Author: Larry Littlefield

There are howls of protest over limits on pay and bonuses for companies receiving government bailout subsidies, with one version limiting guaranteed pay to $500,000 per year. The protest is that these top executives ought to receive whatever their talents command in the free market for labor, and if their pay were restricted at one company, they would simply move on to another, making the lower-paying company worse off. There is a free market for labor in the United States, but those who have been gaining a larger and larger share of national income and wealth over the past 25 years are precisely those who have used their power over institutions to exempt themselves from it.

In the case of the executives, what you have is a loosely operated cabal that works through a small number of pay consultants, hired by boards of directors precisely because they recommend higher pay. These boards of directors theoretically represent shareholders, but the elections for them are as rigged and undemocratic as those for the New York State Legislature. They are stuffed with cronies, executives sitting on each other’s boards and recommending increases in each other’s pay, knowing that the consultants will use the pay they approve as justification for more for themselves down the line. Not too many years ago it was argued that soaring executive pay, justified or not, was too small a share of overall company costs to materially affect shareholders, workers, and customers. Now, across a range of industries, that is no longer the case. As corrupt as government often is, there is a case for more intervention rather than less. Not just for corporations receiving bailouts. In fact, not just for corporations. What about unions and non-profit organizations?

You may have heard that today the federal Bureau of Labor Statistics announced, based on the monthly survey of business establishments, that U.S. payroll employment fell by just under 600,000 from December to January. That is the worst month since 1974, I read.  What you may not have heard, however, is that based on the monthly survey of households, BLS also reported the number of employed residents of the United States fell by 1.24 million, or more than twice as much. Double. More than 1.2 million in one month.  Those who consistently read my posts, including this recent one, know how the difference may be explained: the household survey includes the self-employed, people who own their own businesses, freelancers, and independent contractors.

Back when I was at City Planning, when the first of several failed plans for Governor’s Island was being framed, there is one nightmare I hoped would be avoided. That at the urging of groups such as the Municipal Arts Society, the island would be parkland alone, and would not have revenues to support its maintenance. And therefore it would drain the budget of the NYC Parks Department, the most under-funded service (relative to average spending) in the New York City. Wealthier New Yorkers would continue to have decent park and recreation facilities, because they would pay for them themselves, in fees and “donations.” But poor and working class New Yorkers, who (unlike suburbanites with their private yards) rely on public parks for leisure and exercise, would lose out. And meanwhile, Governor’s Island would become the preserve of those affluent enough to afford an unsubsidized ferry trip, so the affluent would benefit from those Parks Department tax dollars, now diverted to Governor’s Island, but the less well off would not. My suggestion was to move the U.N. and embassies there and turn it into an “international peace island;’ the Giuliani Administration proposed a casino; a later iteration included CUNY; and still later an amusement park. But I knew as soon as Governor’s Island became the property of the city and state rather than the federal government, we were doomed. And now, according to the New York Observer, the nightmare is coming true.

I’m about to say something almost nice about Sheldon Silver, so I’m doing it early in the weekend so I’ll have the whole two days to recover. The next few years are certain to be years of severe fiscal pain for New York City and State, with higher taxes and collapsing services, and quite likely to be years of fiscal disaster akin to the 1970s. This is due not only to the recession, but also to the future-wrecking consequences of the deals, favors and non-decisions of the past two decades, consequences that are set to explode. Moreover, it may become increasingly difficult to defer (while increasing) those disastrous consequences through borrowing, which is what New York has done repeatedly in the recent past. Mr. Silver is among those who share most of the blame for this. But what would have happened if New York City and State, in addition, were staring down a multi-billion-dollar bill for the 2012 Olympics right now? Looks like Mr. Silver’s veto allowed New York to dodge an artillery shell. In any event, way back when a New York Olympics was first proposed by former Mayor Giuliani, I wrote that while other cities (such as Chicago) might need an established international event to bring the world to their door, New York City, being itself, could manage with something vastly lower (down to near zero) in cost and more indigenous. As they did with the New York City Marathon, the city’s people are organizations are capable of creating our own event. For those interested, my suggestion follows.

From the New York State employment press release yesterday: “Since December 2007, the number of nonfarm jobs (private plus public sectors) in New York State decreased by 121,400, or 1.4 percent, and the number of private sector jobs decreased by 122,200, or 1.7 percent.” And, “New York City (five boroughs): Since December 2007, the number of nonfarm jobs has decreased by 53,600, or 1.4 percent, and the number of private sector jobs has decreased by 49,100, or 1.5 percent.” Let’s do the math. Subtracting NYC from the rest of the state, in the rest of the state total nonf-farm jobs fell 67,800 and private sector jobs fell 73,100. Which means that in the rest of the state the number of public sector jobs rose by 5,300, while in New York City the number of public sector jobs fell by 4,500, re-establishing the near two-decade-old pattern. No wonder New York City can afford to have its municipal assistance cut, while the rest of the state — even suburban jurisdictions that are far wealthier on average, cannot.