Here is some good news for the everyday American: Wall Street bonuses are down 17 percent. On the other hand, that only means that the average Wall Street bonus, in 2018, was $153,700; a number taken as an average across the more than 170,000 employees in the securities industry who were active during bonus season, in New York City. Furthermore, this might represent a 17 percent decrease from the year before, but it is still almost twice the income of the average American household.
New York State Comptroller Thomas DiNapoli comments, “Despite a sharp decline in the financial markets in the fourth quarter of 2018, the securities industry still had a good year with increased profits and employment. Profits grew in 2018 and have nearly doubled since 2015. Bonuses declines in 2018, but the average bonus was still double the average annual salary in the rest of the City’s workforce.”
DiNapoli goes on to explain that the sharp 17 percent decline was the result of several factors. Most notable of these, perhaps, was the volatile market during the holiday season, but a bigger employee pool and several changes to the federal tax code (that encouraged firms to make bonus payments in 2017 instead of waiting until the next year) also seemed to have an effect. And, take this as you like, the average bonus in 2017—$184,400—was the highest payout since 2007.
That in mind, Wall Street critics argue that this significant dip should not be viewed as a sign that our financial firms have learned a single thing from the financial crisis ten years ago.
Indeed, Institute for Policy Studies director of the Global Economy Project, Sarah Anderson, notes, “There’s no real argument for why pay on Wall Street should be so high.” She contends that big bonuses encourage risky behavior, adding, “By the time a deal might have gone sour and exploded, the person had pocketed that bonus and was long gone. They didn’t feel the same kind of risk that people who lost their homes and livelihoods did in that crash.”
Now, it is imperative to note that earnings on Wall Street bear heavily on New York City and State revenue. Actually Wall Street earnings account for nearly 20 percent of state and 7 percent of city tax revenue. This decline, then, affects the city/state budget.