Just Rewards

“The financial industry’s 2014 bonuses were double the combined earnings of all Americans who work full-time at the federal minimum wage.” – IPS report

Well after all, these solid citizens must be “worth” that extra money, or our benevolent, all-wise capitalist money gods would never let them have it. Our lowly home-health care workers and burger-flippers, on the other hand, have clearly earned the righteous wrath of these deities, and thus deserve to suffer and starve in this best-of-all-possible economies. Don’t they?

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Off the Deep End: The Wall Street Bonus Pool and Low-Wage Workers

Common Dreams * Thursday, March 12, 2015

by Sarah Anderson, Institute for Policy Studies Blog

Wall Street bonus season may coincide with an uptick in luxury goods sales, but a raise in the minimum wage would give America’s economy a much greater boost.

Wall Street banks handed out $28.5 billion in bonuses to their 167,800 employees last year, up 3 percent over 2013, according to new figures from the New York State Comptroller.

http://www.osc.state.ny.us/press/releases/mar15/031115.htm

These annual bonuses are an extra reward on top of base salaries in the securities industry, which averaged $190,970 in 2013.

To put these figures in perspective, we’ve compared the Wall Street payout to low-wage workers’ earnings. We’ve also calculated how much more of a national economic boost would be gained if similar sums were funneled into the pockets of the millions of workers on the bottom end of the pay scale.

For full sources and methodology, download the full report [PDF].

http://www.ips-dc.org/wp-content/uploads/2015/03/IPS-Wall-St-Bonuses-Min-Wage-2015.pdf

Wall Street Bonuses v. Minimum Wage Earners

The $28.5 billion in bonuses doled out to Wall Street employees is double the annual pay for all 1,007,000 Americans who work full-time at the current federal minimum wage of $7.25 per hour. Wall Street bonuses rose 3 percent last year, despite a 4.5 percent decline in industry profits. The size of the bonus pool was 27% higher than in 2009, the last time Congress increased the minimum wage.

Wall Street Bonuses v. Low-Wage Service Workers

Wall Street’s bonus culture, we learned from the 2008 financial industry meltdown, creates an incentive for high-risk behaviors that endanger the entire economy. A large share of low-wage earners, on the other hand, spend every workday meeting basic human needs, such as providing food services and taking care of the disabled and elderly.

Low-wage workers in many sectors have united around a call for “one fair wage” of a minimum of $15 per hour. A few cities, including Seattle and San Francisco, have already adopted $15 minimum wages. While this is more than double the current federal minimum wage of $7.25, the size of the Wall Street bonus pool puts these figures in perspective.

The bonus pool is so large it would be far more than enough to lift all 2.9 million restaurant servers and bartenders, all 1.5 million home health and personal care aides, or all 2.2 million fast food preparation and serving workers up to $15 per hour.

Wage Increases Would Create Bigger Bang for the National Buck

Wall Street bonus season may coincide with an uptick in luxury goods sales, but a raise in the minimum wage would give America’s economy a much greater boost. To meet basic needs, low-wage workers tend to spend nearly every dollar they make. The wealthy can afford to squirrel away more of their earnings.

All those dollars low-wage workers spend create an economic ripple effect. Based on standard fiscal multipliers established by Moody’s Analytics, every extra dollar going into the pockets of a high-income American only adds about $0.39 to the GDP. By contrast, every extra dollar going into the pockets of low-wage workers adds about $1.21 to the national economy.

These pennies add up considerably on $28.5 billion in earnings. If the $28.5 billion Wall Streeters pulled in on bonuses in 2014 had gone to minimum wage workers instead, our GDP would have grown by about $34.5 billion, over triple the $11.1 billion boost expected from the Wall Street bonuses.

Wall Street Bonus Reform is Long Overdue

While workers’ wages stagnate, the Wall Street bonus culture is flourishing—in part because of regulatory foot-dragging. Nearly five years after the Dodd-Frank financial reform was signed into law, regulators have still not implemented Section 956 of that law, which prohibits financial industry pay packages that encourage “inappropriate risks.”

The proposal regulators released in 2011 ignores key lessons from the last half-dozen years of financial scandals. It would only apply pay restrictions to top executives, leaving off the hook traders and other employees whose activities could put the financial system at risk.

http://fortune.com/2014/10/27/the-london-whale-sized-loopholes-in-wall-street-pay-reform/

The only specific pay restriction relates to the timing of bonuses. Bankers would have to wait three years to collect half of their annual bonuses, which doesn’t amount to much of a disincentive to short-term recklessness.

The European Union now limits bonuses for key bank staff to no more than 100% of their base salaries, or up to 200% with shareholders’ approval.

http://www.wsj.com/articles/many-more-financial-firms-could-face-bonus-caps-under-eu-rules-1425473669?tesla=y

Americans for Financial Reform has put forward detailed proposals for strengthening the proposed U.S. regulation.

© 2014 Institute for Policy Studies

http://www.commondreams.org/views/2015/03/12/deep-end-wall-street-bonus-pool-and-low-wage-workers

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About l. l. frederick

I'm pretty ordinary, so I find any number of things in the world interesting, among them: books, music, flowers, food, social justice, politics and (sometimes!) people. As for my writing, I've decided that I can be subtle and tasteful when our only problems are esthetic ones. Or when I'm dead, whichever comes first. In the meantime, read at your own risk.
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16 Responses to Just Rewards

  1. tubularsock says:

    Tubularsock loves it when the message is so clear. Looks like a fuck you to regular people. So why do regular people put up with it?

    • Tubularsock, Beats the shit out of me! It makes me wonder if too many of us are … irregular or something. Maybe we need heavy-duty brain laxatives? Or more pikes and pitchforks. Thanks for commenting — and I’m sure you’ll take care of all this nonsense when you come into your kingdom, er, presidency. Right? – Linda

  2. swo8 says:

    Love the art work and the music rocks.
    Leslie

  3. No bonus limits in the U.S., and 100-200% of base salary bonus limits in the E.U. Staggering…

    • And those noble bonus-earners are outraged by the injustice of ANY limits to what they may steal. Maybe Einstein missed one more infinite thing — chutzpah! Thanks for your comment. – Linda

  4. From an economic perspective the whole reason profits (and bonuses) are so high is because workers are so miserably exploited. Whatever happened to human decency?

  5. Guess they can’t make enough money on that. Thanks for commenting. – Linda

  6. sojourner says:

    The haves shall have more and the have nots shall have even less. It’s the age-old system of the wealthy and powerful few ruling over and mutilating the disenfranchised many.

    And yet, in our ‘highly educated” state and technologically advanced societies, we the people have progressed not one bit. We are still responding like the peasants and serfs who came before us: “Thank you, Sire, may we have another!”

    There’s an old adage that goes, “Those who will not listen will have to learn the hard way.” And unfortunately, those of us not listening outnumber those of us who are.

    These pigs will continue to be pigs, as history shows, until the people finally decide to awaken and put an end to them and this ancient evil.

    Dr Bramhall asked, “Whatever happened to human decency?”

    Human decency exists only among the masses, and even there it seems to be disappearing.

    Linda, I know you know all of this, but these monsters in five thousand dollar suits drive me crazy, as I;m sure they do you. Some days, it is beyond me to have the energy to keep going, and this is one of those days.

    Sorry, for my pessimism and long winded comment!

    • Sojourner, I know the feeling, only too well. I just lack enough of that submissive gene or hormone to concede the field to the hogs! They can kill me, but they can’t make me thank them for it without my consent.

      And I hope to do a bit more than just say ‘hell no’, in one way or another. I even hope to see a few of those rotten pigs spitted and roasting before I die. If I sound bloodthirsty and unforgiving … I’m getting there. Thanks for your comment, and whatever you are inclined to say here is no problem. – Linda

      • sojourner says:

        Thanks, Linda! I appreciate it. And the same goes for all of you on my blog!

        And no, Linda, you do not sound bloodthirsty. You sound like the rest of us who are sick and tired of seeing the poor and weak raped and pillaged by a system/order from hell!

  7. The continuing legality of complex financial instruments like derivatives, CDOs, etc, , which brought down the world economy in 2008 and Warren Buffett called “financial weapons of mass destruction”, is like a home with infants and very sharp objects scattered about on the floor. Those are financial products which result in tremendous profits or tremendous, economy-threatening losses, so making them illegal protects the financial system from catastrophe while eliminating impossible-to-resist incentives. Making transactions where people make money by betting on others’ misfortune illegal, such as a company’s stock price going down, the housing market collapsing, or a nation suffering financial ruin, wouldn’t hurt either and stop some insider trading.

    • Jerry, Not only are all these ticking financial time bombs still legal, but those who nearly wrecked everything are still running the banks and markets. Only Iceland has jailed even one! And this obscene bonus culture shows, if we ever doubted it, that they aren’t evenn pretending to mend their reckless ways. Why should they — they’re just fine. If we’re not so fine, it’s not their problem! Tell me why we aren’t lynching SOMEBODY yet — we must be crazy too. Thanks for your sensible suggestions and comments. – Linda

  8. Jeff Nguyen says:

    I would have just spent that extra money on Slim Jims, cigarettes and lottery tickets, anyway. Jamie Dimon and Lloyd Blankfein know what’s best for me.

    • That’s a point, Jeff. I’m more apt to indulge in whole-bean coffee and too much music myself! But … what will those guys spend it on? How many mansions, sports cars, yachts, trophy women (or men), and private islands do they need? Thanks for commenting, and have a care with the slim jims, those things will kill you! – Linda

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