- Wall Street bonuses were five times the average growth increase for US workers last year.
- US wage growth was high, but accounting for inflation, Americans lost earning power.
- Wall Street workers, however, have been enjoying historic gains throughout the pandemic.
Inflation is taking a bite out of many Americans' earnings, but that's not the case if you work on Wall Street.
In fact, Wall Street bonuses went up by 20% in 2021, an Institute for Policy Studies analysis of new New York State Comptroller bonus data.
That's almost five times the average Americans' raise of 7.4% over the last year, according to data released this week from the Bureau of Economic analysis.
Meanwhile, inflation rose 7.5% between this January and last. That skyrocketing inflation represented the largest annual increase since 1981, and nearly wiped out the average increase in American earnings. That's despite US workers enjoying the strongest wage gains in decades last year.
But it wasn't nearly enough to offset the gains Wall Street workers experienced, which works out to an average bonus of $257,500 on top of their salaries.
These reports highlight that the financial recovery has been much different for working- and middle-class Americans than wealthier ones. While Americans are quitting in record numbers in search of higher pay, the wage gains from the past year aren't necessarily changing the financial reality for most workers. The Wall Street bonuses also underscore that the wealth divide is especially stark for women and people of color, who are often excluded from the industry.
Molly Kinder, an author of a Brookings Institute analysis analyzing the loss in real wages last year, told Insider in December that while earnings are higher now than at the start of the pandemic for millions of hourly workers, most can't cover basic expenses, and "the sacrifices and the stress of the job have made those jobs worse jobs."
Main Street wage gains were sparse, considering inflation
Wall Street bonuses have been growing throughout the pandemic: the average securities industry bonus was 20% higher than it was in 2020, for a total of $45 billion in bonuses, according to the comptroller's report. 2020 bonuses had also set a record, having jumped 25% from 2019 despite the recession.
That's on top of big wages already — and much of them go untaxed. The securities industry makes up one-fifth of private sector wages in New York City, but only represents 5% of private sector employment. According to the comptroller's office, the industry also made up 18% of state tax collections and 7% of city tax collections last year.
The average salary for securities professionals, including bonuses, was $438,370 in 2020, the latest data the comptroller had. The rest of the New York private sector makes an average of $92,315. In 1981, average compensation in the securities industry was roughly twice the rest of the private sector, according to CNBC, but it's five times as much now.
By extension, that also creates a greater racial and gender pay gap, which disproportionately harms women and people of color, especially Black women. According to an Inequality.org analysis, the growing increase in Wall Street bonuses over the past several decades has contributed to racial and gender inequality, since people of color and women overrepresent lower-paid jobs.
The high-paying financial industry is dominantly white and male, in contrast. That's true across the upper echelons of JPMorgan Chase, Golman Sachs, Bank of America, Morgan Stanley, and Citigroup, whose executives and top managers are all more than 64% male. At those same firms, Black executives and managers make up less than 5% of the C-Suite.
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