The Executive/Financial Class, the Political/Union Class, and the Serfs, Redux

Two kinds of people have been getting richer. The top executives who sit on each other’s boards of directors and vote each other a higher and higher share of private sector pay, to the detriment of investors, consumers, and other workers. And retired and soon-to-retire public employees in places like New York City, who cut deals with the politicians they control to retroactively increase their already rich pensions, to the detriment of public service recipients and taxpayers. There is the executive/financial class, the political/union class, and the serfs.

The serfs continue to become worse off, adjusted for whatever point we are in the economic cycle. Today they may be a little better off than the were in 2010, but they will still end up worse off than they were in 2007, at the prior peak, which was worse off than they were in 2000, the one before, which was worse off than they were in 1987, etc. The next bottom can be expected to follow the same pattern. And the serfs continue to be lied to and manipulated by the executive/financial class, the political/union class, the media, and “truth telling” professions such as public employee pension actuaries, city and state comptrollers, certified public accountants, stock analysts, bond raters, and executive pay consultants.

This post uses recently released Local Area Personal Income data through 2016, from the Bureau of Economic Analysis, to document the trend. We had better use it while we have it, because the falsification of federal statistics in the interest of the entitled over-privileged is the logical next step in the direction of our society. And if you are a serf who rides the subway who really wants their blood to boil, be sure to read through to the commentary at the end of this post.

This is a follow up of last year’s post based on Local Area Personal Income Data.

But to avoid repetition I am bringing an analysis that took place at the end of that post to the top, and adding to it. The changing status of the executive/financial class, the political/union class, and the serfs was also specifically chronicled in a prior post, which will be expanded on here.

The Local Area Personal Income data may be found here.

And a spreadsheet with my extract from that data and all the charts used in this post (and more that I didn’t get to) may be found here.

BEA 2016 New York

First, let’s look at the numbers.


In 1969, according to the BEA data, the average person working in Downstate New York (NYC plus Nassau, Suffolk, Westchester, Rockland and Putnam counties) earned $57,613 (adjusted for inflation into $2016) if they worked in the Finance, Insurance and Real Estate sector, $56,546 if the worked in the rest of the private sector, and $65,211 if they worked in state and local government. “Earnings” in this data includes not only wages and salaries but also non-wage benefits such as employer-funded pensions, 401K contributions, health insurance, and other benefits. And those employed include the self-employed as well as employees.

Most Downstate New York private sector workers are little better off than they were in the mid-1980s, and worse off than they were in the year 2000.   Average earnings increased to $65,361 in 1988 and were as high as $75,368 in 2002, but then fell to $71,133 in 2016. Remember that “Other Private” includes most of the “one percent” outside of finance. It is fair to assume that Downstate New York private sector workers outside the “one percent” have fared worse of the decades.

Meanwhile, the average earnings of those working in the Finance, Insurance and Real Estate sector in Downstate New York, an indication of the fortunes of most of the executive/financial class, soared to peaks of $193,000 in the year 2000 and $156,221 in the year 2007, before dropping back to $112,140 in 2016 – still far higher than the $71,133 for the rest of the private sector — after having been about the same in 1969.

Because of an industry classification change, comparisons between the year 2000 and earlier and the year 2001 and later are difficult, and I was only able to get employment data for the Finance and Insurance sector – without Real Estate – for 2001 and later. The average earnings for Downstate New York workers in that sector were an absurd $238,498 in 2007, but have since fallen back to $168,332.

This demonstrates what I have said about falling U.S. pay, generation by generation. It started with high school dropouts after 1973, the year median male wages peaked in this country, and spread to high school graduates in early 1980s “deindustrialization” recession. In the 1980s only college graduates were getting ahead, compared with previous generations of college graduates, but that ended with the early 1990s recession, the first one to really affect them. In the 1990s boom only those with graduate degrees got ahead, and in the 2000s it was only the one percent. And since the Great Recession even the one percent has been affected, leaving only the .01 percent getting richer. The .01 percent are not depicted in the chart, because they arrange to be paid in capital gains and other investment income, not work earnings.

There is one group of Downstate New York workers, however, that keeps getting richer and richer if total compensation is considered. State and local government workers. Let’s remove finance from the chart to make that easier to see.


Aside from a brief period during the high-inflation 1970s and early 1980s, Downstate New York’s state and local government workers have gotten richer and richer relative to private sector workers outside of finance. By 2016, their average earnings had risen to $110,402, far above the $71,133 for private sector workers outside of finance – including the one percenters in that category. Moreover, there are many categories of public employees who are getting far more than that in average total compensation.

You might have read the recent New York Times expose on the deteriorating NYC subway system.

Subway workers now make an average of $170,000 annually in salary, overtime and benefits, according to a Times analysis of data compiled by the federal Department of Transportation. That is far more than in any other American transit system; the average in cities like Boston, Chicago, Los Angeles and Washington is about $100,000 in total compensation annually.   The pay for managers is even more extraordinary. The nearly 2,500 people who work in New York subway administration make, on average, $280,000 in salary, overtime and benefits.

It isn’t salary that makes those in the political/union class so rich. It is benefit costs, including, for transit workers and managers, a retirement at age 55 after 25 years of work with half pay – plus spiking. One year in retirement for each year worked. Cash pay, which everyone could see and which public workers might be grateful for, is far lower.

And transit workers aren’t the richest public employees. As I showed here

The total salary, overtime (per sessions) and benefits of NYC teachers, who were also retroactively awarded a pension at age 55 after 25 years of work, equaled $297,482 per 20 students in 2015 – it is much higher today. NYC police officers and firefighters, with full pensions and retiree health insurance at any age after just 20 years of work, cost even more on average.

While the soaring cost of the early retired explains most of the ever-inflating total cost of Downstate New York’s state and local government workers. A rising share of jobs that are part time, freelance or contract labor explains some of the stagnant compensation in the private sector. Wages for most workers have fallen behind inflation, but hours and benefits have fallen as well.


The gap between the average earnings of state and local government workers, and the private sector workers who have to pay for them, is even greater in Upstate New York.   There, the average private sector worker earned $48,941 in 1969, while the average state and local government worker earned $54,104.

In 2016 the average private sector worker working Upstate earned just $48,407, actually slightly less than in 1969 (the inflation adjusted peak Upstate in $2016 was $50,506 – in 1972). Excluding the “one percent,” it is likely that the trend for Downstate New York’s private sector workers is similar to the trend in Upstate New York – somewhat less well off, in average wages and benefits, than nearly five decades ago.

But the average state and local government worker working in Upstate New York got $88,010 in wages and employer-funded benefits in 2016, vastly more than in 1969 and well above the $73,085 in 2001.  And far above the average of $48,407 for Upstate’s private sector workers.


Among those working in New York City in 2016, including those in finance, state and local government workers accounted for 10.4% of total work earnings. That is the same percent as 15 years earlier in 2001, even though the number of state and local government workers in NYC has been flat, while the number of private sector workers has soared. Because New York City’s state and local government workers have become richer and richer, on average, relative to its private sector workers, those private sector workers can afford relatively fewer of them. Which leads to more crowded trains, large class sizes, and diminished public services in general.

Part of the soaring burden of state and local government workers in the rest of New York State is also falling on New York City’s private sector workers, because private sector workers in other parts of the state can’t possibly carry that burden themselves. As noted in this post.

In 2016 state and local government workers accounted for 17.1% total earnings at work in the Downstate Suburbs, up from 15.9% in 2001; 20.4% of the total in Upstate Urban Counties, up from 16.2%; and a stunning 24.5% of the total in Upstate Rural Counties, up from 18.9%. New York City is considered by many to be the “big government” part of New York State, but even in the mid-1970s, when the city’s private sector was in collapse, state and local government earnings never rose higher than 14.8% of its total earnings at work.


State and local government workers, along with private sector workers funded by government contracts, are the political/union class. Private sector workers, outside finance and the one percent, are the serfs – younger generations of private sector workers in particular.

In 1969, the average earnings of state and local government workers were 10.5% higher than the average for private sector workers in Upstate New York, and 15.3% higher than the average for private sector workers outside finance in Downstate New York. But in 2016, the average earnings of state and local government workers in Downstate New York exceeded the average for private sector workers outside finance by 55.2%. And the average earnings of state and local government workers in Upstate New York exceeded the private sector average by 81.8%.


For a time New York taxes on Wall Street, which was basically pillaging the world, helped to pay for the soaring burden of New York’s state and local government workers.   That, however, may not be the case in the future.

The financial and insurance sector in Manhattan (aka Wall Street) accounted for around 0.6% of all the money earned at work in the entire United States in the early 1970s, and less in the late 1970s, but this soared to 1.4% of total national earnings in 2000, at the peak of the stock market bubble. After correcting to less than 1.0% in the early 2000s, Wall Street’s share of national earnings increased to 1.23% in 2007, before falling to 0.9% of national in earnings in 2016. And yet Wall Street’s share of national work earnings would have to fall by another third to get back to where it had been before the executive/financial class stated grabbing more and more of total national income. That would shift even more of the burden of New York’s political/union class to the serfs.

The trend is even starker for Fairfield County, Connecticut, home of the hedge funds. This county’s finance and insurance sector accounted for just 0.01% of total U.S. earnings at work in 1969 and 0.05% in 1990, before some financial firms fled New York City for Connecticut. But Fairfield’s financial sector soared to 0.14% of total U.S. earnings in 2007 and 0.23% in 2010, before falling back to 0.10% in 2016, with further to fall. This, combined with soaring public employee pension costs, has led to a catastrophic ongoing state budget crisis in one of the richest states in the country.

When I show the extent to which the political/union class has gotten richer and richer relative to the serfs, and at their expense, one criticism I’ve received – other than the usual personal invective – is that I bias the comparison by separating the financial sector from the rest of Downstate New York’s private sector. But the financial sector in Manhattan and Fairfield County is not a real labor market that ought to be compared with anybody. And outside of these areas, the financial sector is not, in fact, high-paid.


The mean earnings per worker in the Finance, Insurance and Real Estate sector, in the U.S. as a whole in 2016, were slightly lower than the mean earnings in the rest of the private sector. It had soared in the 1980s to a peak around the year 2000 before falling back. The large increase in pay per worker through the year 2000 was the result not only of a stock market bubble and financial pillaging in places such as Manhattan and Fairfield County, but also the consequence of an enormous increase in productivity.

Processing financial transactions and keeping financial records once required millions of clerical jobs handling millions of pounds of paper records. Those paper records, and most of those clerical jobs, have been wiped out by office automation and electronic records. The smaller number of remaining financial workers, mostly professionals, are higher paid on average than they had been in the 1970s – but still paid less than in the year 2000. Aside from financial pillaging, many of the benefits of that productivity gain have been passed on to consumers in lower costs for financial transactions.

Meanwhile, note that when employee benefits are included in “earnings,” the trend of rising average state and local government compensation relative to average private sector compensation isn’t just a New York phenomenon. In 1969, adjusted for inflation into $2016, the mean earnings of the average U.S. state and local government worker was $47,406, slightly lower than the $48,437 for private sector workers outside finance. In 2016 the mean earnings of the average U.S. state and local government worker was $73,159, about 30.0% higher than the $56,367 for the average U.S. private sector workers outside finance. Finance workers earned less on average.

There are no huge productivity gains in state and local government to explain this, just relatively fewer workers providing less in public services. And remember, these private sector averages include most of the executive/financial class, the so-called “one percent.”

From time to time, those in the executive/financial class respond to the criticism that wages for most workers have been falling by claiming that this has been offset by rising employer costs for non-wage benefits, such as health insurance. Local Area Personal Income data, however, shows this hasn’t been true for decades.


Nationwide, the cost of employer contributions to employee pensions, health insurance and other benefits did soar from 8.4% of private sector wages and salaries in 1969 to 16.2% in 1992. Since then, however, benefits have been stagnant as a percent of wages and salaries, aside from cyclical changes. Benefits increase as a percent of total wages in recessions, when wages fall, and decrease in expansions, when wages rise. But employer benefit costs were 16.1% of total wages in 2016, about the same as 25 years earlier.

Moreover, the Bureau of Economic Analysis doesn’t make wages and benefit data readily available for public sector and private sector workers separately. The data in the chart above includes state and local government workers, and we know that their benefit costs – notably taxpayer pension contributions and retiree health care funding – have soared relative to the wages and salaries of government workers still on the job.

Therefore, employer benefit costs must have actually fallen in the private sector, to keep the total flat. And that is what ought to be expected, given that fewer and fewer private sector workers get employer-funded health insurance or pensions, employee health insurance copayments have soared, and employer contributions to 401k “defined contribution plans” have been cut with each recession. These are actually “undefined contribution plans.”

The trend is similar for mandated employer contributions to government social insurance plans, such as Social Security, Medicare, unemployment insurance, etc. These increased from 4.4% of wages and salaries in 1969 to 7.5% in 1984, due to an increase in the payroll tax to “save Social Security,” but there has been little change since, with mandated employer social insurance contributions equaling just 7.2% of wages and salaries in 2016. See that big increase due to “Obamacare?” Me neither.

What is worse is that the higher level of social insurance contributions starting in 1984 will not, in the end, benefit the workers that the BEA counted as having more “earnings” as a result of them. Those higher contributions, by employers and employees alike, went to prior generations.   Meanwhile, the Social Security and Medicare benefits of those who paid more will turn out to be far less.   Trump is lying when he says otherwise.

The executive/financial class and the political/union class have not become richer relative to the serfs because they have truly earned more, in anything like a free labor market. They have become richer at the expense of the serfs as a consequence of secretive self-dealing with cronies on a massive scale, in the public and private sectors alike.

The pay and benefits of the serfs is determined in negotiations with people who have an interest in keeping them as low as possible, either to keep more money for themselves or to be in a position to offer better value to their customers.   Everyone wants to get more for less, whether they are shopping for labor or as consumers, but in the end these relationships are voluntary, so an equitable agreement has to be reached.   But for most U.S. workers, total compensation has been negotiated down relative to inflation, generation by generation.

The compensation of the political/union class is decided in “negotiations” with itself. Secret negotiations with secret provisions. This group controls state and local government, not everywhere in the United States but certainly here in New York.   It has also taken more and more and more, generally in richer and richer retirement benefits as a result of retroactive pension increases. The cost is borne by less well off taxpayers and public service recipients, and that cost has been multiplied many times over by shifting it into the future, so the link between what the political/union class takes and what the serfs lose could be better hidden.

Take the subway crisis that was the subject of the recent New York Times expose, with inadequate maintenance, increasing deterioration, and declining service for the serfs. Somehow in the middle of this disaster the state legislature quietly passed, with no public debate, yet another retroactive pension increase, this time for New York City Transit managers.

These managers had been promised a half-pay pension at age 62 after 30 years of work, but a subsequent pension increase allowed them to retire at age 55 after just 25 years of work. In exchange for a small additional contribution to their own pension, which only covered a fraction of the seven extra years of pension payments and retiree health insurance.

Apparently even that was not enough. A bill passed in early 2016 to refund those extra pension contributions, with interest, on the grounds that some other public workers had gotten an even richer deal.

Despite the fact that the serfs on the subway have been forced to pay more and more in taxes and fares with less and less service in return, in a comment on the above legislation a public union leader used the language of “worker solidarity” to celebrate the deal. Even though the beneficiaries were managers, not workers, many of whom had already retired early, and were not working.

Anthony_Brancato • a year ago

On November 14th, Governor Andrew Cuomo signed into law legislation, which provides a refund to certain members who made pension contributions under the Transit 55/25 program!

This legislation, introduced by Assemblyman Peter Abbate and Senator Diane Savino, both great supporters of labor, corrects an inequity to members who originally opted into 55/25 pension plan and paid an additional pension contribution from the time they opted in until the beginning of 2001. Subsequently, the law changed again and members who did not opt into the 55/25 pension plan were then put into the 55/25 pension plan without having to make any additional contributions. Certain members, mostly Managers, were not treated like the members who opted into the 1994 25/55 pension plan who were refunded their additional member contributions. Legislation for refunds for non-management members was passed in 2007 and 2013 after being agreed upon in collective bargaining contracts. This current legislation only applies to certain Managers who fit the specific criteria.

Your legislative team at SSSA, led by President Mike Carrube, SSSA lobbyist Gordy Warnock, UTLO President Mario Bucceri, and his team, met with and contacted both the legislative sponsors and the Governor’s office, voicing their support for this bill which finally fixes a long standing inequity.

We are happy to announce that the Governor’s office has advised us that despite concerns regarding the fiscal ramifications (more than a $1,000,000 cost to the pension fund) of the proposed legislation, that they were approving it and these members should be receiving refunds as soon as they can be administratively processed.

UTLO appreciates the support that you have shown and continues to work hard on your behalf. Our recent success in the legislative arena is a direct result of your involvement. UTLO thanks Governor Andrew Cuomo for signing our pension contribution refund bill into law. We wish to acknowledge NYS Deputy Secretary of Transportation Ron Thaniel and NYS Deputy Secretary of Labor Elizabeth De-Leon Bhargave and their staff for giving UTLO the opportunity to voice your concerns. We thank the Bill sponsors; Senator Diane Savino and Assemblyman Peter Abate who worked tenaciously and closely followed the Bills progress from start to finish. Our appreciation extends to the bi-partisan efforts of State Senators Marty Golden and Andrew Lanza, Assembly Woman Nicole Malliotakis, City Councilman Daneek Miller and Assemblyman Marc Crespo who stood behind us and pushed the bill through both the State Assembly and State Senate.

We are especially grateful to SSSA President Mike Carrube, His Staff, and our Brothers and Sisters of the SSSA for their continued support.

As we struggle against the prevailing headwinds, we continue to raise our sails ever higher, slowly moving forwards. Our vision is clear, our determination is unwavering, and our strength is in our Unity!

The prevailing headwinds are how much worse off other workers, those riding the trains, are becoming to pay for deals like this. The beneficiaries struggle forward by stepping on the rest of us. Note how both Democrats and Republicans sponsored the bill, which passed with almost no votes against. Not one elected official raised their voice against the unfairness of this deal to the serfs. If I hadn’t happened upon it recently while looking for something else, no one might have ever heard of it.

The bill was signed by Governor Cuomo, who had earlier pushed legislation to force public employees hired after 2012 to work 30 years until age 63 before drawing a pension, after contributing far more than those transit managers who are getting their “extra” pension contributions refunded. Cuomo recently vetoed yet another retroactive pension increase, one that would have hurt taxpayers and service recipients in the rest of New York State rather than New York City.

Gov. Andrew Cuomo vetoed legislation Monday that would provide a special 20-year retirement plan for county corrections officers.

The bill sponsored by Assemblyman Peter Abbate and state Sen. Rob Ortt would have given counties the option of providing the retirement benefit to jail officers. The corrections officers would receive an annual pension of one-half of their final average salary at the time of retirement.

Supporters of the bill said county jail officers receive “inferior pension benefits” compared to other law enforcement positions.

The legislation received overwhelming support in the state Legislature. The Assembly approved the bill by a 140-3 vote. The margin in the state Senate was 58-1. But Cuomo questioned the fiscal impact of the bill. If counties chose to provide the benefit, he said it could cost $100 million annually.

Note also the assertion that these deals represent “equity” for the beneficiaries.   All members of the political/union class only make comparisons with other members of the political/union class, not with the serfs. Which is why many of them get angry when I post charts such as the ones above.

Meanwhile, a small share of transit workers and managers deign to ride the subways like serfs, even though they are allowed to do so for free.   Why would they, given that the service they provide is increasingly overcrowded, unreliable, miserable. And Mayor DeBlasio recently cut a deal to ensure New York City teachers won’t have to ride the subway like serfs either.

Under the terms of arbitration between the city and the United Federation of Teachers, the Council of School Supervisors and Administrators, and DC 37 — unions that represent teachers, administrators, and other school staff — the Department of Education will soon hand out parking placards to any school employee who has a car and requests one, reversing reforms instituted during the Bloomberg administration. The arbitration stemmed from a 2009 lawsuit filed by CSA, the principals union, a DOE spokesperson told Streetsblog…

The DOE cuts were part of a broader effort to reform a placard system plagued by abuse. Placards do not confer the right to park anywhere with impunity, but placard holders tend to treat them as a carte blanche, knowing that enforcement agents will typically avoid ticketing any vehicle that has one. Like placards issued to NYPD, FDNY, and other city personnel, the DOE’s placards were often used to park illegally — in crosswalks, at bus stops, by fire hydrants — prompting the Bloomberg-era reforms.

After the next lawsuit, the parking spots reserved solely for placard holders, now limited to the curbs directly adjacent to the schools, will presumably be expanded to make sure all school staff get a guaranteed space, and no teacher has to use the collapsing mass transit. Perhaps soon there will also be separate schools for the children of teachers, schools that provide a better education, and where teachers are expected to do a better job, than what the teachers provide to the serfs.

There is no difference between these sorts of political/union class injustices and those perpetrated by the executive/financial class.

Those in the executive/financial class sit on each other’s boards and vote each other a rising share of private sector income, mostly in cash, stock grants and options, and bonuses. They are the bonus rich. They also compare their compensation only with each other, and push it up in an ever-increasing spiral. At first soaring executive pay was justified by “shareholder value” during the 1990s stock market bubble, but executive pay continued to soar – with no justification – after that bubble popped. Although knowledgeable people understand that today’s high stock prices are (once again) merely an artifact of the free money policies of the Federal Reserve, those in the executive/financial class continue to reward each other hugely for what is, for most, being in the right place at the right time and taking advantage.   A recent book, written by an insider, describes how this happens.

Clifford, a retired CEO of King Broadcasting and a serial corporate director who admits to having grabbed his share of the loot, argues that CEO pay is a machine—that is, driven by rote policies that automatically send pay into the stratosphere. Why else would CEOs get so much, and through such a bizarre array of categories.

Like unionized public employees, top executives are only willing to see their compensation compared with others in their class, not with the serfs.

In the 1980s, a consultant named Milton Rock sold the idea of “external equity.” Now, as if CEOs belong to a tribe of super­humans, they are paid on a scale with only their “peer CEOs.”

This is highly problematic. First, the peers often aren’t really peers. As Clifford recounts, to set its CEO’s pay, UnitedHealth Group recently used a “peer” group stuffed with companies unrelated to health insurance, such as Apple, Coca-Cola, and Citigroup. It’s ludicrous to think that UnitedHealth’s CEO could be a candidate to run Apple. It assumes a generic market for CEOs that doesn’t exist.

And few compensation committees aim for the median of those peers. Most target the 60th percentile—or the 75th. ­Apparently every CEO is above average. In marked contrast, when it comes to performance hurdles, boards avoid peer groups like the plague. (No board tells its CEO, “To earn a bonus, you’ll have to raise sales faster than Amazon.”)

Rather, boards generally peg annual bonuses to a series of customized and too-easy benchmarks. This process is conceptually flawed, because they incentivize CEOs to focus on short-term goals. Moreover, CEOs are rewarded for hitting targets that are either mushily subjective or can be easily manipulated. If you want more sales, simply cut prices. If you want more cash flow, hold back investment.

When targets aren’t hit, boards often reward the CEO anyway. Nationwide Mutual Insurance once doubled the boss’s bonus by erasing the effect of claims from tornados on earnings.

The .01 percent generally arrange to be paid in capital gains or other investment income, which is taxed at a far lower rate than the work income of the serfs. The work income of the serfs is taxed twice at the federal level, once by the income tax, and once by the payroll tax.   The Trump Administration and the Republican congress, while claiming to want to cut taxes for regular people, mostly just want even lower taxes for the .01 percent, relative to the wage earning serfs. And a Republican congressman from Wisconsin might vote no because the rest of the 1 percent, still earning what is officially classified as “work earnings,” wouldn’t get the same deal.

Wisconsin Senator Ron Johnson also threatened to vote against the bill without more tax relief for partnerships, limited liability companies and other so-called pass-through businesses. Senate leaders have said they’re trying to address Johnson’s concerns.

The political/union class doesn’t like to pay taxes either. The massively costly benefits it agrees to pay itself are completely exempt from both the federal income tax and the payroll tax.

And when the public employee pensions are paid, that income is exempted from New York’s state and local income taxes, the main reason a couple of retired public employees with $130,000 in income would pay less in state and local taxes than a couple of workers earning $80,000.

Chart 4

And the aforementioned Assemblyman Peter Abbate and Senator Diane Savino have repeatedly introduced legislation to eliminate property taxes for retired public employees too, by having their pension income not count when considering whether they qualify as “poor seniors” under the STAR property tax relief program.

When times get better the members of the executive/financial and political/union classes take more, since there is “plenty of money” and the serfs are unaffected. But in each recession the serfs are made to pay more and accept less, because they are don’t have a contract. So what the serfs get slowly ratchets down, what they pay slowly ratchets up, all due to “circumstances beyond our control.” Mayor Bloomberg inherited “uncontrollable costs” due to past contracts, and passed on more of them. DeBlasio is doing the same.

Members of the executive/financial class grant each other employment contracts specifying what each of them will get, even if the company is run into the ground, before a dime goes to shareholders.   Members of the political/union class also negotiate contracts with each other that are irrevocable and must be paid regardless of the consequences for the serfs. The serfs are generally at-will employees and have no employment contracts. They can take it or leave it today, and are always at risk of having their pay and benefits cut tomorrow.

Members of the executive/financial class expect their compensation to go up by more than inflation each year. Under labor relation laws arbitrators generally grant unionized public employees cash wage increases at or above the inflation rate, even as their pension costs soar, and even as the pay and benefits of the serfs trails inflation. One of the pension increases in New York in recent years was an automatic increase in pension payments for inflation. Social Security has been automatically adjusted upward for inflation, for the benefit of “seniors on fixed incomes,” since the 1970s.

The minimum wage is not automatically adjusted for inflation, and has fallen far behind it since about the same time. The lower pay of low-wage workers keeps the cost of services down for seniors, active and retired public employees, and executives.

The executive/financial class rides around in taxis and black cars, or drives their own luxury cars to paid-for corporate parking spaces, lives in the wealthier parts of Manhattan or the more affluent suburbs, and sends its children to private or upscale suburban schools. Not regular New York City schools.

The political/union class drives its own or city cars to public parking spaces reserved for it by placard, lives in the middle-class suburbs (they are no longer required to live within the city) or in a limited number of suburban-type city neighborhoods, and sends its children to suburban or “special” city public schools. To the extent that in the past there were special “middle income” housing deals on offer, such as Mitchell-Lamas, the political/union class got them, often through insider information. In general, however, New York City’s political/union class shuns the New York City public services it produces, opting for a better deal elsewhere. And runs to Florida with its winnings as soon as it can.

The serfs include the unorganized working class, younger public employees and other union members on the wrong end of the repeated cycle of “screw the newbie, flee to Florida” contracts, young college graduates trapped in “freelance” jobs without benefits, immigrants, anyone who starts a small or new business in New York,…everyone else really. They ride around by subway, ride bicycles or walk, or if they drive have to compete for scarce legal parking spaces. They often lack health insurance and generally lack pensions. They are squeezed by soaring real estate costs into less and less space for more and more of their income. They are neither rich enough to live well without public services, nor have enough connections to ensure privileged access to them when good ones are in short supply. Parochial schools had been a lifeboat for some of the serfs, but it is sinking. Charter schools are a lifeboat for some of the serfs, but the United Federation of Teachers wants to take it away.

Both the executive/financial class and the political/union class have an enormous sense of entitlement. They certainly don’t react well if anyone questions the deal they have taken for themselves and its effect on the serfs; they don’t want to hear any comparisons between themselves and the serfs at all.

Another thing you hear is the accusation of “envy.” The idea that the serfs resent what the executive/financial and political/union class get because they are left behind, even though it has nothing to do with them. That is both an insult and a lie.

Back in the 1990s stock boom, when productivity and the wages of average workers were rising along with the stock market, average people did not resent the rise in executive pay. It was only later, when people realized that they had become worse off to pay for it and the federal government bailed out the rich that some of them began to resent it. Having slashed interest rates to prevent asset prices from plunging in 2008, re-inflating the bubble and the executive pay that goes with it, the Federal Reserve will now increase interest rates to keep wage income from rising.

The fact that public employees have relatively rich retirement benefits was widely known for decades, and yet no one cared or objected.   Good for them. Until the soaring cost of those benefits, which has been retroactively enriched, started causing fiscal crises, tax increases, and public service cuts for the increasingly less well off serfs.

This goes on and on. And it will continue to go on and on until the following is widely known and angrily stated.

The pay levels of the executive/financial class are socialism for the rich, unjustified by any free market as our economy descends from entrepreneurship into crony capitalism and stagnation.

And the political/union class has committed a social injustice on a large scale, and is out of solidarity with other workers.

The “progressive” era of the early 1900s has been reversed. We are back to Robber Barons and Tammany Hall. And it is bi-partisan.

1 thought on “The Executive/Financial Class, the Political/Union Class, and the Serfs, Redux

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