Government Spending

Baby Boomers Screwing Younger Workers, Private Sector Edition

|


Note: I'll be discussing the August/September Reason cover story "Generational Warfare" on C-SPAN tomorrow from 9.15 a.m. ET through 10 a.m. ET. Go here for more info or to stream it live.

Over the past couple of weeks or so, Reason articles about generational warfare have generated a lot of traffic and chatter. 

My July 11 piece, "The Real Class Warfare is Baby Boomers vs. Younger Americans," argued that the very boomers who hated their parents are now screwing over their own kids through runaway entitlement spending, calls for a new draft, and other stupid ideas.

The Reason cover story I co-authored with Veronique de Rugy of the Mercatus Center, "Generational Warfare" has been described as "long but spectacular" by new favorite Twitter person. It lays out in detail (spectacular detail) why it's time to get rid of old-age entitlements that are not just bankrupting the country but (in the case of Social Security) paying out crummier and crummier returns.

For younger people: If you care about your future, read the story and call your Congressthing and tell 'em what-for. For older people: If you care about your kids' or grandkids' future, call your Congressthing and tell them to cut your entitlement pay—and your kids' current and future taxes.

But that's all the public sector, right? Has to do with taxes and gummint and all that. Well it turns out that boomers in the private sector are also screwing younger, newer workers. Take the United Auto Workers UAW) and GM, for instance. In an analysis of the rotten bankruptcy proceedings the government engineered for GM, the Heritage Foundation's James Sherk and George Mason University Law professor Todd Zywicki note in passing that the haircut to employee compensation isn't equally shared:

The UAW made some concessions during the 2009 bankruptcy. The union allowed GM to expand the use of entry-level "Tier 2" workers making half as much as regular workers. This was a significant concession—by current employees on behalf of future employees.

Tier 2 workers don't just make less money than their Tier 1 counterparts; their benefits are seriously reduced as well (check out page 23 in this 2007 labor agreement, which has Tier 2 people making less than half as much per hour in compensation as Tier 1 folks). So younger, newer workers can expect to earn substantially less than the current and past employees who helped drive the company into bankruptcy (along with awful management, to be sure). GM spent decades building cars that were deemed too expensive by consumers, so they obviously have to cut its costs, including (or especially) labor costs. But those that got fat in the good old days won't share in the pain very much, if at all.

It remains unlikely that—despite early, unfollowed-up-on hype to the contrary—that GM will ever really pay back its government bailout. And while there's no question that wages needed to come way down, it's still galling that in yet another context, the boomers have managed to skate past problems.