Is outsourcing good for travelers?

Anatoliy Lukich /
Anatoliy Lukich /
If you think the outsourcing and off-shoring of American jobs has gone too far, you might think twice before flying on United Airlines.

The carrier recently fired 220 airport employees and as of Oct. 15 will be contracting its ramp and customer service jobs at airports from Albany, N.Y., to Tucson, Ariz.

“While these were difficult decisions, we must continually look for new opportunities to run a more efficient and financially sustainable business,” United spokesman Luke Punzenberger says.

But is outsourcing really so awful? The reflexive answer among consumer watchdogs is: of course. They say it creates shoddy products, frequent service failures, and, naturally, forces you to speak with incomprehensible agents in offshore call centers.

No question, eliminating these jobs is horrible for the laid-off United employees. It’s also a problem for industry apologists who make the ridiculous claim that airline mergers don’t result in pink slips being handed out like Halloween candy. Those airline fanboys live in a fantasy world.

But for passengers, working with a subcontractor is often only a minor irritant. Geno Gruber, an ad executive from Chico, Calif., and a United frequent flier, tried to check in for a recent United flight at Washington’s Dulles International Airport. He says an outsourced agent kept asking for his passport, even though none was required.

“He made the simple task of checking a bag really difficult,” he says.

One of the worst airline outsourcing incidents happened last summer, when the parents of 10-year-old Phoebe Klebahn accused United of losing their daughter when she flew from San Francisco to Traverse City, Mich., via Chicago O’Hare. The angry parents, who were frequent fliers, blamed United’s babysitting subcontractor, who they say had failed to supervise the unaccompanied minor. The airline claims it never lost Klebahn’s daughter and delivered her to her destination after she missed a connection.

United isn’t the only airline engaged in outsourcing. It’s a safe bet that US Airways and American, which are hoping to merge,are already looking for ways to shed employees. Outsourcing touches every aspect of the travel experience, from the moment you pick up the phone to book a ticket and hotel room, until you collect your luggage at the airport. Everything from the crew on your next flight to the nanny at your hotel may be handled by a different company. In most cases, the experience is so seamless that you don’t even know about it, and when something goes wrong, the company promptly takes responsibility for it instead of blaming a vendor.

Do travelers care if the baggage handler doesn’t work for the airline?

Well, no. They’re only upset when the baggage gets lost by the subcontractor – an important distinction that outsourcing critics conveniently overlook.

Gruber says United should set a minimum customer service standard for all its employees and contractors.

“If you can outsource without falling below your benchmark, that’s great,” he says. “If you fall below your minimum standards, then outsourcing has gone too far.”

That makes sense, and United says that’s exactly what it’s doing.

“We continue to hold all the vendors who serve our customers to the highest standards,” says United’s Punzenberger.

Some within United doubt that. Marilyn Reynes, a United customer service representative in Albany who is about to lose her job, says the airline simply decided to outsource because it could get away with it.

“United no longer cares about service,” she says.

I searched far and wide for examples of customer-hostile outsourcing in the travel industry and was surprised when I came up empty-handed.

One hotel subcontracted its housekeepers. Another resort hired a company to handle its activity center. Airlines routinely contract with outside companies to handle airport service, catering and maintenance. Travelers are none the wiser.

Maybe, just maybe, the travel industry hasn’t taken outsourcing far enough. Other industries have done more aggressive outsourcing, unobstructed by unions and labor agreements, leading to bigger savings. If you work for a technology company, you probably already know the benefits of hiring a third party to handle some of your work.

In information technology, companies save between 6% and 20% by outsourcing, according to one survey.

Travel companies, and particularly airlines, need to hold the subcontractors accountable for their service instead of pointing fingers when something goes wrong. Practically speaking, that means you shouldn’t delay your frequent fliers with silly questions. Oh, and try not to lose their kids.

As long as their level of customer service doesn’t go into a tailspin, customers will stay on board.

Is outsourcing good for travelers?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at Got a question or comment? You can post it on the new forum.

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  • polexia_rogue

    or MAYBE employee unions should not be so demanding.
    here is why they outsource- you can get more labor for less then what you pay a union employee.

    does the quality go down? yes.

    are there ways the big shot CEOS can cut their own pay in order to meet union demands- yes (but that won’t.)

    Here in San Francisco we have BART (our metro system) and BART employees go on strike all the time- and seem to always get what they want- — WHY? because we only have 1 metro system, and it is difficult to train new, cheaper employees.

    Airline employees need to realize they are expendable; all of their jobs can be done cheaper.
    the only argument they have is “but the quality will go down!”-not realizing that the airlines really do not care.

    so to answer the question- is out sourcing good for travelers- in terms of savings-yes, in terms of quality of customer service no (but since there is not much we can do abotu that, we migth as well enjoy the savings.)

  • Carver Clark Farrow

    Here in Silicon Valley, the tech sector has used outsourcing to great success. Outsourcing can be a great cost savings both for the company and ultimately the customer.

    Outsourcing by itself does not mean a degradation in quality. It really depends on what services are being outsourced and whether management considers it a priority to provide good services in a given area.

  • $16635417

    How about “It depends.” If the choice is using your own employees profitably or outsourcing for more profit, I would say outsourcing is not a good long term solution and vote “no”. If the choice is either to outsource or close a station, I would vote “yes” as tolerating outsourcing would be better than eliminating the service to said city.

  • Miami510

    One of the significant financial benefits of “outsourcing,” is not being required to pay the benefit package. In many cases, this can be 30% of the basic wage.

    A separate area not mentioned, because there is no
    customer- employee interaction is in the FAA required maintenance of
    aircraft. I recall reading an article on this subject some time ago that said the quality of the repairs, the legitimacy of the spare parts, and the expertise of the maintenance crews were significantly less when this work was done outside the US.

  • SoBeSparky

    Outsourcing is a race to the bottom. Many times the reasons for it are to avoid unions, wages, benefits and work rules. So part-time people are hired for less than 30 hours a week with no health care, pension, sick days, vacations, etc. This results in a great job at reducing costs and poor job at dumping the costs of sustaining these workers on the taxpayers. You can’t raise families above the poverty level on part-time work.

    While it is true many union contracts are above industry norms and work rules defeat efficiencies, they at least provide a wage and benefit floor to avoid poverty. Management and labor should renegotiate efficiency-driven and market-priced contracts. Will it happen? Doubtful.

  • Alan Gore

    Oh happy happy joy joy. If you think that having ramp rats rifling your baggage is a problem now, wait until the job is outsourced.

  • AirlineEmployee

    Being a Customer Service agent this is a real sore point for me. It’s not just the airlines; it’s all forms of business here in the United States that either want to off-shore all or parts of their customer service or vendor it out locally altogether. They are chipping away at in-house company jobs bit by bit. What a concept to have jobs in-house and actually let AMERICANS keep their jobs. Jobs needed to pay their bills – electric, auto, mortgages, schooling, housing along with medical benefits etc, etc.
    Talk about the height of insult that United will offer to those 220 employees the “opportunity” to work for the vendor – yeah, (UA employees) are making upwards of $22/hour with medical and travel benefits and instead would be offered $9.00/hour with no benefits ?? What idiot would do that ? I would rather shovel $h!t in a horse stable. Calling this “customer service” is an oxymoron. The people they hire are nothing but information givers and (kiosk) button pushers. Ask a question about changing a ticket or a ticket rule and you will be met with a dumb blank stare or referral to yet someone else.
    With all due respect to you CE, I resent that you are endorsing this in your article – the so-called benefits and not taking it far enough ? Please stop escalating the already risky loss of jobs in every sector and turning the airlines into a “fast-food” experience (and making it sound good).

    Good for who ? – only the top echelon who by saving money, make more money for themselves — the Teflon, protected heads of Corporation who have no worries that the poor-schmuck family man has to deal with.
    Examples in my next post…..

  • emanon256

    I voted no. I have always been opposed to outsourcing any form of service industry. The contract employees don’t work for the company they are representing, so they really don’t have to care or know what to do. And the company the customer is using can simply blame the contractor to get out of doing the right thing.
    When I used to work for the University we ran our own bookstore, hired our own employees, and service was top notch. The bookstore director reported to me and he ran a tight ship. We paid the employees well, and every once cared about their job. When the state cut our appropriation by another huge amount, the president decided to make up some of the money by outsourcing the book store. I fought him tooth and nail, but he had the final say. When the corporate owned store moved in, they laid off all of the staff, hired new managers for half the pay, new front line employees for minimum wage, and jacked up the prices of the books. Customer service was horrible, the minimum wage employees didn’t care about doing their jobs, the students were upset, there were problems with the right books being in stock. But there was nothing we could do, we had a contract. The school saved some money, but I didn’t think it was worth it, and based on the higher prices of books, and lower staff cost, I think the contract firm made out like a bandit.

  • emanon256

    I really don’t think we as customers will enjoy the savings. I think the CEO and high lever staff will get the savings as increased bonuses and pay, but I seriously doubt they will lower ticket costs because they cut costs on customer service.

  • AirlineEmployee

    Recently flew on AA from LGA with my family. (I do not work at LGA nor do I work for AA). I had a lot of time to observe their operation. It was a bad weather day with many cancellations and irregular ops. AA’s OUTSOURCED red-jacketed lobby staff were not equipped to handle irregular ops, they just shoved everyone onto a very long line while shouting and barking orders to do so. There were less (real) AA personnel behind the counter than these outsourced vendored kiosk button pushers so the line grew even longer and the wait seemed endless to get to an agent.
    I wouldn’t call this a good “customer service” experience; it was just cattle being herded. It was obvious that the AA agents are frazzled and short-staffed; They told me they resent AA outsourcing many of their employees. Not a good experience.
    So decades of experienced agents mean nothing to our corporate leaders – airlines run by lawyers instead of dedicated airline executives. No wonder the day will come when people will check in without any human contact including the gates. Passengers will have to become their own travel agents, booking agents, ticketing agents, and clever trouble-shooters to deal with anything that can and will go wrong. Good luck.

  • emanon256

    While I am against outsourcing for customer service, I agree with you on tech, at least in the case I am about to describe. With my former company, we went in and did full scale system implementations as contractors. When a company is implementing a new system, its much cheaper to hire a team of US based consultants who are highly trained to come in and run the full scale implementation, than to hire new staff, train them, and do it yourself. Also once the company is done with the implementation, they have tons of new staff and no work for them.

  • RetiredNavyphotog

    Oxymoron = United airlines + customer service.

  • John Baker

    Done the correct way, outsourcing is almost always better for the customer. Don’t believe me?

    What do we as a customer really care about? The cost of our airfare to get from point A to point B. When outsourcing is done correctly and the contractor maintains the same standards, it can result in a better experience for the customer.

    Here’s some examples:
    1. Pooled resources during irregular operations – one of our local airports has used contractors to run the ground staff for a while. It means when things go wrong, they have a much bigger staff to call on than a single airline could afford. Two years ago, we had a flight cancelled during the Friday of a long weekend. We had the ground staff wearing the uniforms of multiple airlines plus the site supervisor all working to reaccomodate the flight. 5 people got it done much faster than the two working the airline that night could have.

    2. Better efficiency – that same airport contractor uses a shared crew for the ramp. It means that the airlines can have multiple flights leave in quick succession because a crew can work a UA flight followed by an AA flight. It also helps because the contractor needs less equipment on the ground. If UA or AA was staffing the airport individually, they would need a back up of everything in case something broke. By using a a contractor, the two can share back ups.

    3. Better people – I can hear people arguing now… and here come the naysayers and down votes. I fly in Europe a lot where using a single ground contractor for multiple airlines is fairly common. I was talking with one of the CSRs working my flight last year and she’d related that she wouldn’t work for the airline. Due to their limited flights a day, they wouldn’t be able to give her a full time job. Because of the pooling, she was working my airline in the morning and a different one that afternoon. Oh, and they were organized (ie Unionized).

    4. Better schedules / more destinations – The cost of the ground staff factors into an airline’s decision to offer service / often they offer service. Staffing up and entire station for one or two flights a day would be cost prohibitive. Using a contractor to share those resources among multiple airlines means that the airline might be able to offer service somewhere where it would otherwise be able or at a time it might not be able to.

    Finally, cost. By sharing resources its cheaper for the airline (see 4) and results in lower airfares.

    So as long as the contractor maintains the same or better standards than the parent airline, outsourcing works. When they drop their customer service standards, it doesn’t. Oh for the record, I’d much rather have an issue at the local airport I talked about instead of ORD. The staff is a lot nicer than the rude folks wearing the airline uniforms and working gates a ORD.

    Edit: Website and IOS had “issues” letting me finish so I had to change computers half way through

  • justmeeeee

    Yes, in today’s economy you can pay people substandard wages (a la Walmart) and tell them they’re lucky to have jobs–if all the various components of running the airline are outsourced, then there’s no chance the employees can band together and demand a fair share of the pie. But you can be damned sure the execs of those outsourcing companies and of the companies employing the outsourcers are continuing to rake in their own millions!

  • justmeeeee

    Yes, cheating employees of reasonable benefits is one of the big, big reasons to outsource!

  • Carver Clark Farrow

    You resent Chris having a position that’s different than yours? Can’t reasonable minds differ?

    Edited: I guess not. No room for anyone’s opinion.

  • Carver Clark Farrow

    The outsourcing debate is about 2 unrelated issues. The quality of the service and the potential reduction in American jobs.

    The quality argument is a red herring. That has nothing to do with outsourcing, but rather management directives. If all management cares about is saving money, then they get the cheapest, crappiest, company that can perform at minimum standards. Consider McDonalds worker’s vs. In-N-Out workers (for the West Coast folks). Exact same job, radically different levels of competency. In-N-Out also pays its workers more.

    The other question is the reduction in American jobs due to foreign outsourcing, or the reduction in salaries of workers who’s job are no longer in-house. Its a legitimate point. Of course, we only seem to care about other worker’s when its our own job on the line. I don’t hear anyone complaining that the housekeeping or janitorial staff when its no longer in-house.

    But the reality that we must consider is that as the economy gets more global, we can no longer afford protectionist policies, no matter how well intended.

  • cowboyinbrla

    Exactly. Which is why single-payer health insurance and a major reform of the labor laws would eliminate a lot of this kind of gaming the system to juice profits to pay executive bonuses. When the law mandates significant benefits (time off for having children, mandatory vacation minimums, etc.) and there’s no savings to be had by cutting health care benefits because they’re paid for via taxes instead… then companies can actually compare REAL benefits of outsourcing to in-house employment.

  • cowboyinbrla

    There’s truth in what you post, but there’s a difference between all airlines at an airport pooling resources to hire a single baggage contractor, for instance, and one airline deciding to just contract out that part of the service. When it’s the latter, all you get is cheaper labor that most likely doesn’t care as much. A contractor for United is no more likely to help AA’s in-house staff than UA’s in-house staff would. The key there is figuring out which services are better provided by the airport contracting with, or hiring, crew than the individual airlines.

    In other words, “pooled operations” is key in your example, not “outsourcing”. The “pooled operators” could just as easily be full-time employees of the airport itself, provided as part of the terminal leasing arrangement, as an outside contractor.

  • bayareascott

    In this example, it is the former scenario.

  • bayareascott

    A big problem is that the majority of consumers could care less about workers’ wages and benefits if it inconveniences them or costs them a few pennies….until their jobs are in the crosshairs, of course.

  • bayareascott

    Exactly. This is where Corporate America is taking the American workers and driving them all into the ground.

  • bayareascott

    Because they keep outsourcing more and more of their agents.

  • Carver Clark Farrow

    What’s the difference? They are still not the Airlines employees?

  • AirlineEmployee

    okay, resent was not a good word to use…..let’s just say disappointed that seems to be perpetuating outsourcing, use of vendors, off-shoring, etc.

  • Sam Varshavchik

    The social engineers who believe in creating big government mandates in order to construct some kind of a workers’ paradise of an utopia always are shocked when they discover that there are always ways around any mandate.

    For example, a new law is about to go effect that mandates employers to provide health coverage for full time employees. Perhaps you’ve heard of it. Well, they’re shocked, just shocked, when employers fail to play game, and instead cut full time staff, and replacing them with part time staff, which are exempt from health insurance mandate.

    Just keep piling on more mandates on employers, in a naive belief that employers are endless funding source for socialist utopia. Employers will simply end up cutting staff altogether, and replacing them with 1099 subcontractors.

    Just as a reference point, I’m a 1099 subcontractor in my field of work. The reasons for that are not relevant here — I’ve been one for about twenty years now — and although in my line of work almost everyone is a salaried employee (and I constantly have to disappoint aggressive headhunters for salaried spots), I have my own reasons why a 1099 gig works for me, and I take care of providing my own benefits, and fund my own retirement plan, more efficiently, and at a better bang for the buck that any employer could.

    I certainly don’t wish to discourage anyone who believes that the greater good requires government to force employers to provide even more fringe benefits for the proletariat. The more costs the government piles on employers; the more expensive it becomes for an employer to hire an employee, the more competitive my own services are, and the better off I will be.

    But just don’t let anyone be disappointed, when it becomes so expensive for their employer to keep their current level of staffing, that they are the one who are chosen to get laid off, so that the employer can, instead, send the laid off employee’s salary, instead, to Uncle Sam, in order to pay the increased costs for their remaining staff.

  • AirlineEmployee

    Let’s face it, Airlines don’t want their employees to be unionized, now more than ever. Why? because this does not allow them (the company) to call all the shots regarding wages, work-rules (overtime, breaks, job descriptions, work areas etc.) and other benefits. Why allow employees to have any say in the matter when you can control or change anything at whim ?
    I’m no lover of all unions and not necessarily pro-union but being part of a merged airline (one was unionized, the other was not), I am glad to be in the unionized end of things (voted to remain unionized). In this case we see it as the lesser of two evils. The work rules, wages and benefits are far superior than the non-unionized 1/2 of this merger. Incremental wage increases, work rules, vacations, days off, trade rules, etc., etc. are leagues apart. The other airline employees had to pay for their medical benefits; they simply questioned nothing for many years; just worked like puppets. No thanks.

  • $16635417

    The poll question does not apply to the story.

  • bettyblanco

    Let’s pay employees what they are worth, not what some union mandates.

  • Grant Ritchie

    Or what the government mandates. California just mandated a $10 an hour minimum wage… which means, in effect, that every other Californian’s wages just went down. I don’t know why the politicians don’t seem to get that, but I DO know that nowadays, I’m just getting by on the kind of money I used to dream about making.

  • RetiredNavyphotog

    It’s a shame because I used to fly United all the time. The last time I flew United and checked in for an international flight at Dulles, it was an outsourcing agent who was supposed to help us with the check-in kiosk. I felt there was a complete lack of understanding in case of any problems. There were very few United employees present to help. First there were the check-in kiosks that eliminated the need for all the United employees and then the outsourcing agents were in place.

  • bayareascott

    Don’t know what you are referring to. You talked about two choices in your comment. The outsourcing referred to in the story is the former of your two choices.

  • justmeeeee

    which is why health-care should be government provided in the first place–to keep the scamming empolyers from trying to game the system.

  • Sam Varshavchik

    Riiiight. The government has already did such a great job running health care. Just ask anyone on Medicare. They’ll tell you all about how great of the job the government has been doing.
    We don’t have to wonder what government-run healthcare is going to be like. We’ve already had, for the longest time, government running single-payer healthcare for a portion of our population; namely those over 65. All anyone has to do, in order to figure out how great it’s going to be, is to look at Medicare as the shining example of government-run healthcare.

    I mean, it’s so great, nobody ever has a need to purchase supplemental insurance, for stuff that Medicare doesn’t pay for. Oh, wait…

  • justmeeeee

    Not our government, but governments that actually do it with concern for the people being governed–Switzerland, Austria, Canada, and so on, and so on, and so on…

  • Sam Varshavchik

    … and like England, right? England’s National Health Service, right? So much concern, so much compassion…

    Well, one of my distant relatives is a British subject, he can tell you all about their great national health service. Don’t mean to get anyone squeamish, but some time ago he began bleeding where one should not be bleeding. So he went to his NHS doctor. Oh yeah, sure, we’re going to schedule you right up for a colonoscopy. It’s not an emergency, there’s no imminent threat to life, just a little blood, and the waiting list is six months. Here’s some cotton, stuff it up your bum, and we’ll see you in six months, cheerio!

    He had to fly to Germany, and take care of this, instead of waiting for his government to take care of his health.

    When someone has a major health problem, they don’t seem to fly to Switzerland, Austria, or England. You see all though geriatric middle-eastern oil sheiks, who need to do this or the other. They come to the United States, to get the best health care in the world. For some strange-reason, government run health care, elsewhere, never quite makes the grade.

    If you think our health care is too screwed up, and expensive, just wait until it’s free.

  • justmeeeee

    As opposed to the US, where 15% of the population have no health coverage at all…yeah, that’s the ticket!

  • Sam Varshavchik

    That sounds about right for the percentage of the population who are young individuals, who simply choose not to buy health insurance coverage. I know quite a few. That is their decision to make, as free individuals. And I believe that it’s their right to make.

    But let’s take that 15% number and run with it. If the problem is truly just 15% of the population, why does fixing that requires a wholesale replacement of the entire health care industry, which is going to affect EVERYONE, and not just the affected 15%, a massive new federal bureaucracy, and a slew of new federal taxes? That makes no sense to me Why do we need to create a monstrous new bureaucracy, instead of simply expanding Medicaid to cover the existing uninsured? You want to cover the remaining 15%. Fine, expand Medicaid to cover them, and leave everyone else alone. That’s what’s Medicaid’s supposed to be, government-subsidized health care for those who don’t make enough to pay for it out of their own pocket. That’s what it is supposed to be all about. So, why again, remind me, we have this train wreck destroying full time jobs, and the rest of the economy?

    What’s happening right now, what you’re reading in the news, the links that I’ve posted, is not just the process of extending health care to those 15%. It’s affecting everyone, at all income levels. All those people, who were interviewed in those sob stories, they sure don’t look like the wealthy to me, you know, the ones who are supposed to pay for all this? I don’t recall the last time I met a millionaire who worked at Trade Joe’s. So, explain to me how punishing the poor working stiffs who work for Trader Joe’s, or McDonalds, or Walmart, or Forever 21, as a result of this massive change in the law, ends up helping those 15%.

    So now, most of those 15% are still going to be without health insurance coverage, because it’s still going to be cheaper for them to pay a small penalty, instead of paying for full fledged health coverage that they don’t want; meanwhile much more than 15% of the population are now losing jobs and/or their existing coverage, as their employers are cutting their hours, and bumping them down to part time status, as the result of the new health insurance mandates.

    And, the icing on the cake is that the employer mandate, as we’ve all heard, has been pushed back by a year, but the employers — as the links I’ve posted above appear to suggest, are not taking any chances — and they continue to reduce their headcount. Meanwhile, the individual mandate has NOT been pushed back; and although your employer have gotten a waiver, YOU didn’t, you’ll have to comply with the law, and be required to purchase health insurance, starting next year. So, if you’re employed by Trade Joe, using one of the links I posted before, and Trade Joe has bumped you down to part time, and yanked your health coverage, welll, you’re still required to buy health insurance. You’re now supposed to figure out where your state’s health exchange is, where to go, and how to buy insurance from them, and hope that you qualify for some subsidy. They’re all going live in just a few weeks, but pretty much everyone knows, but refuses to admit publicly, that it’s going to be a major fustercluck of train wreck, but, hey, the government should run healthcare, didn’t you know that?

    And hey, health care is going to be “free”, now! Enjoy paying for your “free” health care, out of your own pocket, next year.

    Everywhere you look in the world, where the government runs health care, it always ends up devolving to the lowest common denominator; rationing, waiting lists, massive corruption, and health care decisions driven by government budgets and politicians, rather than healthcare professionals; all in the name of the of providing “free” healthcare for everyone. But, guess what, the rich and the wealthy will still be able to enjoy a higher quality of health services. They’ll still have the means and the resources to freely travel, or buy superior healthcare out of their own pocket. The only ones who will be stuck on waiting lists, rationed care; the only ones who will have to deal with massive errors and headaches, that comes with government-run healthcare (just ask anyone on Medicare), will be everyone else.

  • BMG4ME

    I know plenty of people that can only feed their families because of outsourcing. I was one of them once, when I was working in our services organization (a large IT firm).

  • dave3029

    Regarding the upcoming healthcare law…. many employers are going to be shocked when they find out the law is not “50 full time employees”, but “50 FTE” or “full time equivalents”. That means if they have 100 employees working 15 hours a week or more (remember, the new law states that 30 hours a week is considered “full time”) or any combination thereof that gets them to the magic number of 3000 manhours per week, they WILL fall under the guidelines and have to provide healthcare options for their employees.

  • Sam Varshavchik

    You mean to tell me that you have a better understanding of the new healthcare law, than the HR lawyers at Trader Joe, Walmart, McDonalds, and Forever 21?

    You mean, that all of them are wrong, in their belief that replacing full time with part time headcount is going to exempt them from the employer mandate, insofar as their part time staff is concerned? You mean to tell me that /all/ of the mainstream media, from CNN down to MSNBC, who have been reporting all of this, on the record, that all these employees are doing it to avoid the mandate, and that /none/ of them have mentioned that it’s not going to work, because /none/ of them are aware of this unique interpretation of the law?

    Color me skeptical.

    No, it’s painfully obvious that this is OFA-originated spin control.

  • Judy Serie Nagy

    Theoretically, outsourcing is fine for travellers. I’m sure the top dogs think it’s a very clever way to cut costs. However, when there’s a problem such as a delayed/cancelled flight, there is NO customer service to take care of it. We experienced it recently with British Air in Bologna … it was a nightmare that lasted all day and we only got to London (at midnight) because we were pro-active with the rebooking and didn’t just stand around waiting for BA to do something. They never did do anything and scores of people spent the night at the airport. If BA had personnel at the Bologna airport, someone would have rallied them and taken care of us but the contractor had other airlines to deal with and nobody to help with the BA problem.

  • skoc50

    Wait till United Airlines loses your bags for 4 days. See how you like outsourcing then!

  • Another Airline Employee

    “It’s a safe bet that US Airways and American, which are hoping to merge, are already looking for ways to shed employees.”

    Will they offer buyouts? Approximately when do you predict this will happen? Before the end of the year?

  • Lindabator

    Amen! Happens each and every time. This is not something they do for US – but for a mere handful of execs.

  • Lindabator

    Unfortunately, outsourcing won’t save the client a dime – just make more moeny for the big execs. So we don’t get the savings, and now no service either. Oh, yee-haw!

  • Lindabator

    The difference is they work for the airport, not the airlines – jobs are different.

  • Lindabator

    And who determines that? The greedy companies who think you should work for peanuts while they count their million-dollar bonuses? What a maroon!

  • cowboyinbrla

    I’m saying, Carver, that there’s a difference with regard to pooled operations as noted by the poster I was responding to. When the airport as a whole outsources baggage operations to a single company, they can move agents around from airline to airline as flight levels (and timing) fluctuate. They have a bigger pool to call upon to work extra, say, if another airport has to close and multiple flights headed to that airport are diverted to the one with the pooled operations. Granted, these are not common occurrences, but they’re a time when people are most likely to want some extra hands on deck.

    Those benefits don’t happen if only one airline at an airport outsources, or if they all outsource to different companies. In those cases, it’s just as though they were employees for the purposes of being available to help. Although I suppose Airline A’s outsourcer could always contact Airline B’s outsourcer and see if they could subcontract some work for the evening. More complicated, but doable, in theory.

  • Carver Clark Farrow

    So then are you saying that outsourcing is sometimes good for travelers, it just depends on the specifics of the outsourcing?

  • Guest

    Be as skeptical as you want – – it’s not MY “unique interpretation”. Google “Obamacare FTE” and read the results for yourself.

    Below are a few examples. I had to put a space between each character as Chris’ blog flags anything with a link in it as “awaiting moderation” and I wanted this up without delay.

    Look at section 8 at h t t p : / / w w w . c p e h r . c o m / a f f o r d a b l e – c a r e – a c t – o b a m a c a r e – f o r – b u s i n e s s

    Look at the section for “Full-time equivalents treated as full-time employees” at h t t p : / / w w w . l a w . c o r n e l l . e d u / u s c o d e / t e x t / 2 6 / 4 9 8 0 H

  • dave3029

    Be as skeptical as you want – – it’s not MY “unique interpretation”. Google “Obamacare FTE” and read the results yourself.

    The law very clearly states that (1) a full-time employee is one who works 30 hours or more per week, and (2) that anyone working less than 30 hours per week will have their hours added together with all other under-30 hours employees and divided by 120 (for a month) and that number will be added to the number of 30+hour employees to determine that the employer HAS to provide healthcare benefits.

  • Sam Varshavchik

    Yes, I googled it, and you’re wrong. The FTE test is used only to determine whether or not a business crosses the 50 employee threshold, but not which employees must get employer-provided healthcare, from employers that exceed the 50 employee FTE requirement.

    “…that the employer HAS to provide healthcare benefits.”

    Right, but only to their employees that work over 30 hours.

    There is no shortage of self-appointed experts on the Internet, who claim to know better about the new law that the corporate lawyers at Trade Joe, Walmart, McDonalds, Forever 21, and others. Unfortunately, they’re all wrong.

    So, if you are a part-time worker, and you were hoping against hope that, due to this OFA-spinned interpretation of Obamacare, you will continue to receive health-care coverage from your big employer, well, you’re going into to be in for a very rude surprise, come January 1st.

    As you acknowledge, the law “very clearly states” that a “full time employee” is one that works 30 hours a week. Well, the law also “very clearly states” that an employer that employs more than 50 employeers, or 50 FTEs, to be pedantic, is required to provide healthcare coverage, or pay a penalty, to their “full time employees” only. Sorry, but that’s the law.

  • justmeeeee

    OMFG. You really think that the 15% uninsured in the US represent only young, healthy folks? Come down off your 1% cloud sometime and look around. Expanding Medicaid is actually an integral part of the Affordable Healthcare Act, but a part that many wacko right-wing if-you-get-sick-please-just-go-away-and-die state legislatures have opted to refuse to participate in.

  • Sam Varshavchik

    Thank you for admitting that I was right, by the virtue of your childish, silly, ad-hominem attack.

    You were unable to dispute the fact that part time employees are not required to have employer-provided health care plan, and that millions of poor and lower working class are getting laid off, or being cut to part time work, as a result of PPACA. And for the rest, instead of a $2,500 cut in health care insurance, that Obama repeatedly promised them three years ago, their premiums are getting doubled.

    And, no, I don’t just think that most of that 15% of uninsured are young, healthy adults.

    I know it.

  • dave3029

    It is possible that some of the additional sources I’ve read misinterpreted part of the new law – – but as you acknowledged, simply shifting part of a workforce to part-time will NOT allow the employers to completely bypass the 50 FTE requirement. Using your example, if they have ANY employees working 30 hours or more, if the hours the part-timers work add up sufficiently, the employer will still have to either provide healthcare options to the “full-time” employees or pay the penalties.

    For the record, I’m employed by a HUGE multinational tech corporation, working 40 hours per week. There are NO part-time workers in my division (which has over 500 employees in one location alone, out of over 10,000 globally). I’m not sweating MY benefits.

  • Sam Varshavchik

    That’s not the main point of contention. The argument is that the employers /are/ shitfting as many of the workers as they can to part time status, and kicking them off their existing plans for part-time workers, which do not meet the requirements under PPACA. Earlier on in the thread, I posted a bunch of links documenting multiple instances of this happening, all across the fruited plain.

    Then, here comes the spin control: “duh, as long as they still have 50 FTEs, they still have to provide health care”. Right, but to their remaining full time employees only. And any new hiring that’s going on, it’s mostly part time. Over the last year, there were four times as many part time hires as full time, reversing the trend in the prior years, of six full time hires for each part time hire.

    Go and ask all the new part time employees, of McDonalds and Forevever 21, who are not required to receive employer-paid coverage under PPACA, and who ain’t getting it, whether or not they give a frak if their employer still has to provide coverage to their other other, full time employees.

    Then, ask them if they still believe the “if you like your current health care plan, you can keep it” promise.

  • Deborah Newell Tornello

    When people are paid a living wage, consumer spending goes up (as opposed to people making do with old goods) and when consumer spending goes up and the economy is stronger along with it, employment goes up, and along with that, you get higher wages overall as companies compete for employees as opposed to the other way around.

    The reason you’re “just getting by” on money that once seemed like a lot is, hello, inflation. Everything in 2013 is more expensive than it was a few years ago, and what used to buy you a lot now only buys you a little. For the purpose of your argument, such as it is, it’s a completely different issue.

    The price of consumer goods does not, over time, appreciably rise simply because minimum wages are now legally required to be higher–that’s an old conservative myth that ignores the complicated factors that drive market price–like supply, which is determined by factors like weather, trade agreements, and so forth. Or by outright market manipulation like commodities speculation (several years ago, BP traders were caught doing this and the company paid yet another record-breaking fine).

    Does you also not get that the stuff you buy at Wal-Mart is not only artificially cheap because it’s made abroad, but artificially cheap because their employees are paid rubbish wages? And that as a result, a huge percentage of people working there must rely on things like food stamps, the cost of which is passed on to you and me, often via reduced public services, because God forbid taxes go up? Meanwhile the Walton family grows ever wealthier, thanks to those low, low wages and the fact that the Walton’s greed means taxpayers subsidize their workers’ needs. That’s right: fully-employed people need public assistance to feed their families. I imagine you probably complain about “all the people who use food stamps”, not realizing that this country’s uniquely low minimum wage is directly connected to that. Even right-leaning countries like Australia pay more than the States does–$14.50 per hour–*and* they have universal health care, with sliding-scale rates for low-income workers.

    It’s just arithmetic. And basic economics.