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How accurate is Labor Dept. Data?

Posted By Barry Ritholtz On September 27, 2005 @ 11:15 am In Economy | Comments Disabled

Fascinating criticism of a recent Department of Labor’s 2004 National Compensation Survey of wages and income (by career) by 2 airline pilots.

It calls into question the methodology and underlying presumptions of the Labor Dept. and by extension, the BLS:

We’re Earning More? You Could’ve
Fooled Us
September 26, 2005; Page A19

Your article "Wage
Winners and Losers: Most Paychecks Fell in 2004 but U.S. Survey Finds Pilots,
Doctors Came Out Ahead
" (Marketplace, Sept. 13) did a grave disservice to
the thousands of pilots who have sacrificed billions in salary concessions and
billions in lost pensions, not to mention the thousands of pilots currently
furloughed and those who have lost their jobs and benefits completely.

The Air Line Pilots Association has serious questions concerning
the Bureau of Labor Statistics data and how the study was conducted. These
questions remain unresolved despite repeated calls to the agency. As we told
your reporter: "We’re unclear how the government could have come up with numbers
that show an increase. This study flies in the face of the reality that pilots
are working more hours while taking substantial pay cuts, losing some or all of
their pensions and paying more for health care."

Capt. Duane E. Woerth
Air Line Pilots

On behalf of the Allied Pilots Association representing the
13,000 pilots of American Airlines, I was surprised to read in your Sept. 13
edition that pilot pay has supposedly increased 15.6% from 2003. You also quoted
Department of Labor statistics that indicate pilots work an average of 20.5
hours per week. In April 2003, our pilots agreed to a 23% across-the-board pay
cut to help American Airlines remain solvent. Since the Sept. 11, 2001,
terrorist attacks, nearly 3,000 of our pilots have taken a 100% pay cut as a
result of being furloughed.

As for how much our pilots work, Federal Aviation Administration
regulations limit airline pilots to 1,000 actual flying hours per year. To amass
that much flying time, our pilots typically spend between 2,500 and 2,800 hours
away from home, with many of those hours devoted to essential pre- and
post-flight duties.

Our experience at American Airlines, the nation’s largest
scheduled passenger carrier, is that our pilots are working harder than ever and
for substantially less income than they were at the beginning of 2003. A quick
scan of the airline industry will tell you we are, by no means, alone in this

Capt. Ralph Hunter
Allied Pilots
Fort Worth, Texas

Pilots making more money, given all the bankruptcies and layoffs? Hardly makes any sense to me. They raise some interesting points — and should make you wonder what sort of unwarranted assumptions are built into the Labor Department models . . .

The graphic detailing the salary gains from the original WSJ article is below.

click for larger graphic

Labor_wages09122005210412 [1]


We’re Earning More? You Could’ve Fooled Us [2]
September 26, 2005; Page A19

Wage Winners and Losers [3]
Most Paychecks Fell in 2004 But U.S. Survey Finds Pilots, Doctors Came Out Ahead
THE WALL STREET JOURNAL, September 13, 2005; Page B1

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2005/09/how-accurate-is-labor-dept-data/

URLs in this post:

[1] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/labor_wages09122005210412.gif

[2] We’re Earning More? You Could’ve Fooled Us: http://online.wsj.com/article/0,,SB112768744339751528,00.html

[3] Wage Winners and Losers: http://online.wsj.com/article/0,,SB112657650869238922,00.html

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