During the California Gold Rush of 1848 to 1857, California produced an average of 76 tons of gold per year. A little back of the envelope calculation suggests to me that the total gross value of the gold that was mined during the gold rush in today’s dollars is around $27 billion. During that period 300,000 people flocked to the gold fields in search of riches. The 49ers were pikers by comparison with the gold rush that’s going on right now.
Every day well over 400,000 people commute from the collar suburbs into Washington, DC. It’s the new gold rush and it dwarfs anything the gold-seekers who rushed to the gold fields of California or the Yukon ever dreamt of.
Today of the ten richest counties in America six are in the Washington, DC metropolitan area. The are Loudon and Fairfax counties in Virginia, Howard County in Maryland, Fairfax city in Virginia, Arlington County in Virginia, and Montgomery County in Maryland. The unemployment rate in the DC metro area is 6.2%, far below the national unemployment rate.
Since December 2007, when the current downturn began, the ranks of federal employees earning $100,000 and up has skyrocketed. According to a recent analysis by USA Today, federal workers making six-figure salaries – not including overtime and bonuses – “jumped from 14 percent to 19 percent of civil servants during the recession’s first 18 months.’’ The surge has been especially pronounced among the highest-paid employees. At the Defense Department, for example, the number of civilian workers making $150,000 or more quintupled from 1,868 to 10,100. At the recession’s start, the Transportation Department was paying only one person a salary of $170,000. Eighteen months later, 1,690 employees were drawing paychecks that size.
I think we can see a pattern emerging here and it goes far beyond the federal government. Consider the unemployment rates in the largest metropolitan areas in the country. Here in Illinois for example while the statewide unemployment rate is 12% and the unemployment rate in the Chicago metropolitan rate is consistent with that at 11.4%. The unemployment rate in Springfield is notably lower at 10.1%. Missouri’s statewide unemployment rate is 9.5%, St. Louis’s unemployment rate is 11%, while Jefferson City’s unemployment rate is 7.9%. Wisconsin’s statewide unemployment rate is 9.7%, Milwaukee’s unemployment rate is 9.6%, Madison’s unemployment rate is 6.7%.
Lest you think that the issue identified here is small town vs. major metropolitan area, the Massachusetts statewide unemployment rate is 10% and Springfield, MA’s is 11% while Boston, the state capital’s, is 8.9%.
I recognize that this phenomenon can’t be attributed to federal and state employees alone. There are lobbyists, consultants, general hangers-on, and the people in service industries who support them to consider, too. They all add up to the reality that rent-seeking is now the only real growth industry.
Under normal circumstances I wouldn’t be overly concerned about it. I don’t envy others their wealth. But the federal and state governments need a strong private sector to prosper and that isn’t the case right now. I think there’s a lot to be concerned about.