Should we feel sorrier for bankers or autoworkers?

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I've been pondering this question for a while, and this post from Felix Salmon brought it back:

The point is that there's so much uncertainty built in to the bonus system that the expected bonus has to be enormous in order to make up for it. Suppose I give you a choice between a base salary of $75,000 a year and an expected bonus of $1 million, or a base salary of $350,000 a year. If you're anything like me, you'd take the smaller amount with the higher predictability.

Now in the case of guaranteed bonuses, the calculus does change somewhat -- in that case, you might well opt for the $1 million. But the guarantee doesn't mean that you're certain to get that seven-figure payday; it just means that the degree of uncertainty has fallen substantially. And as Mike points out, you're still very much running the risk that your entire company goes bust, or that its new owners decide to abrogate those guarantees.

Not getting your bonus is a bit like those bad beats in poker. There's no point railing against them, they're bound to happen some of the time, and indeed if they never happened then the game wouldn't be structured that way in the first place. So accept it and move on with equanimity.

I know the answer on the left:  of course you should feel sorrier for the autoworkers, because they don't make as much money.  But though experiences aren't really transitive, I don't think you can say it's worse to have your job and industry destroyed as an autoworker than as a banker.  Having the whole life you planned on snatched from you is a miserable, miserable experience.  Neither group is going to starve; neither groups will, as a group, have nearly as affluent a life as they planned on.

The reason I ask the question is that the fundamental difference between bankers losing their jobs, bonuses, and so forth is that the bankers had it happen suddenly.  It's all very well to say they should have known, but they didn't, and suddenly having to sell your house, yank the kids out of their schools, etc. is not some just punishment for the terrible crime of working for an insolvent firm.

The autoworkers had some warning.  They had plenty of time to see the writing on the wall and get new jobs. So maybe I should feel less sorry for them.  But the very slowness of the change may, paradoxically, have made it harder to adjust.  All the bankers currently getting fired have gotten a very strong signal to get the hell out of an industry that needs to radically downsize.  The very slowness of the process of downsizing the auto industry has made it harder for autoworkers to disconnect; there's no firm moment when they should have said, "Yup, that's it." So maybe I should feel sorrier for them.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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