MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
The Institute for Policy Studies (IPS) in Washington, DC just released a report comparing the bonuses received by Wall Street employees to the earnings of minimum-wage workers. After analyzing the data, IPS concluded, according to a news release:
Wall Street banks handed out $23.9 billion in bonuses to their New York City-based employees last year, according to new figures from the New York State Comptroller. To put these figures in perspective, we've compared the Wall Street payout to low-wage workers' earnings.
The total bonus pool for 177,000 Wall Street employees was 1.6 times the combined annual earnings of all 1,075,000 U.S. full-time minimum wage workers.
The average Wall Street bonus increased by 1 percent last year to $138,210. Since 1985, the nominal value of the average Wall Street bonus has increased 890 percent, whereas the minimum wage has risen only 116 percent.
The much faster increase in Wall Street bonuses has contributed to racial and gender inequality, since workers at the bottom of the wage scale are predominantly people of color and female, whereas those in the financial industry's upper echelons are overwhelmingly white and male.
The report itself, written by Sarah Anderson, who directs the Global Economy Project at IPS, states:
The average Wall Street bonus increased by just 1 percent last year. But the nominal value of the average bonus has grown by 890 percent since 1985, from $13,970 to $138,210. Meanwhile, the minimum wage has risen only 116 percent, from $3.35 per hour to $7.25. Adjusted for inflation, the minimum wage was nearly 3 percent lower in 2016 than in 1985, whereas the average [Wall Street] bonus was about 343 percent higher.
This has a spillover impact that perpetuates gender and racial inequity in national salaries. Wall Street employees are primarily white men, while minimum-wage workers are mostly people of color and women, the report states:
Over the past three decades, the dramatic rise in average financial industry bonuses relative to the minimum wage has contributed to racial and gender inequality. Workers at the bottom of the national wage scale are predominantly people of color and female, whereas those in Wall Street's upper echelons are overwhelmingly white and male. At the top five U.S. investment banks (JPMorgan Chase, Goldman Sachs, Bank of America, Merrill Lynch, Morgan Stanley, and Citigroup), the share of executives and top managers who are white ranges from 84 to 87 percent and the share who are male ranges from 66 to 84 percent, according to the firms' own reports (see sources section). By contrast, only 44 percent of minimum wage workers are white and an even smaller share, just 37 percent, are male. For Wall Street employees, annual bonuses come as an extra reward on top of their base salaries, which averaged $388,000 in 2015, the most recent year for which data [on base salaries are available].
According to the New York State Comptroller, this is five times higher than the average salary for other New York City private sector employees.
Those at the very top, of course, make out like bandits. I noted in a September commentary last year that Wall Street financial firms can take tax deductions for "performance-based" CEO bonuses, which further enriches the CEOs who receive stock as a significant part of their bonuses.
Wall Street bonuses are a flagrant inequity. The IPS report points out in detail how the amount of the 2016 Wall Street bonus pool could pay for raising the wages of a significant number of minimum-wage workers, stating:
The Wall Street bonus pool was large enough in 2016 to have lifted all of America's 3.2 million fast food prep and serving workers up to $15 per hour -- and still have had $776 million left over.
Most of the US's major fast food chains are deeply entrenched in Wall Street, through financing and the trading of their stocks. It would be far more equitable if their workers benefited from their profits, rather than the Wall Street staff receiving such unseemly bonuses for ensuring fast food corporations have underwriting and are traded on the stock market.
"The extreme divide between Wall Street bonus recipients and minimum wage earners is even more disturbing now that we have government stacked with former financial industrial titans," Sarah Anderson told me. "I don't think we can expect to see a narrowing of this divide anytime soon."