Christopher M. Broyhill, Ph.D., CAM
As someone who frequently consults, writes, and speaks about business aviation compensation, I am often asked my opinion on the impact of the COVID-19 pandemic on wage growth in our industry. My usual answer goes something like “On the average, I don’t think wages will contract, but I do think the growth curve will flatten.” According to data released by the U.S. Bureau of Labor Statistics today, it seems that the growth curve is, in fact, beginning to do just that.
When I perform compensation analysis, I don’t just look at the aging and regionalization data from inside aviation compensation surveys, I also look at data from the U.S. Bureau of Labor Statistics (BLS). On a quarterly basis, the BLS publishes a statistic on wage growth in private industry, which is where nearly all business aviation operations reside. The fact that BLS data is updated quarterly makes it a much more current and dynamic indicator of wage movement than survey data, which is updated annually and is usually six-months-old when it is published.
In the chart above, I used a 25% average of annual survey wage growth to depict industry trends versus BLS data on a quarterly basis. While there is a difference in height between the industry data and the BLS lines, note that the BLS data acts as a leading indicator for industry trends. For example, in Q2 of 2015, BLS private industry wage growth began to rise. In 2016, industry data rose in a corresponding fashion. You can see similar trends from 2016 to 2017, 2017 to 2018, and so on.
Now, note the dip in the BLS data for Q2 of this year. In Q2, private industry wage growth decreased to .4%, the lowest level since Q2 of 2015. Keep in mind, however, that wages still grew, but they grew by less, in this case, they grew at half the rate of the first quarter. I actually think this is a promising statistic. Given the high unemployment rate and low GDP in the second quarter, wage growth could have been far less or could have even gone negative.
Our national economy is on a slow rebound and our industry is well into its own recovery. If the BLS wage growth remains positive in Q3, I’m fairly certain my prediction about business aviation wages will be correct and the impact of COVID-19 on compensation from an average perspective will be nominal, flattening the growth curve, not making it negative. Sadly, since compensation data has already been collected for 2020, I won’t be able to test that prediction until the 2021 survey data has been collected and analyzed. We’ll all have to have some patience for the final answer.
If you’re looking for compensation analysis that uses a reasoned approach, scientific methods, and relies on data, not opinion, you’re in the right place. And, if want to have access to the business aviation industry’s only online compensation analysis system, see my page on the AirComp Calculator.