click for larger graphic

Source: MillerSamuel

 

The short answer is 7X the rest of the USA (assuming you have not yet been laid off from that job yet).

That astonishing data point came to us via Jonathan Miller. He used the state bonus compensation data for 1985-2011.

As of 2011, the securities industry salaries + bonuses were 7x larger than private industry salaries Wall Street remains an important part of the local economy — and this is part of the reason why . . .

 

 

Source:
Wall Streeters Paid 7X The Private Sector
Jonathan Miller
Miller Samuel February 27, 2013
http://www.millersamuel.com/blog/wall-streeters-paid-7x-the-private-sector/28511

Category: Markets, Wages & Income

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “How Lucrative Are Wall Street Jobs?”

  1. cluben1 says:

    Here are some thoughts that would allow for a better comparison:
    - Are bonuses included for the other jobs as well?
    - And what is the hourly income for wall street jobs and other non-security jobs in these areas?

  2. ZedLoch says:

    I’d be curious to see a $/hr metric.

  3. capitalistic says:

    I think a better metric would be to compare “Revenue/Employee”.

  4. Bam_Man says:

    Nice work if you can get it.

  5. Internet Tourettes says:

    The economist in me cannot see any rational for the 7:1 multiplier. In the old days, traders brought liquidity and stability to markets but now their main function seems to be either to extract fee’s or distort market values to benefit their own book. I think that what we have now are goliaths built on impropriety and self interest and protected by outdated and ill enforced regulations developed in an atmosphere of collusion. I don’t mean to indict everyone in the industry, and there are a few good people working who really do provide a meaningful service and maintain their fiduciary responsibilities, but the industry as a whole is based on a business model dependent on a self regulatory environment and a lack of over sight. I only say this because I used to work there…. You know if glass steagall was brought back and the proper regulation and oversight was in place we would not see wages and compensation at the levels we have seen in the past 15 years.

  6. rsinnott says:

    unless I am missing something, the axis labeling seems to be off by one index. 2011 should be $362k, not $462k.

  7. WallaWalla says:

    “As of 2011, the securities industry salaries + bonuses were 7x larger than private industry salaries Wall Street remains an important part of the local economy — and this is part of the reason why . . .”

    Doesn’t that irk of trickle down economics? Of course, it’s nowhere near the discrepancy of Executive vs worker pay, but I’d still like to read an argument justifying the 7x margin in terms of value added.

  8. WallaWalla says:

    As an addendum to my previous comment,

    to better understand the what was occurring prior to the upward trend beginning in 1990, I recommend perusing Chapter 2: Banking Regulation and Legislation from History of the Eighties — Lessons for the Future: a study prepared by the FDIC’s Division of Research and Statistics examining the banking crises of the 1980s and early 1990s.

  9. rd says:

    I don’t think this thing is over until the ratio is back in the 3:1 to 5:1 range. At that point, I expect that we will be back to a more normal economy without a financial sector requiring massive government guarantees and subsidies. The opportunities will still be there to become fabulously wealthy in the financial sector, but they will have to really work hard for it.

  10. hammerandtong2001 says:

    In my view…

    The pediatric neurosurgeon can save the lives of young children afflicted with brain disorder and disease. She is highly educated, spent a half-decade or more in apprenticeship in ER, works all hours of the day and weekends. She is well-paid, and likely resides in an exclusive area. It’s likely that she is in the top 5% income bracket.

    However, she can only treat one patient at a time. Her exceptional skill and knowledge needs to be administered and focused to each patient individually, and in total she can treat only a limited number of needful patients. She cannot LEVERAGE her time.

    The 28 year old bond trader can and will earn multiples of the this doctor’s annual income. And that is because he can LEVERAGE debt and balance sheet resources to earn an outsize profit on risk. In fact, the trader has at his disposal almost unlimited leverage, which is only capped by prevailing risk management needs – or recent law and rules. Yet, that discrepancy in earning power remains.

    .

  11. S Brennan says:

    Whatever the reason, the policies Wall Street demands of productive sectors of the economy should be imposed on Wall Street. Not out any sense of fairness, a silly notion in the 21st century, no, we simply are not giving the owners the maximum return…and maximizing the return for the fewest number of people is always the best use of resources…right?

    Surely if we brought in 450,000+ people a year from countries like China, Russia/[Eastern Europe] Pakistan and India, as we have done to the engineering & science professions the pay would fall to parity with third world nations. And since both the New York Times and Fox News agree that Americans are stupid and unworthy…it’s what we should do to keep our nation “competitive”…after all, it’s bipartisan, so it must be reasonable.

  12. Strange says:

    Multiple things are wrong with these numbers.

    First of all, the absolute magnitude looks off. An average employee of a Wall Street firm (be it a fund or a bank) did not bring home $600k in total compensation even in the best of times (2006-2007). I think average wall street income was more like $350k at the time (not sure where Miller-Samuel takes this data).

    Once the median number is correct, to compare it to the other industries, you’d have to correct the total compensation for
    (a) education, with a proper quality corrector, so you don’t compare MIT graduates with the graduates of University of Arizona, Phoenix
    (b) location of employment; NYC is an expensive place to live and people make more money here. Many police officers and firemen in the NYC bring home over two hundred thousand
    (c) the total present value of current and future benefits; while regular corporate jobs provide pensions and disability (especially if you are a union employee), “Wall Street” has no benefits to speak of

    That would be a fair, unbiased analysis.

    PS. Wall Street is one of the main “importers” of skilled labour from overseas, including Russia/India/Pakistan and China. Surprisingly, these people make the same Wall Street salaries as regular, American-born Wall-Streeters.

  13. speeds says:

    Unless I’m missing something, the numbers are inflated. From the link posted…

    “The average salary, including bonuses, in the securities industry in New York City edged up slightly to almost $362,900 in 2011. (Wage data is not yet available for all of 2012.) This was a higher average than before the financial crisis and was the highest average among New York City’s major industries.
    The disparity between the average salary in the securities industry and the rest of New York City’s private sector narrowed slightly in 2011, but it remained wide, at 5.3 times more than the rest of the private sector ($67,900)”

  14. Robespierre says:

    Wasn’t the late 80s and the early 90s when the bulk of de-regulation of the financial industry started? OTC and CDS and the repeal of what was left of Glass–Steagall? I venture to say that the money they make is due to a financial sector that has nothing to lose on bets and everything to win due to leverage and not due to long hours (like someone insinuated) or any particular skill (like Obama indicated when he called the banker sophisticated).