A new study published by the Institute for Public Policies found that Wall Street banks doled out $28.5 billion in bonuses to their collective 167,800 employees last year, about $1.7 million per employee. The 2014 bonuses represent an increase of 3% over the prior year and were provided in addition to the average base salary of $190,970. The 2014 bonuses also represent a 27% increase since 2009 - the last time that Congress raised the minimum wage.
To put the numbers into perspective, the bonuses handed out to Wall Street's 167,800 employees, almost double what was paid out to all of America's 1,007,000 full-time minimum wage ($7.25 an hour) earners. Full-time minimum workers earned a collective $14 billion last year.
Economic models (economic multipliers) established by Moody's Analytics, indicate project that for every dollar paid out to high-wage earners only adds about $0.39 to the GDP. For every dollar paid out to low-wage earners, $1.21 is added to the GDP. If all of the $28.5 billion worth of bonuses would have been reallocated to minimum wage workers, the American GDP would have grown by an astounding $34.5 billion dollars as opposed to the $11.1 billion boost from the Wall Street bonuses.
It would cost $19 billion to raise the wages of 2.9 million restaurant servers and bartenders to $15 an hour, $13 billion dollars to the raise the wages of 1.5 million health and personal care aides to $15 an hour and $17 billion to raise all of America's 2.2 million fast food prep and serving workers to the same hourly wage.
Conspicuously, one of the factors that emerged from studying the causes that led up the 2008 financial crisis was that the bonus culture on Wall Street created an incentive for high-risk behaviors that endangered the entire American economy. A key provision, Section 956, of the 2010 Dodd-Frank Act 2010 aimed to prohibit financial industry pay packages and or bonuses that encourage "inappropriate risks." Incredibly, the provision has yet to be implemented.
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