While Wall Street fat cats give themselves million dollar bonuses, the rest of us are more and more squeezed.
Last year sucked, didn't it? The recession dragged on, unemployment kept rising, wages fell... It turns out, though, there was one place where the streets were lined with gold: Wall Street.
Yup, pay on Wall Street broke a record last year, hitting $135 billion -- up 5.7%. Revenue for firms is up to $417 billion, another record, rising 1%. And executives are seeing fit to give themselves a big pat on the back for that achievement, whether their firm saw such profits or not -- million dollar back pats. Even though Goldman Sachs' earnings are down 37% from 2009, pay is way up: head honcho Lloyd Blankfein will get $13.2 million in compensation for 2010. He's also getting a raise, with his base pay going from $600,000 to $2 million, and the base pay for all 470 partners will go up, the first time it's been raised since the company went public in 1999. Blankfein's not the only one seeing green: Blackrock CEO Laurence Fink is getting a bonus of $13 million, one of the largest for this season. But let's not forget: bankers still aren't getting paid enough.
Times are great! If the banking sector, which supposedly does so much to grease the gears of the economy, is doing so well, we must be too, right? Not quite. Average wages in 2009 (the last full year data is available) fell 1.5%. Adjusted for inflation, medium family income declined 5%, from $52,388 to $49,777, from its peak in 1999 to 2009.
As outrageous as all of this is, it's really nothing new. Financial sector pay has been outpacing what the rest of us make for a long time -- ever since, surprise surprise, 1980. The recent FCIC report included this graph (h/t David Frum):
Hmm. Wonder what could possibly have coincided politically with that departure point? Could it be the demise of Glass-Steagall? Free market obsession? Declining union power? Nah. It's probably just a coincidence.
Bryce Covert is Assistant Editor at New Deal 2.0.