America's New Elite; Touble Ahead

A trend that has been happening in the United States for quite some time has accelerated in the Obama administration. That trend is the establishment of a new elite. Conventional wisdom believes that it is the fat cat wizards of Wall Street that have made all the money these past 8 years. That is true to an extent. But the more interesting story is what has been happening in the middle class. Just who are the new elite? Union members and government employees!

No matter how you slice and dice it, in the mass making of manufactured goods the American worker cannot compete with the Chinese guy making a $1.00/hour working 12 hours per day with no benefits. The same goes for India. This has decimated our manufacturing base and destroyed union jobs. It is easy to point the finger at government policies for the mass exodus of jobs from the United States, but mostly the problem is folks who prefer to buy $8.00 Chinese made blue jeans instead of $30.00 American made blue jeans. Those folks walking into Walmart every weekend have voted for the cheaper imported goods rather than the more expensive American made goods.

That has left a divide among the working classes in America. Those who have been able to maintain their union jobs have seen their buying power go up as the cost of goods at Walmart’s goes down. Those who have lost their $30.00/hour jobs and are now making $10.00/hour, if that, are struggling big time and it is going to get worse.

I don’t think the political class in this country understands just how far the divide is among the America’s workers. 14% of the workforce is unionized, and I guess at least ½ of that are public employees. Look at the wages and benefits received by our public employees. As a rule, public employees consistently make more than private employees, with substantially more benefits. What’s more…their wages continue to go up unfettered. A recent study showed that median difference was 58%. For comparable work with comparable education, the gap between the private and public sectors ranges from 25% to as much as 78%. What are the chances public employees will take a cut in salary? Slim to none.

In the private sector, analyzing union salaries versus non-union salaries is a bit more problematic. Most of the studies show that a union worker makes approximately 11-15% more than their non union counterpart in the same job. The problem is that if a worker in a union manufacturing shop loses his/her job, there are no comparable to jobs to go to. The jobs have left the country. So the comparison needs to be between a union manufacturing job and a non-union job at something else. There, the comparisons go haywire. I don’t have to tell you that a worker at Walmart makes substantially less than a worker at General Motors.

The biggest problem of all is that the non-union worker at Walmart is subsidizing the salary of the union worker at General Motors, including the most generous health care plan in the country with just about unlimited coverage with no deductible. The taxpayers are paying for that. The union, in its negotiations with GM last year, generously gave up…a pay raise. THAT is why there is so much discontent with the bailout. What makes the GM worker more important that the average Joe?

The big story that all the media is missing is just how long the non-union taxpayers of this country are going to tolerate huge taxpayer subsidized benefits to the few selected to be winners by the current administration, when they themselves can barely make ends meet. The same goes for the Wall Street winners, who we are also subsidizing with our taxes.

I am going to guess that the above makes you angry with me if you are a public employee or a GM worker, and with the situation generally if you are at the other end of the equation. In full disclosure, my wife is a teacher and I benefit from the above situation. I live in Youngstown where Lordstown GM is one of the government selected winners, as opposed to Ontario, Ohio, which is a government selected loser. Politics, like truth, depends on whose ox is being gored. It is the job of the governmnet to devise ways to improve good job opportunities in the country to raise up those from below to the level of those who are on top. Unfortunately, George Bush did nothing, and Barack Obama is actually aggravating the situation.

The cost of the new elite is not being borne by America’s rich, but by the newly unemployed former union workers. Not a good thing!! Sooner or later there is going to have to be an adjustment. Heretofore, it has been the market that has decided who are the winners and who are the losers. Now it's the government...and that spells trouble ahead for the new elite, and for the country.