Midwestern labor market

We recently visited a large avionics shop at an exurban Midwest airport. In business for many decades, they now employ 12 full-time technicians, for whom starting salary is $20/hour (median home price in the area is about $150,000; a brand-new 4BR house biking distance from the airport can be purchased for $250,000; so a person earning $20/hour could afford the median house and a two-income couple could afford the new 4BR house (source)). “It is getting harder every year to hire people who can do this work,” said the manager. What does a beginner avionics technician need to be able to do? Read a wiring diagram, cut wires to the correct length, crimp connectors onto wires, etc. The work must be done diligently and with attention to detail, but no college or engineering education is necessary.

Separately, painting aircraft is very labor-intensive (prepping/sanding) and also requires attention to detail. It can easily cost $50,000 to $100,000 to paint a light jet. One would think that there would be a thriving industry in Mexico to paint U.S.-based planes, but it doesn’t seem to be the case. The Wall Street Journal in 2010 described airlines getting some paint work done in Monterey, Mexico by Saltillo Jet Center, but most of the shops in the article were in the U.S. With labor costs rising in the U.S. could this be a business opportunity for an entrepreneur down there? The typical U.S. paint shop seems to have one or two real experts supervising a bunch of junior folks.

12 Comments

  1. Brian

    September 9, 2015 @ 1:15 pm

    1

    The Saltillo Jet Center seems to be located in Saltillo, Coahuila (the state capital), not in Monterrey, Nuevo León. They’re two hours apart on the highway and a lot further in colonial charm and public safety, both in favor of Saltillo.

    It’d be a shame if Saltillo couldn’t make a lot of money by saving US flyers on painting costs. It looks like there are a dozen airplanes parked around their hangars on Google Earth.

    I’m glad to hear there are still good jobs in the Midwest for midwesterners willing to learn a trade. That’s been the promise of a good life there for a long time, but they say it’s a promise that’s eroding.

  2. Bill Gatez

    September 9, 2015 @ 2:28 pm

    2

    If you want to pay Mexican wages, then go live in Mexico. If you want to enjoy the benefits of living in American society, then pay American wages.

    A 10-20 years go I accepted the “free trade with everyone will make us rich” experiment espoused by economists and politicians. Since then I’ve watched the middle-class standard of living decay. The economic textbooks need to be updated to reflect these results with something like “balanced trade in specialized goods with rich nations benefits us, but open trade with poor nations hurts us (while enriching the very top)”.

    Maybe a non-politician like Trump will fix the obvious imbalances.

  3. jack crossfire

    September 9, 2015 @ 2:44 pm

    3

    Never hard to find people. Just hard to find them at the lowest price. As one who remembers the days of 6% mortgage rates & above, a $150,000 house seems way beyond what $20/hour can afford. They could do everything the Silicon Valley way: don’t hire anyone but borrow 2 billion dollars with no interest & buy out a startup.

  4. philg

    September 9, 2015 @ 2:55 pm

    4

    Jack, thanks for sharing your feelings about affordability and for sharing historical interest rates. http://www.realtor.com/mortgage/tools/affordability-calculator/ and the default current interest rate is how I determined that$20/hour ($40,000/year for full-time work) would render a $150,000 house affordable.

  5. mark

    September 9, 2015 @ 6:10 pm

    5

    I wonder if affordability calculators have something to do with housing bubbles. From my experiences, it would be VERY difficult for someone making $40,000 to afford a $150,000 house.

    I imagine Realtor.com has an incentive to make people buy expensive houses.

  6. ianf

    September 9, 2015 @ 6:23 pm

    6

    @ mark

    Quite right, it’s a very rosy picture they paint, with bare debt & no provisions for unforeseen future outlays (“the known unknowns”), all designed to entice house-wannabes to sign a deal. And if they later have to vacate it at a loss, the realtor has not gone unpaid (see the agent-principal problem)

  7. paul kramarchyk

    September 9, 2015 @ 7:56 pm

    7

    Financial TV (cnbc, Bloomberg) has many so called experts that say, “we need to become more productive” in order to move the economy forward. I think not. Could it be that the “global we” are so productive (efficient) that we satisfy the demand for all the affordable needs and wants of people without employing all the eligible work force? The book “Rise of the Robots: Technology and the Threat of a Jobless Future” (Martin Ford) is based on this concept.
    http://www.amazon.com/Rise-Robots-Technology-Threat-Jobless/dp/1480574775

  8. Andrea

    September 9, 2015 @ 10:28 pm

    8

    Bill Gatez: the economics textbooks already say that (the result is known at least since the ’40s). https://en.wikipedia.org/wiki/Stolper%E2%80%93Samuelson_theorem

    All economists say is that with free trade the total amount of output will be greater, so there would exist the possibility for capitalists in the US to transfer some of their gains to workers, so that everybody was better off.

  9. ianf

    September 10, 2015 @ 10:12 am

    9

    It is getting harder every year to hire people who can do this work,” said the manager.

    I’m not familiar with labor laws in the USA, but, given the attention that the FAA pays to anything concerning work on planes, I wouldn’t be surprised if they required some kind of airframe technician’s certification to allow a worker anywhere near one. Those with a cert & a few years’ experience must be in high demand higher up the maintenance chain. Which leaves that outlet’s line managers with a problem to fill upcoming vacancies with newly (for the occasion) certified DILLIGENT & CONSTANTLY ATTENTIVE TO DETAIL workers. So, no ADHD or Ritalin cures in the past. But I still wouldn’t call a $20/hr (=~$38k/year) job that prevents one from showing up somewhat hungover on Mondays & requires peeing once a week into a cup for a CUSHY DEAL.

  10. philg

    September 10, 2015 @ 10:38 am

    10

    Ian: An admitted lack of familiarity with U.S. labor laws and FAA regulations may not be the best position from which to comment on same…

    Drug testing is once every four years (statistical/random), not once/week.

    An FAA A&P certificate is not required if one is employed by an FAA-approved “repair station” (see https://www.faa.gov/aircraft/repair/ ). Thus a person without even a high school degree could accept a job in this avionics shop and start work immediately (under the supervision of a more experienced employee).

  11. jay c

    September 10, 2015 @ 7:20 pm

    11

    it is really difficult to hire technicians in California. And we pay a lot more than $20/hour. Similar to the Midwestern shop, just know ohm’s law, how to read schematics, how to solder, show up on time, follow directions. I found a really good technician working for my company in a foreign country and I wanted to bring them to the US. The management was incredulous: “Let me get this straight. You want to burn an L visa for a technician?”

  12. Mrs. Lastname

    September 11, 2015 @ 5:41 pm

    12

    Where I live, 20/hr is a typical part-time wage for totally untechnical work like driving grandma to her appointments. And it’s a whitopia where the median household income is maybe 70-75k with two adults working. I’ve seen more and more men vying for these kinds of jobs locally because people have rediscovered that it does take a village and purchasing one is not coming cheap as the villagers learn their worth.

    People also get full time incomes doing yard and house cleaning for 25-50/hr. And again, not a rich area, just one where Americans will do those jobs. So maybe the avionics house should try raising the wage.

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