Last week, Consumer Financial Protection Bureau head Elizabeth Warren told Bloomberg News that Wall Street pulling in record profits and gearing up for bonus season shows “we still have a problem” with economic disparity. “This just staggers me; I mean, I just don’t have words to describe what this means,” she said. “It isn’t meaningful to talk about profits and a growing economy until American families are stabilized.”
Thanks in large part to government assistance, Wall Street has had a profit bonanza over the last two years. And according to a new report from the New York State Comptroller, while the total Wall Street bonus pool has gone down, the average bonus may be going up:
As Wall Street returned to profitability, cash bonuses paid to securities industry employees located in New York City grew by 17 percent to $20.3 billion in 2009. Given compensation and revenue trends so far this year, it appears the cash bonus pool will be smaller than last year, although the average bonus may be somewhat higher since it will be shared among fewer workers.
Somewhat reassuringly, the report noted that “regulatory reforms (both enacted and anticipated) could result in the deferral of a larger share of bonuses.” But in a bit of a kick to Main Street, Goldman Sachs is preparing to pay out $111 million in deferred payments from 2007 and 2009 (yes, two years right around the heart of 2008’s meltdown). As John Ogg wrote at 24/7 Wall Street, “this is one of those situations where it almost looks like the financial crisis never existed.”
In the meantime, wage growth in the labor market has been steady (if unspectacular and low by historical norms) recently, but as the Center on Economic and Policy Research noted, “there is no sector showing strong job growth at this point. Furthermore, average weekly hours actually fell slightly for non-supervisory workers, suggesting that the demand for labor might actually be weakening.” 2009 saw the second-lowest wage increase ever, and the prospects for these numbers improving are not good.
Wall Street is also keeping its foreclosure machine chugging along, with a survey of consumer attorneys finding that at least 2,500 homeowners were foreclosed upon while waiting to see if they qualify for a mortgage modification.
A poll released this week shows that 70 percent of Americans want to see bonuses banned this year at firms that took government funds, while just 7 percent of respondents believe “bonuses are an appropriate incentive in light of Wall Street’s apparent return to financial health.”