Bureau of Economic Analysis Local Area Personal Income Data for 2019: So This is What Was Meant by the “Fairest City in America!”

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 comparatively 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.  In fact the economic cycle is part of what the executive/financial class and the political/union class use to put the serfs further down.  At the peak of a boom, they sign irrevocable deals to give themselves more because there is “plenty of money” and no one needs to be made worse off to pay for it.  But then a recession hits, and the serfs end up with higher taxes, diminished services and public benefits, and diminished pay and benefits funded by their employer, due to “circumstances beyond our control.”  Those cutting the deals never give anything back, since they have “a contract” that others, who received nothing in exchange, have to make good on.  Among the worst off victims – those in later-born generations, since those in older, earlier-born generations generally “grandfather” themselves from all related sacrifices as well.

Bureau of Economic Analysis Local Area Personal Income data was recently released for 2019, almost certainly the peak of the economic cycle that started from the bottom in 2010.  And it shows that here in Downstate New York, we have reached a milestone.  The average (mean) earnings (cash plus employer benefits) those working in the Finance, Insurance and Real Estate sectors (including both employees and the self-employed) was $122,813 that year. The rest of the private sector averaged $81,575.  The mean earnings for state and local government workers Downstate, meanwhile, was $124,095.  That is not only 52.1% higher than the mean for the rest of the private sector, including all the one-percenters outside finance, a record high difference.  But also – for the first time – more than the Finance, Insurance and Real Estate sectors. So that is what was meant by “fairness” around here!


The Bureau of Economic Analysis data may be found here.


And a spreadsheet with the data I downloaded for use in this post, examining data for workers by place of work, and the next one, with personal income data by place of residence, is here.

The Local Area Personal Income series starts in 1969, so you are looking at 50-year trends, including New York City’s previous economic, social and governmental collapse due to self-dealing by those cashing in and moving out – in the 1970s.  New York City’s public employee unions and contractors, and the politicians they control, have spent decades working to restore the “fairness” of that collapse, and the level of privilege they received compared with ordinary people who don’t matter. And in a process that COVID-19 may have accelerated, they may have achieved it.  So whatever happens to New Yorkers over the next year, added to what has already happened, may not honestly be described as failure. It is success, one I saw coming before the virus even really hit.


All that is left is to use control of the media to shift the blame, in an “engineering of consent.”  But let’s look at the data, which seems to have stabilized after it appeared to be monkeyed with for NYC.  The data described above may be found in this chart.

The data shows that adjusted for inflation, the mean earnings of Downstate New York (NYC plus Nassau, Suffolk, Westchester, Rockland and Putnam) private sector workers outside finance was only 0.8% higher (adjusted for inflation) in 2019 than it had been in 2002, and only 20.9% higher than it had been in 1987.  This despite the average being pulled up by the once-growing earnings of the one-percenters, of whom Downstate NY has more than its share.  “Private outside finance” includes, among other things, everyone who works in the (until recently) booming “TAMI” industries, technology, advertising, media and information, along with other professional and business services such as law and management consulting.  It includes, for example, all the CEOs in these industries, and the large number of people working for Google here.

Meanwhile, the 2019 mean earnings in Downstate’s Finance, Insurance and Real Estate sector was 26.5% lower than in the prior economic peak in 2007, and 40.5% lower than the wild dot.com bubble peak of 2000.  This despite the Federal Reserve using zero percent interest rates to re-inflate stock prices to a record high relative to the size of the economy, and to generally insulate finance from what otherwise might have been a 1929-like collapse.   That has been upward income redistribution on a grand scale.

Because of an industry classification change, and the limited employment detail provided by the BEA for the years prior to 2001, it is only possible to track employment in the Finance and Insurance sector, without Real Estate and Rental and Leasing, and calculate its mean earnings per worker, from that year forward.  The mean earnings for Finance and Insurance alone was $187,448 in 2019, down 26.5% from the prior economic peak in 2007. 

The next chart is simplified, without finance.

The mean earnings of Downstate New York’s state and local government workers is 31.0% higher than in 2002, compared with the increase of 0.8% for private sector workers outside finance, and 57.3% higher than in 1987, compared with a 20.9% private sector gain.  Much of the increase has been in benefits, as a result of a long series of retroactive pension increases that were fraudulently described as “costing nothing,” because Wall Street would pay for it.

There was a similarly large increase in Downstate state and local government earnings per worker, compared with private sector earnings per worker, in the late 1960s and early 1970s, as a result of the retroactive pension increases agreed to by Mayor (and later candidate for President seeking union support) John Lindsay, and Governor (and later candidate for President seeking union support) Nelson Rockefeller.  That, and the debts run up during these years, led to the collapse of New York City’s public services, soaring taxes, and economic decline during the 1970s and early 1980s.  As I showed in this post…


The only reason New York City was able to recover is high 1970s inflation that cut the real value of all the money the debt holders and pensioners were “guaranteed” in half over a decade.  And caused active workers to face falling real pay unless they agreed to new contracts.   There was also a Mayor who sought, at least in part, to do something for someone other than the political/union class, meaning that negotiations were more like actual negotiations than they have been since (see 0.55).

A far cry from what one hears today – that city residents should be paying more, and also deserve less.   Although none of the policies Mayor Koch said he was in favor of in those ads actually happened, because the beneficiaries of existing arrangements controlled the state legislature, as they do today.  Ordinary people not in on the deals suffered instead. Keep that in mind during the 2021 Mayoral Campaign.

Of course the average of $124,095 in state and local government wages and benefits per worker is just that – an average.  That average is inflated by a long series of retroactive pension increases, followed by cuts in pay and benefits for new workers, and not all titles of Downstate public employees are that overpaid.  What has been engineered is a workforce that comes to work resentful at being underpaid and underfunded – despite being paid and funded, in the aggregate, more than Wall Street.  In particular, the political/union class strives to keep starting pay as low as possible.  And then tells the workers that the public they serve has cheated them. They carry that attitude to work every single day.

As for the mean earnings per worker of private sector workers outside of finance, it tends to go up in recessions, as lower paid workers lose their jobs and are no longer counted.  Their earnings, in reality, drop to zero but they are no longer included in the average. The big increase was from 2000 to 2001, since many lower-paid workers were getting laid off during 2001, but many higher paid workers still got bonuses early in the year based on the peak of the boom in 2000.

One of the aspects of “fairness” promoted by the administrations of Governor Cuomo and Mayor DeBlasio, however, is that it isn’t just unionized public employees who should get richer and richer compared with most private sector workers.  It is government contractors as well. These contractors and their unions, the unionized construction and school bus companies, also had big retroactive increases in pension benefits around the year 2000.  They have been trying to force taxpayers to pay for them ever since, with soaring prices for both public works (especially for the MTA) and school transportation.  Just this month the DeBlasio Administration took over one of the school bus companies and guaranteed all pensions.  The city also proposes to pay ten times  the cost per square foot of those new sliver luxury condominiums going up on 57th Street for new jails, because of “racial justice.”  With slightly more privileged people on the inside, those on the outside are worse off still.

Upstate New York has gone through a long period of economic decline due to the loss of its high-paid economic base in manufacturing.  High paid government jobs, funded in part by taxes collected downstate, have been used as an offset.  It’s basically a Cadillac welfare system, something Bella Abzug might have proposed for New York City back in 1977, but that the suburbs and Upstate would never have agreed to pay for at the time.

The mean payroll per private sector worker Upstate was $53,545, less than in 1972  and just 2.7% higher than at the start of the series in 1969, after adjustment for inflation.  That is nonetheless the highest it has been since 1973.  That is the year median male earnings per worker peaked in this country and the start of a long downward slide in median earnings that began with high school dropouts and (since 2007) has even reached many of those with graduate degrees, as I showed here.


What is true of private sector workers in Upstate New York – flat earnings over five decades after adjustment for inflation – in probably also true of private sector workers in Downstate New York, outside of the one-percenters.  

Meanwhile, since falling during the 1970s due to inflation, the mean inflation-adjusted earnings per state and local government worker in Upstate New York has soared almost continually, with particularly big increases after the huge retroactive pension increases during the year 2000.  At $92,127 in 2019, it was 59.9% higher than in 1969 and 20.2% higher than in 2000.   That is lower than the average of $124,095 in mean earnings per worker that Downstate New York state and local government workers received, but it is about the same as the average for New Jersey.

In New Jersey, the mean earnings per state and local government worker was $92,740 in 2019, up 12.5% since the year 2000 after adjustment for inflation.   A rapid increase stalled out after the Great Recession, even as government earnings per worker continued to soar in New York.  Part of that, however, might just represent a failure to fund public employee pension benefits that have nonetheless continued to be promised.  New Jersey had a retroactive pension increase around the year 2000 too, though not as large as the ongoing ones in New York.   And taxpayer pension funding has been much lower in New Jersey than in New York (and employee pension contributions much higher), as I showed here.


The mean earnings per private sector worker, among those working in New Jersey (as opposed to living there and working in NYC), was $70,793 in 2019, about the same as it had been back in 1999 – two decades earlier.  That is 13.2% less than the mean private sector earnings at $81,575 (excluding FIRE) for Downstate New York.  

Back in 1969, the mean earnings per state and local government worker was 15.3% above the mean earnings per private sector worker (excluding Finance, Insurance and Real Estate) in Downstate New York, 10.5% above the mean earnings per private sector worker in Upstate New York, and, 6.4% below the mean earnings per private sector worker in New Jersey.   The higher pay level compared with private sector in New York at the time may have been reasonable, since the share of public sector occupations that require higher credentials or skills is greater than in the private sector.

In the decades that followed, however, the only times private sector workers got ahead, relative to public sector workers, was during the 1970s, when public sector pay and pensions were eroded by high inflation, and during the late 1990s, the exception to the long term trend of falling work compensation in the private sector. Otherwise, state and local government workers have gotten richer and richer, relative to the private sector workers who have pay for them, over the five decades.

By 2019 the mean earnings per state and local government worker was 52.1% higher than the private sector mean in Downstate New York and 72.1% higher than the average in Upstate New York, each a record gap.   The mean earnings per state and local government worker in New Jersey was 31.0% above the private sector mean for that state, down from a record high of 33.9% higher in 2009.

The public sector unions, contractors, and politicians they control may believe they are worth that much worth than everyone else – and everyone else is worth that much less than they are.  But that doesn’t mean everyone else can afford them.

One of the arguments you hear from the political/union class is that they are actually in favor of everyone  being that well off as they are, someday, eventually, where there is enough money.  And the more they take, the more they  will have to  provide to everyone in the future somehow

This, however, is a lie.  Workers and consumers aren’t two different types of people. They are the same people at different times of day.  The fact that the average serf has been paid less and less over the decades is one of the factors in making the money the political/union class is paid worth what it is, because it buys more.  And the fact that the political/union class has been paid more and more – without this being offset by rising productivity – means the serfs can afford less and less in public services despite more taxes paid.  And that is what they are getting.  

In other words, there is an exchange of value between private sector workers and public sector workers.  And that exchange has become increasingly disadvantageous for private sector workers, in large part because when the deals for the political/union class are negotiated, they aren’t represented.  Certainly not in New York.

For the U.S. as a whole, in 2019 the mean earnings per state and local government worker was 25.6% higher than the private sector mean (excluding Wall Street), down from a record gap of 26.8% in 2009.  Excluding the Finance, Insurance and Real Estate Sector, the mean earnings U.S. per private sector worker was $62,324.  That was 15.5% higher, adjusted for inflation, than in 1973, a year when public and private sector workers received about the same mean compensation.  The mean earnings per state and local government worker, on the other hand, was $78,277 in 2019, up 40.7% from 1973.   

The Finance, Insurance and Real Estate sector is not as high paid, relative to the rest of the private sector, nationwide as it is in New York.  The highest paid finance jobs are concentrated in a few locations, notably Manhattan and Fairfield County, Connecticut.  The mean earnings per FIRE worker was just $59,335 in the U.S., compared with $122,813 in Downstate New York.

From time to time, those in the executive/financial class respond to the criticism that cash wages and salaries 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, employee 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 15.8% of total wages and salaries in 2019, 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 costs – have soared relative to the (often falling) total 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 employees get employer-funded retiree 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 7.0% of wages and salaries in 2019.  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 the later born generations who paid more will turn out to be far less.  

Despite reduced employer-funded benefits for private sector wage and salary workers, for those in later-born generations – and even those in their 50s downsized out of a job – being an actual employee, and getting at least some tax-free benefit income – is now an increasingly rare privilege.  A rising share of the workforce consists of temps, contract workers, freelancers and others in the contingent labor force.  They have no guaranteed weekly hours and earnings, no health benefits, have not been eligible for unemployment insurance (special pandemic program aside), and are required to pay both halves of the payroll tax – and other extra taxes on work income — themselves.

Among non-farm workers, the self-employed accounted for 13.5% of U.S. private sector jobs in 1969, 18.3% in 2000, and fully 25.0% in 2019.  New York City once had relatively more actual private wage and salary jobs, and less self-employment, as a share of the private sector total.   The self-employed accounted for just 9.0% of total private employment in 1969 and 15.2% in 2000, but this had risen to 26.0% of the total in 2019, more than the national average.  

New York City had 338,501 self-employed “proprietors” in 1969, and this fell to a low of 288,450 in 1976, before rising to 583,688 in 2000 and then soaring to fully 1,462,009 in 2019.  There were particularly large increases in Brooklyn and Queens.  And as the number of self-employed workers has soared, the nature of self-employment has changed.

The self-employed once included individual business owners and partners, including those on Wall Street, along with professionals such as lawyers.  Many of these are now employees of corporations.  On Wall Street, partners once received the benefits when investment values soared, but also took the losses when investments failed.  They were “risk takers.”  Now the C-suite employees of finance still get all the benefits of upturns, more than ever before, in high pay and stock options and grants.  But shareholders take the losses in downturns.  

For example, private equity firm Blackstone went public in 2007, at the peak of the market, enriching its founders.  The investors have gotten little or nothing in return since. 

And in December 2019 Blackstone converted from a publicly traded partnership to a publicly traded, “limited liability” corporation.


These guys are the sharpest knives in the drawer.  “If Blackstone is selling, why are you buying?” A couple of decades ago, Goldman Sachs was led by the sharpest knives in the drawer.  That firm’s partners sold out to shareholders at the peak of the dot.com bubble.  So all the top executives there are employees with benefits and contracts as well.  But their pay is high nonetheless because they are “entrepreneurial” “risk takers.”

Meanwhile, taxi drivers, sales clerks, truckers and assembly line workers are now increasingly “self employed” or temps. The C-suiters now have guarantees, as if they had union contracts, while the workers take all the risks.

This Dilbert strip from 1991 pretty much anticipated what was going to happen.


Not surprisingly, the mean earnings per non-farm self-employed worker in New York City was just $60,435 in 2019, despite being pulled up by the remaining business owners, partners, and self-employed professionals.  That was lower than the inflation-adjusted mean of $66,607 five decades earlier, back in 1969.  On average across the United States the self-employed have fared even worse.   From an inflation adjusted mean of $46,661 in 1969, their average earnings fell to just $35,281 in 2019.

And all those earnings are taxed, at the federal level, not once, but twice – by the income tax, and by the payroll tax.  Whereas the sky-high benefit income received by most public employees is not taxed at all.


As in France and developing countries such as Brazil, the U.S. now has a two-tier labor market with those in the “formal” system entitled to substantial public and private benefits paid for, in part, by later-born generations consigned to the “informal” system, who receive less or none.  And it keeps getting worse.  

There are those who would like to restore the 1950s system by having more people work for large corporations, and regulating them to prevent them from classifying workers as independent contractors.  Actual “socialists” would not, in theory, be disappointed by the wipeout of small independent businesses now occurring, nor would they be favorable to new independent businesses, and those who start them.  A California referendum to require internet-based taxi-dispatch companies such as Uber and Lyft to hire drivers as employees was advanced – and was just handily defeated.

My own view is that trying to go back to the 1950s economy by trying to reduce self-employment and entrepreneurship makes as much sense as trying to go back to the 1950s family by forcing women out of most high-paid occupations.  Those older arrangements, in reality, weren’t great for everyone, and they are obsolete in any event.  What ought to be done is to separate health and retirement benefits from wage and salary employment entirely, in a single system for everyone including the employed and self employed, the public and private sectors.  Moving forward, not backward, to a system that treats people equally, one that is also consistent with a dynamic economy that provides opportunity for the next generation.

But the political/union class, which controls the Democratic Party, will not let that happen.  If you are in a public union, or work for a contractor that is funded by taxpayer dollars, you get extensive tax-free benefits right now, paid for in part by taxes on other workers who do not get those benefits.   Any system that treats people equally would make the currently privileged worse off.  And they have kept working the system to prevent that from happening.

Local 1199, the NYC hospital workers union, and the Greater New York Hospital Association worked with the insurance companies to kill Hillarycare back in 1993.  In 2000 the public unions made sure that Al Gore was the Democratic nominee for President instead of Bill Bradley, who was in favor of a single health care finance system that everyone paid for and benefitted from.  In 2009, the public unions (ASCME) fought against Obamacare, and helped to ensure that it ended up the privilege-maintaining mess that it is.   Just this year they backed candidates for President who didn’t promise Medicare for All. And the public unions also fought against a universal health care system for New York State alone.


Not that I would favor a New York-only system.  We are broke enough as it is, and people move between states.  But it shows the reality of New York’s political/union class.   “I’ve got mine jack, and we make you pay for it, while you deserve nothing.”

“What about Wall Street!”  The political/union class self-deception is that no matter how much they take, “the rich” will end up paying for it all.  And Wall Street did indeed create a gusher of state and local tax revenues until 2019.  That year, the Finance and Insurance sector in Manhattan accounted for 0.95% of all of the earnings at work in the entire United States, with Fairfield County, home of the hedge fund managers, accounting for another 0.11%.

Manhattan finance’s share of total U.S. earnings at work, however, was down from 1.24% in 2007 and 1.40% in 2000, the peaks of the prior stock market bubbles.  And the 0.95% for 2019 was still much higher than the 0.56% or less of the mid-to-late 1970s, when bond traders had to take second jobs to get by. Might COVID-19, or a long-overdue stock market crash, reduce Manhattan’s share of this market, and the associated tax revenues, back to what it was then?  Who will pay for the sky-high cost of state and local government workers then?

Even with the smaller Wall Street take, if you exclude the Health Care and Social Assistance sectors (which are substantially government-funded) Manhattan by itself accounted for 52.2% of the total private sector earnings at work in all of New York State in 2019.  Add to that the private sector activity generated by the consumer spending of those who work in Manhattan and spend money elsewhere. And consumer spending by taxpayer-funded workers in other parts of the state.  And you have virtually the entire New York State economy – and tax base.  And it depends on the subway and rail transit system that brings in people from throughout the region, and the quality of life when they get there.

The rest of the state appears to think of Manhattan as the enemy, and seeks to bring it down.  It accounted for just 37.6% of private earnings at work in New York State in 1977.  But this time, I wouldn’t be so sure that economic activity that flees Manhattan will end up elsewhere in New York State, or even in New Jersey or Connecticut.

For purposes of the New York City budget, moreover, I wouldn’t assume that mean private non-farm earnings per worker will be as high, compared with the Downstate Suburbs, as it was in 2019.  The NYC average was 29.7% higher than the Downstate Suburbs that year, a record difference, but back in 1969 the city’s mean earnings per private sector worker was just 9.6% higher than the average for the Downstate Suburbs.  

Back then, the newly developed suburbs excluded many low-wage business activities, and NYC still had extensive low-wage employment in industries such as garment manufacturing and wholesale trade. Today, all a firm needs to do is open up an office in Bergen County, and assign its employees who are working from home in New Jersey to that office, and voila – no New York City or New York State income taxes.

Can it even be assumed, moreover, that Downstate New York’s private sector workers will continue to earn as much more than the U.S. average as in the past?  The mean earnings per private sector worker (excluding finance) in Downstate New York was 30.9% higher than the U.S. average in 2019, typical of recent years, but far more than the 15.0% to 20.0% average that prevailed in the 1970s, the last time the political/union class made this big a score.

That is due to an increase in mean earnings per private sector worker who worked in NYC that far exceeded that of most other areas around the region, or the U.S. average.  The concentration of high-paid work in the city led to a gusher of tax revenue that the political/union class cashed in on, but it also led to soaring real estate prices and a lower quality of life. The quality of life is likely to fall further once tax revenues are no longer gushing in, but the huge increases in public sector compensation still has to be paid for.

Overall, 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, in contrast, is decided in “negotiations” with itself.  Secret negotiations with secret provisions, and with no “voluntaryness” as a check on human selfishness. 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.  They are the years in retirement rich.   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.

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.   

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.   And when the public employee pensions are paid, that income is exempted from New York’s state and local income taxes.  

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 relations 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 three classes end up living very different lives.

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.

Since the political/union class would never deign to use mass transit, is it any wonder that it is the MTA that is facing draconian fare increases and service cuts, and not other city agencies? Meanwhile, under the DeBlasio Administration, public school employees have started parking in school playgrounds again, denying the children access to outdoor play space.

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.

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, and includes those who describe themselves as “progressives.”

The next post will review Bureau of Economic Analysis Local Area Personal Income data by place of residence.