Have the federal bailouts been biased towards white-collar and against blue-collar workers?
That question was starkly raised by Rep. Barney Frank, chair of the House Financial Services Committee, which yesterday heard the chief executives of the Big Three automakers beseech Congress for $25 billion in taxpayer-funded loans.
Frank, the committee’s chair, said:
I have been struck, not happily, in the time that we’ve been discussing this, at what frankly seems to me an inherent cultural bias. There’s a double standard here. Aid to blue-collar employees is being judged by a standard different than white-collar employees.
Now, I have no complaint about white-collar employees. They are my friends and constituents, as are others. But I do not remember complaints — and I’m not talking about CEO compensation. And let me just add one thing. We have the CEOs with us. People have said, “Well, we’re bailing them out. Should we deal with them?…”
… But while there was some talk about CEO compensation, there was none about the compensation of the people who work at these financial houses. And I am sure that even before the concessions in the recent contract, the hourly wage of people at the financial houses that have received assistance through the federal government are a good deal higher than auto workers. I think the average AIG worker gets a good deal more than the auto workers — probably not the clerical people, but the people at AIG.
There is apparently a cultural conditioning that’s more prepared to accept aid to the white-collar industry than to the blue-collar industry, and I think that has to be confronted honestly. Look, the $700 billion and this much smaller amount have in common the following: The justification for them has to be the impact on the broader economy. We have no right trying to help an industry for that industry’s sake.
One point to make is that when Frank in September argued for the $700 billion bailout package in September, he said it was important to pass in part because it would help blue-collar workers among others.
On Sept. 22, he told reporters:
The issue here is that the credit system of the country is clogging up. I’ve had people in the business of providing automobile finance say that they may go out of business. If people can’t buy cars, salesmen can’t sell cars, automobile workers can’t make cars. There’s a real clog from all these — from these kinds of things.