It’s official: Wall Street had a lousy year and that means that for some people the annual ski trip to Aspen will be put on hold.
Time for Occupy Wall Street to pack up its tents?
The New York State Comptroller reported Wednesday that the pool for Wall Street bonuses shrank by 14 percent during the 2011 season to a total $19.7 billion. Some firms reported slashing bonuses 20 percent to 30 percent. Still, that’s not nearly as steep as the drop in profits at the broker/dealer members of the New York Stock Exchange – they plunged 51 percent to $13.5 billion, the second year in a row that profits plunged by more than half.
The bonus cuts would have been worse, but Wall Street has downsized dramatically since the financial crisis began and is now 22,700 lighter – including 4,300 layoffs last year. That means the shrunken bonus pool was divided among fewer people. The smaller bonuses nonetheless took a huge bite out of revenues – 52 percent among the NYSE firms, up from 47 percent in 2010 and 36 percent in 2009, when bonuses had become four-letter words and much of the profits were courtesy of taxpayer subsidies.
So the 1 percent may be wounded, but down-and-out they are not. The average cash bonus alone was $121,150 in 2011, up 13 percent from 2010. The total 2010 compensation package tallied $361,180 – 5.5 times as the average salary in the private sector. Figures for 2011 are not yet available.
The disappointment among the financial elite has become fodder for the less-blessed. The Twitterverse has been sniggering all day over one quote from a rich-just-don’t-get-why-everyone-hates-them story from Bloomberg News: “People who don’t have money don’t understand the stress.... Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”
New York State is keeping a stiff upper lip because its revenues won’t suffer as much as might be expected: Personal tax revenues are getting a backstop from deferred Wall Street compensation coming due from previous years. Deferred compensation and potential clawbacks mark one of the biggest changes in the way Wall Street pays its top earners, famous for eating what they kill on the run. New York State Comptroller Thomas P. DiNapoli is hopeful that the shift will help smooth the huge swings in tax revenues from Wall Street, which accounted for 20 percent of state revenues before the meltdown and now make up just 14 percent.
Maybe OWS can come up with a new tax revenue-producing idea.
