Bill Knight column for Mon., Tues. or Wed., April 4, 5 or 6
But in the United States in the 21st century, the disparity between the very rich and the rest of us is no “survival of the fittest.” It’s the “prospering of the powerful.”
“The widening divide between the haves and have-nots is undermining the American Dream,” said University of Baltimore law professor Michelle Gilman. However, “economic inequality is now firmly on the public agenda as candidates and voters alike look for someone to blame for stagnant wages, entrenched poverty and a widening gap between rich and poor.”
Indeed, presidential contenders as different as Donald Trump and Bernie Sanders recognize it (though Trump faults corporations moving overseas and Sanders accuses Wall Street’s power).
Crystallizing the situation is a new report from the Institute for Policy Studies (ISP), “Off the Deep End: The Wall Street Bonus Pool and Low-Wage Workers,” which shows the country’s wealth gap at a time of supposed economic revival.
First, as to that “recovery” – the Bureau of Labor Statistics (BLS) in March reported that job growth nationally between September 2014 and September 2015 was up 1.9 percent, and wage growth had a 2.6 percent gain. In Illinois, jobs grew a bit more slowly (1.3 percent) but wages statewide outpaced the country (3.9 percent here).
However, in a county-by-county breakdown, the nation’s seven-year comeback from the Great Recession remains uneven. For instance, Illinois’ McLean County had a 0.5 percent gain in jobs and a 0.3 percent improvement in wages; Peoria had a 0.7 percent gain in jobs and a 3.8 percent improvement in wages; Sangamon had a 0.5 percent drop in jobs and a 1.1 percent uptick in wages; and Winnebago was unchanged in jobs, with a 1.83 percent improvement in wages.
Meanwhile, ISP’s Sarah Anderson found that the total value of 2015 Wall Street bank bonuses were so large that their dollar total was DOUBLE that earned by ALL full-time minimum wage workers in the whole nation.
Let that sink in for a second.
Wall Street banks paid their 172,300 New York City-based employees about $25 billion in bonuses last year, according to New York State Comptroller data. Again, that’s more than TWICE the combined annual earnings of all 895,000 U.S. workers earning minimum wage in full-time jobs: $12 billion.
Just their bonuses.
Considered other ways, that amount would be enough to lift to $15 an hour the wage of either all 2.6 million restaurant servers and bartenders, or all 1.6 million home-health care and personal-care aides, or all 2.6 million fast-food workers preparation and serving workers, the ISP showed.
The annual bonuses are handed out on top of big-bank employees’ base salaries (which already average a robust $404,000 – about eight times the U.S. median household income of $53,657, according to the Census Bureau). It’s the second consecutive year that these Wall Street bonuses have doubled U.S. minimum-wage workers’ total pay.
“Wall Street bonus payouts don’t just violate basic norms of fairness,” Anderson said. “The financial industry’s bonus culture has encouraged the sorts of high-risk behaviors that led to the 2008 financial crisis. And these bonuses also give the American economy far less bang-for-the-buck than would pay raises for the low-paid workers who prepare our food and take care of our vulnerable.
“These low-wage workers tend to spend nearly every dollar they earn, creating beneficial economic ripple effects,” she continued. “The wealthy, by contrast, can afford to squirrel away more of their earnings.”
The bipartisan Dodd-Frank financial reforms of 2010 were supposed to deal with such enrichment of the affluent elite and the related “inappropriate” risks they’re encouraged to take to be eligible for the lucrative payouts. Other nations have such regulations. The European Union, for example, limits such bank bonuses to 100 percent of base pay, or up to 200 percent with special consent by corporate shareholders. However, in 2011 federal regulators proposed a rule limiting the law to top executives.
So what remains after the financial crisis is not only that Wall Street manipulators essentially escaped prosecution and that the Big Banks got even bigger, but that the status quo of abject income inequality continues.
For the elite, economic justice means “just us.”
[PICTURED: Chart from Institute for Policy Studies.]