Banker bonuses down? Don’t believe a word of it.

February 28, 2013, 6:34 PM UTC

FORTUNE — Wall Street compensation may look shoddy compared to the boom years, but it’s really not as bad as the numbers suggest. Estimates released Tuesday by New York State show bonus payouts of $20 billion in 2012, 8% more than last year but a blistering 41% less than the $34 billion payout in 2006. While it may be tempting to conclude that the industry is still reeling from the financial crisis, think again. The majority of bankers on the Street are doing as well, or in some cases, much better, than they did when bonuses hit their nominal “peak.”

Indeed, it is barely an apples to apples comparison. First, one needs to understand where this data is coming from and why it is even tabulated. The New York State Comptroller provides this yearly estimate of Wall Street bonus payouts because the state and the city of New York derive a large chunk of their revenue from taxing the heck out of them. This year, Wall Street bonuses will contribute 14% and 7% to the state and city’s bottom lines, respectively. Given the hyperlocal nature of the analysis, the comptroller is strictly focused on bonuses paid to employees who work in New York City.

While “Wall Street” is located in New York City, it is really a moniker for the financial services industry in the so-called “tri-state” region, which includes financial firms that have moved just across the river from New York City to New Jersey or up north to Connecticut, home to hedge fund havens Greenwich and Stamford. Eliminating the surrounding regions wipes out around 30% of employees who technically work on “the Street” but actually work in a leafy suburb or a gentrified industrial sludge pit. Some are “back office” folks who work at the banks’ data centers in Jersey City while others are hedge fund mavens, like David Tepper of Appaloosa Management, who from his Short Hills, N.J. offices made an estimated $2.2 billion last year — himself.

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So right off the bat this $20 billion bonus figure doesn’t seem very representative of the Street. Nevertheless, it does provide a baseline by which one can measure most of Wall Street’s main industries, save hedge funds, of course. If we were to take it on faith that the majority of investment bankers were captured in the estimate then it would be quite a blow for that slice of the Street. But there are a couple of issues here as well.

First, Wall Street’s headcount has not only decreased in size, but it has changed in composition. Total employment in the securities industry in New York City peaked in January 2008 at around 189,000, according to the Bureau of Labor Statistics. By August 2010, the city had shed some 31,000 or 17% of them, which was four times the rate of total job losses in the city at the time. Now a lot of those jobs that were lost came from the trading side of the business as the crisis obliterated the securitization market (CDOs and the like). The bonus pool swelled thanks in part to their “performance” and therefore contracted markedly upon their exit.

Employment on the Street picked back up after 2010 and by the end of the last quarter of 2012 there were around 169,000 people working on the Street in New York City, closing the pre-crisis employment gap to around 11%. Now, the people who were being hired during that time tended to be in areas like risk management, which, while relatively well-paid, isn’t close to what securitization traders were bringing home during the boom. So while there has been an uptick in the number of workers, the ones hired aren’t as expensive as the ones they let go, blunting the precipitous dip in the bonus pool from 2006 to 2012.

The second major issue with the $20 billion figure is that it doesn’t take into account the way many banks and financial firms are choosing to pay out their bonuses. The Comptroller’s estimate reflects just cash bonuses and deferred compensation for which taxes have already been withheld. Therefore, it doesn’t include stock options or other kinds of deferred compensation that have yet to be paid out. That’s a problem because bankers, for the most part, no longer receive a fat check in February for their bonus. The trend now is to pay a higher base salary and to break up bonus payments throughout the year.

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This method solves two problems. First, the higher salaries make the bonus pool appear smaller than it normally would as money has flowed from one bucket of compensation to another. Since the bonus numbers tend to be what makes the headlines, lowering the bonus payout and paying higher salaries gives the banks much needed cover to compensate their employees.

The break-up of the traditional bonus payout is being sold by the Street as a way to better align compensation with performance. They argue that this would help to prevent a trader receiving a big payday for phantom gains. As such, the thinking goes, that trader would be less tempted to take big risks. While that’s a clever way of explaining the move to the public and its employees, it isn’t really true. To solve that problem all a bank would need is a clawback provision built into their traders’ contracts, whereby the bank could at any point in the future take back any compensation that was determined to be a phantom or ill-gotten gain.

Indeed, the main benefit of staggered bonus payouts is that it makes it appear as if the bank has made somewhat drastic cuts in compensation. Spacing the pay out over several quarters or several years blunts that headline number, making it more palatable for Wall Street’s critics. It also makes the bank look more efficient in the eyes of investors as it lowers costs and pushes it out into the future.

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Pretty much all banks are chopping up their bonus payouts, some more than others. The general rule for most of them is that junior employees still receive their bonus (ranging from $50,000 to $100,000) up front and in cash. That is really no matter because most of the bonus pool is allocated to more senior employees. At Morgan Stanley (MS), for instance, bonuses will be paid out in a combination of deferred cash and stock beginning in May of this year and stretching out through December of 2015, according to a person familiar with the matter. Morgan will apply the payout to bonuses above $50,000, which is most of its bonus pool. Barclays (BCS) deferred bonuses for all 1,200 of its managing directors in its investment bank, according to the Financial Times. They will see their bonus checks in three yearly installments starting in 2014 and ending in 2016.

While it isn’t great to get an I.O.U. from your employer, it is certainly better than nothing. It is here where the longing for the old Wall Street has some merits. But when you add up all the deferred compensation, Wall Street’s sad looking bonus pool plumps up nicely. Of course, there is a chance that a bank might fail while waiting to get paid, but it is better not to think about that.