On Wall Street at the moment, jobs are faltering. It’s not just jobs that are suffering, though, as profits are falling as well, dropping 30 percent to $16.7 billion in 2013. Despite these pressing issues, however, bonuses on Wall Street are increasing. It’s the kind of thing that may sound like an oxymoron, but actually makes sense once you take a moment to look at what is really going on.
Last year, the average cash bonus paid to Wall Street employees was $164,530, a 15 percent increase, which serves as the biggest average payout since 2007, the year prior to when the recession hit. The average pay (including salary, bonuses et cetera) per Wall Street employee last year is perhaps even more impressive to take into consideration — $360,700. Most people wouldn’t even dream of making this amount of money in a single year, yet it’s a constant on Wall Street that doesn’t seem to be lessening even a bit. Add to this the fact that this number is more than five times higher than what is seen in the rest of the private sector, and it becomes even more impressive.
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Factors at Play
When you look at the data, it doesn’t make a great deal of sense at face value why Wall Street employees are seeing higher bonuses even though profits and employment are both falling. Dig a bit deeper, however, and things start to become easier to understand. Even when profits are falling, firms are generally willing to pay extra for the best talent available. The $360,700 average above is certainly not a number that low-level Wall Street employees are used to seeing, after all. While these individuals typically get by with a livable wage, high-ranking employees are the ones who are really making the extra money here. The more money these individuals pull in, the higher the average for Wall Street is going to be.
Good for the City
There’s no getting around the fact that the increase in bonuses is good for New York City. As bonuses were actually expected to fall, there was a bit of concern regarding how tax revenue might be affected. Because the bonuses are so high, it’s possible that this year they could generate up to $100 million in tax revenue, much higher than what was otherwise anticipated. For a city that felt a great deal of the impact from the recession, which only just recently has become a thing of the past, Wall Street is an extremely important economic indicator. The money brought in by Wall Street, however, continues to trump that brought in by any other industry in the private sector.
A Nod to the Occupy Movement
It’d be impossible for news such as this to come about without giving a nod back to the Occupy movement that has made headlines over the course of the past few years. While Occupy Wall Street may have lost steam in comparison to when it first became a popular movement, there are still countless individuals who feel as if Wall Street execs are bringing home far more money than they deserve. It stands to reason why these people would feel such a way, as increasing bonuses that come at the same time as decreasing jobs and profits simply doesn’t seem fair, especially considering the fact that the majority of these bonuses are going to high-ranking executives. The Occupy movement put this and other, similar factors toward the top of the list in terms of what it was fighting against, yet it’s still happening in America with reckless abandon.
Not all firms are compensating employees in such a way, however. Goldman Sachs and Morgan Stanley, for example, are both reporting lessening compensation, showing some of the lowest levels since 2009. Still, the increase in bonuses on Wall Street certainly doesn’t bode well for some, even if they’re immensely positive for the city and others who stand to benefit from this news. Only time will tell where things go in the next year or so, but right now, it’s not looking like bonuses will be slowing down anytime soon.