A new report arrives at a number that helps clarify the magnitude of the gap between rich and poor Americans.
We talk a lot about income inequality in the United States. But it can be difficult to grasp just how big the chasm has grown. Perhaps this will help you comprehend the difference between the haves and the have-nots: Wall Street bonuses in 2014 were worth twice the combined earnings of all full-time, minimum wage Americans.
That sobering statistic is from a new report by the Institute for Policy Studies, which compared Wall Street bonuses to the dismal paychecks of America’s low-wage workers.
Report author Sarah Anderson found that 167,800 Americans potentially benefitted from the more than $28.5 billion in bonuses paid out by Wall Street banks in 2014. Some securities industries employees likely received large bonuses, while others received nothing.
“The $28.5 billion in bonuses doled out to Wall Street employees is double the annual pay for all 1,007,000 Americans who work full-time at the current federal minimum wage of $7.25 per hour,” Anderson wrote.
If you’re having a hard time stomaching Anderson’s findings, you’re not alone. Sadly, they’re accurate.
In an article penned for The New York Times, Justin Wolfers, a senior fellow at the Peterson Institute for International Economics, said: “My judgment is that we can be pretty confident that Ms. Anderson’s estimate that the sum of Wall Street bonuses is roughly twice the total amount paid to all full-time workers paid minimum wage seems like a fair characterization.”
Wall Street bonuses were up 3 percent last year from 2013, despite a 4.5 percent drop in industry profits.
“The bonus pool is so large it would be far more than enough to lift all 2.9 million restaurant servers and bartenders, all 1.5 million home health and personal care aides, or all 2.2 million fast food preparation and serving workers up to $15 per hour,” Anderson said.
The study makes the argument that raising minimum wage, rather than giving out $28.5 million in bonuses to Wall Street workers, would provide a big boost to America’s economy. Anderson wrote:
All those dollars low-wage workers spend create an economic ripple effect. Based on standard fiscal multipliers established by Moody’s Analytics, every extra dollar going into the pockets of a high-income American only adds about $0.39 to the GDP. By contrast, every extra dollar going into the pockets of low-wage workers adds about $1.21 to the national economy.
A Harvard Business School study on U.S. competitiveness found that America’s wealth gap is “unsustainable.”
Experts have identified income inequality as the top threat to global stability.
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