Wall Street gave itself another raise this year to the tune of $144 billion in compensation and benefits, according to a newly released study conducted by the Wall Street Journal. Although the increase is small, only 4 percent over 2009, the action speaks volumes when the unemployment rate is teetering around 10 percent for the nation and almost reaching depression era levels in some states.
This is not news. Compensation for the financial sector has been widely debated over the last decade, more so in recent years as the economy halted along with job growth. While not solely responsible for the U.S. economic downfall, Wall Street did play a big part fueling the housing market bubble selling securitized loans like they were hotdogs at a ballpark.
Pretty much all of the investment banks that took bailout money paid their debt with interest however. So why not give raises to employees? The firms are profitable and should reap the benefits, right?
It’s hard to criticize any company for rewarding employees. Deserved or not, bonus and compensation increases on Wall Street are frowned upon by those on “main street” just like when politicians decide to boost their annual incomes. To be fair, Wall Street itself has tried to circumvent any perception backlash by reducing bonuses. How all of this plays out is still questionable.
Wall Street is up over the last two years as stocks continue to rebound. This runs counter to the economy’s turnaround, although some studies suggest that the recession has been over since last June. Jobs and the economy are the top issues facing Americans today and there are more than 11 million people out of work. Wall Street giving pay raises at a time when the country is in economic turmoil seems like a public relations nightmare, especially since the American taxpayer footed the bailout tab.
Public recoil has been minimal. People may be too busy finding jobs or focusing on the midterm elections to pay any attention to Wall Street bonues. Whatever the reason, nothing really can be done about pay raises unless change is made at the shareholder level. Until then, Wall Street’s image will be about profit, which is not necessarily a bad thing.