A new study claims that more than 160,000 Wall Street employees earned a total of $28.5 billion in year-end bonuses in 2014 – double the wages collected by the entirety of America’s 1-million-strong workforce earning the federal minimum wage.
The study, conducted by the Institute for Policy
Studies, found that the bonus pool of 167,800 Wall Street
employees was 27 percent higher than in 2009, the year after the
financial crisis. In 2014, the study found that bonus amounts
rose three percent over 2013 figures.
Notably, one of the facts that emerged from studying the causes
that led up the 2008 financial meltdown was that the bonus
culture on Wall Street created an incentive for high-risk
behaviors that endangered the entire economy. A key provision of
the 2010 Dodd-Frank Act 2010 was to prohibit financial industry
pay packages and bonuses that encourage “inappropriate
risks.” Regulators have still not implemented the provision.
— Eduardo Porter (@portereduardo) March
“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,” wrote Sarah Anderson, author of the study titled “Off
the Deep End – The Wall Street Bonus Pool and Low-Wage Workers.”
The current federal minimum wage is $7.25. Through executive
order, President Barack Obama raised the minimum wage for all
workers under federal contract to $10.10, but Congress has
resisted calls to raise the minimum wage for all workers
nationwide. Democrats have backed efforts but Republicans have
said increases would burden business and stymie job creation.
Meanwhile, 21 states have implemented increases in state minimum
wage through legislative changes and ballot initiatives.
— Marni Halasa (@MarniHalasa1) September
The study is premised on a narrow comparison between Wall Street
employees’ bonuses and minimum wage earners working full-time.
The majority of minimum wage earners, however, don’t work full
time. Many work 25 hour to 31 hours a week so an employer can
avoid having to pay worker health benefits.
The study also argues that while bonuses might coincide with an
uptick in luxury good sales, Moody Analytics found that for all
the extra dollars paid out in bonuses, only about $0.39 ended up
contributing to the gross domestic product (GDP). Whereas it was
low-wage earners who spend nearly every dollar they make who
added about $1.21 to the national economy.
“[If] 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,” said Anderson.
— Rebecca Leber (@rebleber) March