Exploring the Eclipse of Equality

Tin Soldiers and Nixon Comin’: How your public sector job is about to get worse

In Uncategorized on February 15, 2010 at 8:57 pm

As an inaugural post to my blog, I wanted to highlight a fascinating development in American politics. I direct your attention to a story in the Star Tribune of Minneapolis-St.Paul:

http://www.startribune.com/opinion/commentary/84264862.html?elr=KArks:DCiU1PciUiD3aPc:_Yyc:aUU

What makes this story important is how it serves as a kind front line attack in the publicity wars to liberalize American labor markets so that they conform to the standards of abstract theory. This has been coming for a long time and I think that this is one of the first clear and well argued examples of  how the right will direct ire within the middle class in way that distracts attention from the abuses of established interests (bankers, upper management, insurance companies, hospitals) that seem to be intractable. The logic is that the market should decide. Unfortunately what the market has decided in a globalizing economy is that Americans should make less money than they once did. This may be fair from a global perspective, but it places a bit of a cognitive strain on those who, with a straight face, claim that they support American interests in the world.

Back when I was in grad. school people used to debate the facts of increasing intra-national rates of inequality. The argument once was that the median wage (arguably the best marker of how the middle class is fairing in economic competition) was not really declining. Few debate this today, but they argue that instead family incomes have continued to rise, albeit slowly.  This rise in family incomes generally came at the expense of more work hours per family, and with much of that coming from female labor force participation. After the great recession, even family incomes seem stagnant at best and we all recognize that today’s average American will not better yesterday’s for some time to come.

What makes the Star Tribune piece brilliant is that the author is exactly right to point out that public sector employment is a better deal right now than private in many cases. The unions probably have much to do with this, as well as the fact that the government employer is not so tough on its employees as is the case in the private sector (governments are moderately egalitarian and are only tough bosses for those like federal judges and other elite positions).  The odd thing in this argument to me is that the logic of the case does not suggest to many people that unions might be a good idea again in the private sector, but rather that the public sector should be degraded with the rest of us. I expect that this class war on what was once called the new class will continue and we with therefore see decreasing average salaries in the public sector with increasing inequality as the gains that were once broadly shared get pushed up to the top by the stars. In other words, if you work for the public sector  get ready for a great sucking sound in which salaries, perks and benefits are distributed upward toward your slightly more productive colleagues. You had better get busy because the old security for which you traded away opportunities is quite possibly on its way out.

We should also expect to see griping about how much plumbers and other repair occupations make as well. Progressives may take heart that these new necks on the chopping block are mainly white male jobs. We have reason to expect that diversification of inequality will benefit from bringing the guy premium down to the market clearing wage. This isn’t personal, its just business. The market will degrade the white male jobs for the same reason that Willie Sutton robbed banks, because that’s where the money is–the petty cash that is;  investments don’t fit in the cash drawer.

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