A report from the Institute on Policy Studies looking at the impact of Wall Street bonuses on income inequality and both gender and racial pay gaps.
Although the argument at first seems to be Wall Street bonuses are choking the pay of women, minorities, and low-wage workers in general, it's ultimately more a use of contrast to remind people the vast income gulfs that exist in this country because Wall Street is more indicative of an issue than a sole cause.
The IPS based its analysis on the most data from the Office of the New York State Comptroller of the securities industry bonus pool. That's the amount of money that the banks, brokerages, and asset managers in New York collectively split among the employees who are allowed a share.
In 1989, the bonus pool was $1.9 billion and the average per person share, $13,300, meaning there were almost 143,000 eligible employees in the sector then. As for 2018, the pool was $27.5 billion and the average share, $153,700, meaning about 179,920 employees.
The astounding thing here is how much faster than the economy the average bonus level has increased. As the IPS correctly calculated, that is a 1,000% jump.
That did happen over 29 years but consider the context. An online calculator for compound annual growth rate—the annual increase on the average you'd need with compound interest to go from a starting number to the final result—showed an 8.81% CAGR. Compare that to annual inflation numbers during the same time period that ran between 0.1% (during the Great Recession) and 6.1%, with most of the years under 2%.
The Bureau of Labor Statistics inflation calculator shows that the $13,300 bonus of 1989 would have been worth $26,489 in 2018. A whole lot less than $153,700.
Per-person bonuses—and, to be fair, averages don't show how the bulk of money is likely tilted toward the top—were about double the average salary of the rest of the New York City workforce. A bonus alone put someone at double that number.
According to further IPS analysis, the bonus pool for last year is more than triple the earnings of all 640,000 federal-minimum-wage workers across the entire country. (Remember that many states pay minimum wages are far above the federal level.)
As previously mentioned here, the distribution of income and wealth is far from a shared experience. Increasingly, the process has become a zero-sum game, where those with money push for ever larger amounts that grow far faster than the entire economy does as a whole. Some pieces of pie grow much faster, and other pieces have to lose what they might have had to make it possible.
