Federal employees facing a whopping 2% pay raise next year likely won’t lick their chops over the prospect. But you’ll keep working. Does that make you a chump?

Especially when you consider this: The union people on strike at a giant federal contractor have rejected a contract that would have raised salaries an average of nearly 9% for each of the next four years. Year One would net them a 12% raise!

The Boeing situation interests me on a couple of levels: the federal-industry pay comparison for one, the travails of a major contractor and industrial base linchpin for another.

Let’s take pay first.

Boeing also offered its members of the International Association of Machinists and Aerospace Workers a $7,000 ratification bonus and an increase in company contributions for their 401(k) plans — starting with an initial contribution of $5,000. They would also receive annual guaranteed bonuses. But what the union bosses convinced their members of, is that Boeing ought to restore a defined-benefit pension plan the company ended 10 years ago.

The union points out that the Seattle area, where much of Boeing’s production takes place, has become one of the nation’s most expensive places to live. You can trace that to the tech economy there sparked originally by Microsoft, not by Boeing.

No doubt the machinists were encouraged by the Longshoremen’s strike. That ended with the idea of further negotiations. But when it is resolved, the dockworkers will likely get 50% more pay over five years, and an agreement to keep automation out of the ship unloading process.

An aside on that last point. It doesn’t matter what anti-automation provisions are in a contract. Those jobs will be automated, one way or another. No union and no contract has ever stopped fundamental economic change. Find me a newspaper that still has Linotype operators setting type, the railroad with a caboose crew, the commercial airliner with a flight engineer to fiddle with the engines.

But on the issue of pay itself, unions are clearly trying to make up for their members’ lost purchasing power from the inflation of the last few years. Inflation has mostly subsided, but prices haven’t all fallen back to where they were.

I focus on Boeing because of its status as one of the largest federal contractors. Washington Technology placed it number 7 for 2023. It’s hard not to compare the demands — and the pay itself — of the average Defense Department civilian or service member with those of the people riveting together the KC-46 aerial refueling airplanes. Machinist Union employees at Boeing receive a wide range of pay. The average stands at around $75,000; the entry base at around $47,000.  Some make more than $100,000. Those numbers don’t include benefits.

So what are they worth? It depends on a galaxy of variables, but there’s this: No one new to the job can walk in and get qualified in two days, like you could at a coffee shop or a shipping warehouse. Airplane assembly and associated tasks take highly skilled people, and mistakes can have life-and-death consequences. Those Seattle assembly lines aren’t turning out Caramel Cremes.

On the matter of Boeing as a contractor, it’s important to note that the company’s problems don’t derive solely from its commercial side. As Defense News Steve Losey reports, Boeing attributed $2.4 billion of a $6.2 billion quarterly — quarterly — loss to its Defense, Space and Security sector. It’s losing money on fixed price contracts for several Pentagon programs. Boeing took charges of hundreds of millions of dollars in each of several programs — the 767-derived tanker, an Air Force trainer plane program, the Commercial Crew space capsule, and a Navy drone tanker plane.

I remember when, in the 1980s, Ford Motor Company sustained losses on that scale. Nobody wanted Ford cars then. But Boeing has a backlog of hundred of tankers to build. It has something like 5,000 or 6,000 commercial aircraft on backorder. No Honda Commercial Airplane Company is carving away Boeing’s market share. To the contrary, a generation ago, maybe two,  the nation sustained a half dozen commercial airliner makers on a tiny fraction of the number of people who fly today. The whole thing seems nuts,  and some analysts have suggested a breakup or bankruptcy might come next. If so, labor costs might be a contributor but not the sole reason.

Boeing’s problems have wide implications. It’s the country’s largest exporter. It manufactures products of almost incomprehensible complexity. An airplane like a KC-46 tanker or the “triple seven” you hop aboard to to join the tourist mobs in Rome or Lisbon, culminate from deep engineering and material science in 100 disciplines. These skills matter to the nation.

Therefore, Boeing’s widening problems in some sense are becoming a national security issue. I don’t advocate a bailout or any other specific measure. But I’d bet Pentagon leadership is watching closely. It should.

I worry, not because I have Boeing stock (I don’t) or any other particular interest in this company other than that of an aviation buff. I mentioned there’s no equivalent to Boeing of the Japanese car makers to Ford. But Comac, the Commercial Aircraft Corporation of China, makes a plane about the size of a 737. It  flew commercially with passengers in China for the first time this past June. Now the company is trying to get it certified for Europe. Its supply chain partly coincides with that of Boeing and Airbus.

It all adds up to an ominous development in the defense industrial base.

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