Wall Street traders discouraged by declining bonuses this month can take solace: They still earn much more than brain surgeons and top US generals.
An oil trader with 10 years in the business is likely to earn at least $1 million this year, while a neurosurgeon with similar time on the job makes less than $600,000, recruiters estimated. After a decade of deal-making, merger bankers take home about $2 million, more than 10 times what a similarly seasoned cancer researcher gets.
The pay gap between finance and other professions widened between the 1980s and 2006, exceeding the record set before the Great Depression, according to a 2009 study by Thomas Philippon, a professor at New York University’s Stern School of Business. After the 2008 financial crisis, Wall Street started paying a larger portion of bonuses in stock and restricted cash. Yet there’s little sign the gap with Main Street is narrowing.
“I don’t think it’s healthy for the economy to be this skewed,” said Stephen Rose, a 63-year-old professor at Georgetown University’s Center on Education and the Workforce. “I believe there’s some sort of connection between value added to the economy and pay. Everyone is losing sight of any fundamentals.”
Tomorrow, JPMorgan Chase & Co will lead the largest US banks in reporting full-year earnings, disclosing costs to reward employees. In the first nine months of 2010, the New York-based bank allocated $21.55 billion for compensation and benefits, down one percent from the same period a year earlier even though the number of employees rose seven per cent.
