In 2008, the New York Times’ great (and now former) labor reporter Steven Greenhouse authored a book titled “The Big Squeeze.” The squeeze in question, of course, was the increasing economic pressure on America’s middle and working classes.
In recent years, though, the squeeze on most Americans has also become physical, as their employers and major investors in airlines cram them into less and less space. From 2010 to 2012, the average amount of square footage allotted to office workers in North America, according to the commercial real estate association CoreNet Global, declined from 225 to 176. As for air travel, according to Consumer Reports’ Bill McGee, “The roomiest economy seats you can book on the nation’s four largest airlines are narrower than the tightest economy seats offered in the 1990s.”
As income goes, so goes space: Unless you have a lot of the former, you’re going to get less and less of the latter. The rise of the open office, where workers are inescapably privy to the once-private grumps and groans of their co-workers, is sometimes accompanied by the establishment of “quiet rooms,” into which employees may occasionally retreat should their work compel them to concentrate. To be sure, the shrinkage of space-per-employee can reduce a company’s rent and inflate its quarterly profits. But as economists ponder the riddle of declining U.S. productivity, they might want to look for a square-footage level beneath which workers’ output is diminished by distraction.
The transformation of most Americans’ air travel experience to a form of mobile incarceration, by contrast, poses no riddle at all: It’s the direct result of investors’ quest for higher profits. In a wondrous op-ed column this month in the Wall Street Journal, Rick Schifter, an American Airlines board member and a onetime partner in and current adviser to a private equity firm that has controlled an airline, extolled the terrific stock performance of U.S. airlines in recent years, by which metric American, Delta and Southwest have landed in the top-10 list of the Fortune 500 during the past three years. The rising share prices, Schifter asserted, are the result of the “consolidation and liquidation of some airlines” (that is, reduced competition ) and of the new standards by which airlines operate.
“Following airline deregulation in 1978,” Schifter wrote, “many airline executives were motivated by growth over profits — and were reluctant to shed the inefficiencies which were vestiges of a regulated industry. Only after this mind-set changed, when success was measured by net income and not the number of planes, did the industry bring supply into balance with demand.” This transformation, Schifter continued, was substantially the handiwork of the private equity firms that took over airlines to eliminate those “inefficiencies” with the goal of boosting share prices (and thus the returns to private equity investors such as Schifter).
Ah, those inefficiencies — meals, legroom, seats that recline, the promiscuous provision of decent treatment on the saps who fly coach. And to stay on that top-10 list of stock-price performance, the airlines have rejiggered their mileage rewards into ticket-price rewards (your patronage is now measured by what you spend, not how far you fly). Airlines like JetBlue that once had the gall to provide a comfortable experience to passengers have been compelled by investors to revert to the industry’s norm: Excoriated by Wall Street analysts for being “overly brand-conscious and customer-focused,” JetBlue changed its top management and announced it would shove more seats into coach and start charging for luggage and WiFi. Conversely, Spirit Air, which has received some of the lowest customer satisfaction ratings in the history of Western civilization, is a company that has thrived financially, Schifter proudly asserts, after private equity helped it transform its business model in 2006.
It’s not just all the new income in America that’s going to the top 1 percent (well, not “all” — just 95 percent since the “Great Recession” ended). It’s the physical space, as the room and amenities for the highest-paying passengers expand while coach contracts, as magazines for the wealthy run ads for private islands for sale while affordable housing in many U.S. cities grows harder and harder to find.
What the Schifters of this world have created is an experience in which incidents of air rage are bound to erupt — at no cost or peril to first-class passengers, much less the plane’s private equity owners. A better targeted and more productive form of that rage would be to change our corporate structures, labor laws and tax codes so that the Schifters wouldn’t take up all the space and Americans might again have some breathing room.