Jacobin - March 24, 2022
Nearly fifteen years on from the 2008 meltdown and in the wake of the significant economic downturn wrought by the coronavirus pandemic, the continued explosion of Wall Street bonuses is yet a further reminder of the American economy’s fundamental inefficiency. While workers becoming vastly more productive yields limited gains for the broad majority, even a massive financial implosion like 2008 has done nothing to arrest the runaway greed of the country’s economic elite.
At the zenith of the Reagan revolution and since, the market has consistently been defended on grounds of its supposed efficiency. Market outcomes, or so the argument goes, may not always yield egalitarian results but they do at least allocate resources effectively and reward productive activity. But evidence is plentiful that the hyper-financialization of America’s economy has actually had something like the opposite effect.
According to findings from the Economic Policy Institute, the growth in worker productivity over the past seventy years hasn’t been mirrored by anything like a commensurate increase in wages. In recent decades, however, compensation for those now at the commanding heights of financial activity has ballooned — average Wall Street bonuses growing by an astonishing 1,743 percent since 1985 when adjusted for inflation (had the minimum wage grown at the same rate, it would currently be $61.75 rather than a meager $7.25).
The breathtaking extent of this growth is dramatically illustrated in a new report from the Institute for Policy Studies’ Sarah Anderson, which finds that the average Wall Street bonus in 2021 was $257,500, up 20 percent from 2020 and significantly higher than in any year since the 2008 financial crash.
The jump is particularly notable in light of ongoing debates concerning inflation and the cost of living. As Anderson observes, the rise in Wall Street bonuses considerably outstripped the annual inflation rate of 7 percent — a rate that itself outpaced the comparatively small 2 percent increase in average weekly earnings among private sector workers. And that’s to say nothing of base salaries on Wall Street, which themselves averaged over a quarter of a million dollars last year. ...
Read full report at Jacobin