Wall Street banks handed out $23.9 billion in bonuses to their New York City-based employees last year, according to new data released March 15. For the fourth year in a row, the Institute for Policy Studies has produced a rapid analysis of these figures, revealing how the rapid rise in the average Wall Street bonus, compared to the stagnation of the minimum wage, has contributed to U.S. racial and gender inequality.
- The total bonus pool for 177,000 Wall Street employees was 1.6 times the combined annual earnings of all 1,075,000 U.S. full-time minimum wage workers.
- The average Wall Street bonus increased by 1 percent last year to $138,210. Since 1985, the nominal value of the average Wall Street bonus has increased 890 percent, whereas the minimum wage has risen only 116 percent.
- The much faster increase in Wall Street bonuses has contributed to racial and gender inequality, since workers at the bottom of the wage scale are predominantly people of color and female, whereas those in the financial industry’s upper echelons are overwhelmingly white and male. At the five largest investment banks, the share of executives and top managers who are white ranges from 84-87 percent, and the share who are male ranges from 66-84 percent. Only 44 percent of minimum wage workers are white and 37 percent are male.
- The 2016 bonus pool held enough dollars to lift the pay of any one of these groups of low-wage workers up to $15 per hour: all of the country’s 3.1 million restaurant servers and bartenders, all 1.7 million home health and personal care aides, or all 3.2 million fast food preparation and serving workers.
- The report points out that an increase in the minimum wage would create a larger beneficial multiplier effect in the economy, since the poor have to spend nearly every dollar they earn, whereas wealthy bankers can afford to store up their cash. IPS also notes that unrestrained Wall Street bonuses were a factor in the 2008 financial crisis. And yet regulators have failed to implement a provision in the 2010 Dodd-Frank financial reform law which was supposed to ban bonuses which encourage high-risk behavior.