The International Association of Machinists union has agreed to a two-year tentative contract extension with McGee Air Services, the Alaska Airlines subsidiary that provides baggage handling and airplane cleaning services to its fleet.
The contract will cover 2,300 workers at eight airports around the country, with 788 of those Washington state.
The base wage scale covering workers at Seattle-Tacoma International Airport barely tops the 2023 $19-an-hour minimum wage there and is likely to fall below it by 2024.
Counterintuitively, McGee can legally pay less than the minimum wage because its workforce is unionized. The exemption in the minimum wage law that allows this anomaly explains why Alaska chose to unionize this group of workers after its history of busting the same union.
Alaska Air spokesperson Bobbie Egan said employees who show up for their assigned schedule can earn up to an additional $4 per hour for “reliability,” which hikes the hourly rate well above the minimum wage.
And John Coveny, who as the IAM’s directing general chair of Local 142 led the contract negotiations, defended the overall agreement by citing the added benefits in the package.
“The value of the contract itself far exceeds the dollar amount that they put in their pocket,” Coveny said. “You get your vacation, your holidays, your sick time, your 401(k), your medical and all the other benefits that come along with it.”
The new contract requires McGee to set up a 401(k) retirement plan for the workers starting in June, with the company matching employee contributions up to 3% of their salary.
It also adds a company-paid $50,000 life insurance policy for all employees. And it increases the accrual of paid time off.
If ratified, all employees will get a one-time bonus of $1,275.
The contract provides a 5% wage increase across the board, but the wage scale remains low.
Falling below minimum wage
Without the “reliability” addition, a new hire at Sea-Tac airport will start at $19.52 an hour. That’s less than 50 cents above the minimum wage at the airport, which rises in January to $19.06 per hour. The top of the scale is only $21.47 an hour.
And because the wage scale increases are small, when the city of SeaTac’s minimum wage rises again in January 2024, McGee’s starting wage could fall below minimum wage, at least until a July 2024 raise pegged to inflation in the agreement.
The reason this is possible is that the city‘s minimum wage ordnance has an exemption that specifically allows a union collective-bargaining agreement to waive the law. Unions then negotiate whatever terms they can get, ignoring the law.
(There’s no such provision in the city of Seattle’s minimum wage law, but it’s common in other living-wage ordinances, including those governing some other airports where Alaska operates.)
This anomaly explains why Alaska Air, after getting rid of the IAM in 2005 by outsourcing baggage handling to nonunion contractor Menzies, abruptly reversed course in 2015 and ousted Menzies to bring back the IAM.
Alaska Air had publicly opposed the minimum wage law, but once it passed in SeaTac, unionizing was a way of getting around it.
That strategy is not lost on the IAM’s Coveny.
“If the law as written says a [labor] contract supersedes it, then these companies would be crazy not to organize and try to negotiate the wage down lower,” he said.
Coveny added that it’s up to the union to try to negotiate wages upward, though he contends that the added value of the benefits in the IAM contract needs to be taken into account.
“Our folks who are making roughly $20 an hour, at the end of the year their package is almost time and a half what the money [in wages] was worth,” he said.
Still, right now, a food service worker inside the airport terminal will earn almost as much as a starting baggage handler, who is required to do constant heavy lifting, much of it outdoors in all kinds of weather.
Only after a new hire shows up on time enough to earn the extra reliability pay will the wage bump up to $23.52 per hour.
In the summer of 2021, when the pandemic had created a severe labor shortage while air travel boomed, Alaska was so short of ramp workers it asked executives to volunteer to sling bags in the bowels of Sea-Tac airport, and McGee offered an additional $2 per hour temporary bonus plus another $150 per two-week pay period for those who worked the full 80 hours.
Those bonuses are gone now.
How a union wage scale can fall below the minimum wage is also clear in another IAM contract that was agreed upon this past summer for 5,300 direct Alaska Airlines employees who work as gate agents, stores personnel and office staff, as well as for ramp workers who load cargo.
Starting pay for those workers is now $18.50 per hour, higher than the 2022 minimum wage at Sea-Tac of $17.74.
In June, Alaska’s Chief Operating Officer Constance von Muehlen praised that agreement as providing “a significant, market competitive boost in pay across our team.”
But that wage rate falls below the $19.06 per hour minimum wage that takes effect for other Sea-Tac workers on Jan. 1.
Even when the pay for new hires in that contract bumps up to $18.96 in August, it will still be below the minimum wage.
The McGee baggage handlers and airplane cleaners have similar wage prospects.
In a statement, McGee Air Services President Justin Neff, who formerly worked for eight years directly at Alaska Airlines, said, “We’re proud of this tentative agreement and the enhancements it brings to employees and the foundation it sets for our future success.”