affordable Chapter 13 Bankruptcy plan.