Analysis

Wall Street's shrinking bonuses

The average Wall Street bonus tumbled 9 percent last year, to its lowest level in three years

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"It's hard out there for a banker," said Kevin Dugan at the New York Post. The average Wall Street bonus tumbled 9 percent last year, to its lowest level in three years, according to the Office of the New York State Comptroller. Before you reach for a Kleenex, let me add that the average was $146,200 — on top of a banker or trader's regular salary. But in the financial world, receiving that princely sum apparently qualifies as a "challenging year." Believe it or not, "$146,200 is a terrible bonus for Wall Street," said Renae Merle at The Washington Post. If nothing else, it reflects the dismal state of affairs in the financial industry: Overall profits fell 10.5 percent in 2015, eroded by economic uncertainty around the globe and new regulations that have driven talent and business away from the biggest firms. And while $146,200 is clearly a great deal of money, many banks now pay bonuses in stock rather than cash, and include more "clawback" provisions that make it easier to recoup money down the line. Matters aren't expected "to get much better in 2016."

It's exceedingly hard to feel sorry for people who made more in extra pay last year "than the combined earnings" of all of Main Street's minimum-wage workers, said Sue Chang at Market​Watch. The collective $25 billion in bonuses paid to Wall Street's 172,400 employees was double the combined earnings of the 895,000 people who currently work full time for the minimum wage, according to the left-leaning Institute for Policy Studies. Or consider that if you spread out Wall Street's bonuses among the 2.6 million workers in the fast-food industry, it would be enough to boost every worker's wage to $15 per hour "and still have $4 billion left over." Despite a raft of reforms passed since the financial crisis, Wall Street pay has continued to grow "largely unchecked," said The New York Times in an editorial. Bankers may carp that their bonus checks have dipped, but since 1986, three of the six biggest years for Wall Street bonuses were 2013, 2014, and 2015. What's more, the average bonus today is nearly three times the median annual household income. Such a comparison "does not by itself prove that Wall Street pay is excessive." But in an economy defined by widening income inequality, "gains at the top of the income scale imply stagnation or losses at the bottom."

Banking is in the midst of "an existential crisis," said Mark Gilbert at Bloomberg View. More than half a million banking jobs have been eliminated worldwide since 2008. Financial firms feel besieged on all sides — facing increasingly zealous regulators, having to navigate central bank policies that make it harder to profit, and fending off disruptive technologies that threaten to make them obsolete. Oh, and "the public despises" them. Given all that, "who would choose to be a banker these days?" The Wall Street bashing really should stop, said Matthew Winkler, also in Bloomberg View. "Financial firms are doing more to help consumers, business, and industry in America than they have in decades." Banks have increased their lending to businesses for 21 straight quarters, "a streak unequaled since 1985." Meanwhile, home values have returned to pre-crisis levels, but without the risky lending that precipitated the bust. Look closer, and you'll see that the interests of Wall Street and Main Street aren't so far apart after all.

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