Bonus rage is back.
Elizabeth Warren (right), the White House adviser behind the Consumer Financial Protection Bureau, lashed out at the disparity between rising Wall Street pay and the deteriorating finances of the average American.
She said the pay gap shows “we still have a problem” with out of control compensation during an anemic recovery, Bloomberg reported. She made the comments in an interview for Bloomberg Television that will be broadcast this weekend.
“This just staggers me; I mean, I just don’t have words to describe what this means,” Warren said. “For me, what an economic recovery is about is about what happens to American families. It’s what happens in the real economy. It’s whether or not families are building up wealth in their homes or whether or not their homes are dragging them over an economic cliff.”
Warren made the comments as Wall Street’s bonus season creeps up on us. The tax deal announced this week by the White House and congressional Republicans should end talk of big banks moving up their bonus payouts to avoid a big tax hit, but coming weeks will nonetheless be full of chatter about the size of the checks being written at a time when unemployment is near 10% and showing little inclination to fall.
Based on their profits and the amount they set aside for pay and perks through the first three quarters, Goldman Sachs (GS) is on track to pay their average worker $500,000 or more.*
Goldman engaged in some considerable acrobatics last year to avoid hitting that number. It will be interesting to see in a supposedly recovering but still not very good economy how it and others weigh the balance between keeping the crucial talent happy and avoiding a number that attracts attention to itself.
*Update Dec. 13: Earlier I wrongheadedly wrote JPMorgan Chase was on track to hit the nonmagical $500k mark as well. I was wrong, and not by a little bit, as you will see.
I thought I recalled that the JPMorgan investment bank had set aside $378,000 or so per worker in the first nine months, but that isn’t so: the actual number (see pages 10 and 11) is $298,866. So the investment bank is on track for about $400k, not $500k. If that’s not bad enough, I didn’t specify that it was the investment bank I was thinking about. For the entire bank the number is $91,014. My apologies.