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Wall Street traders may be dejected by the declining size of their bonuses this year, but they can take comfort in one fact reported by Bloomberg this week: They still earn much more than brain surgeons and top U.S. generals.
An oil trader with 10 years in the business is likely to earn at least $1 million this year, according to the report, while a neurosurgeon with similar time on the job makes less than $600,000.
And after a decade of deal-making, merger bankers take home about $2 million -- that's more than 10 times what a similarly seasoned cancer researcher gets, according to the Bloomberg article.
The story cites a 2009 study by Thomas Philippon, a professor at New York University's Stern School of Business, that found the pay gap between finance and other professions widened between the 1980s and 2006, exceeding the record set before the Great Depression.
After the 2008 financial crisis, Wall Street started paying a larger portion of bonuses in stock and restricted cash, Bloomberg said. Yet there's little sign the gap with Main Street is narrowing.
The story notes that 2010 bonuses for fixed-income and equity traders could drop between 20 percent and 30 percent compared with the previous year, adding that compensation consultant Johnson Associates estimates that the biggest bonus increases (as much as 15 percent) will go to fund managers and people who advise wealthy clients.
Bloomberg also points out that in the first three quarters of 2010, eight of Wall Street's largest banks set aside about $130 billion for compensation and benefits, enough to pay each worker more than $121,000 for nine months of work. Four years earlier (before the financial crisis) lenders set aside a total of $113 billion, or enough to pay an average $114,400 to each worker.
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Well it's a good thing this much money is being handled by people of the highest moral character who are clearly looking out for the best interests of their customers, otherwise I'd be worried about all that dough they're rolling in... /rolleyes
When is stck broker season?
Stock Brokers are not in this group. Energy and fixed income are the real money maker.
This is why, as a research scientist, I am saddened when people suggest that scientists commonly fudge their results just to get grant money. To earn my basic credentials, I completed a 4 year undergraduate degree and then spent a further 6 years in graduate school. After 10 years in college, my starting salary (in 2002) as a postdoctoral fellow was $28,000. Now, with 8 years of postdoctoral experience, my salary (as a research assistant professor) is still under $50,000 a year. If/when I get a tenure-track faculty position, I may make $80,000 or $90,000.
I do this because I believe in the value of science. I love figuring out how the human body works and I love the feeling that I get when I add some little tidbit to our understanding of it. If money was my main concern, I would have chosen an entirely different profession.
Sure....I would love to get ahead and be well-known for my discoveries. But...to fudge results to accomplish that (or to get a grant) would defeat the entire purpose of entering this profession in the first place.
MGinRochester wrote: I do this because I believe in the value of science. I love figuring out how the human body works and I love the feeling that I get when I add some little tidbit to our understanding of it.
And if traders wanted to cat-sit, paint landscapes, or serve in the military rather than do something that satisfies their thirst for the rush or their love of money, they'd make less money. Meh.
this sounds like the american dream to me.
And when all is said and done... who did more for the public? The money managers are simply "funny money"...
The difference is even worse when you consider that a neurosurgeon has 4 years pre-med, 4 years of medical school and 6-8 years of residency/fellowship before they begin making enough money to payback hundreds of thousands of dollars in student loans. They work nights, weekends and holidays while holding their patients lives in their hands.
The fact that these Wall Street parasites make more for what they do while at the same time generating misery and suffering for millions of Americans really shows something about this country.
This is so true.
I don't know if it so much reflects poorly on the country as much as it reflects poorly on capitalism. Capitalism's feedback mechanisms don't take into account moral or "usefulness to society" metrics. Unfortunately this line of reasoning just gets you called a socialist. I suppose that aspect of it looks poorly on the country.
You can tell a lot about a society by the professions and people that they honor/celebrate.
Seems like all we "make" in this country is money. We no longer make many tangible things.
Drs. LeMole and Rhee (guiding Giffords through her recovery) deserve so much more than traders. Alas, perhaps their moral character allows them to reap benefits from knowing they've saved lives. Monetary compensation is not everything. What do traders have to show for themselves at the end of the day besides conspicuous consumption?
Another bad effect of excessive salaries on Wall Street is that it is sucking talent away from the sciences, engineering, and medicine. Young people with new Masters and Ph.D. degrees in science and engineering are going to work for Wall Street firms to make huge salaries, rather than going into research to make new discoveries and inventions. If this continues, we will lose our competitive position to countries like China and India who value science and engineering more highly than finance.
One of the aggravating aspects of the problem is that many newly graduated Ph.D.s in the sciences and engineering have had their way paid through graduate school by federal research grants from the DoD, NIH, NSF, or other federal agencies. I think we should require anyone who takes a job in the financial sector after receiving a degree in the sciences, engineering, or medicine to repay all federal support they received in graduate school in full, so that these grants can go to support students who actually go into the sciences, engineering, or medicine.
Why is this a surprise? If a firm is in the business of "money", if they are successful, they obviously would know how to maximize their "money" (or funny munny, etc.) to pay their highest performing employees.
There's nothing "wrong" with this society because of this. This is capitalism. If a "neurosurgeon/cancer scientist" is good enough and is involved in cutting edge research in his field and gets a share of royalties because they are so good...they will prolly make millions of dollars too...even after they quit/retire!
If it takes "bonuses and stock options" vs. "royalty share" to retain stars of any particular industry, that's what the board of directors is going to give. The rest of the "neurosurgeons" are just normal workers like that accountant in the financial firm who makes < $100K.
But, I understand. We hate "Wall Street" now so lets write articles about how evil and oppressive they are!
I don't see a problem with Capitalism either. The problem I DO have with these bonuses is that most of them are given out for simply showing up for work. That may be how the boards of these companies voted to pay bonuses to keep their “star performers” even if they weren’t, but that just doesn’t sit well with me. I’d rather give my investments to someone who was bonused for performing well.
No, it's not capitalism. It's a distortion of capitalism. Can anyone say that trading CDO's that collapsed is 'capitalism'? That these people 'performed well'? That growing the financial sector from 20% to 40% of GDP in 10 years added anything to America? This myth that the rich are rich because they 'perform well' is falsifed by places like Mexico where 15 or so families run the country while most people live on subsistence wages. Check the GINI coefficient for the US vs other countries. Are OUR traders out performing theirs to the extent that their pay indicates? Or have they just gamed the system?
That "growing the financial sector from 20% to 40% of GDP in 10 years" in America is called POST INDUSTRIALIZATION. Just because we don't make as much crap as we used to and are more of a service economy now that we have 3rd world nations make everything for us doesn't mean it doesn't "add anything to America". If you don't have a bank, what are you going to do wiht your money? If there is no investment banking, what is the person you work for going to do wiht his money? So what if some ppl figured out how to "game the system" and make a little profit for the investment bank. Even the investment bank needs money to operate and SERVICE that person who hires you...or that person who wants to open a massive factory in China to produce cheap computers for you to type all your crap into!
OK tell me what it added to America. How's our economy doing? We doing OK? Unemployment at 4%, after all the big financial sector growth? American economy more competitive? They didn't make a little profit. They simply invented worthless trading schemes that could not be accurately assessed for risk then blew up our economy.
You seem to think ANY type of theft is permissible. Why not just get a gun and rob a bank?
It adds only to the top 1% of America. For the rest of us it has meant the demise of our pensions, jobs, and standard of living. The bankers have really added nothing to the GDP, they are merely skimming 40% off the top and leaving the crumbs for the rest of society. You can call them traders all you want, but they are really white collar criminals. Speculation in commodities is nothing more than legalized gambling. If they were "speculating" on sporting events, you would throw them in jail and call them bookies. Since they do it with what you call "commodities," what the rest of us consider as "necessities," you call them your idols.
But that's just the thing rasmasyean they if a firm is in the business of 'making money' if sucessful they wld know how to maximize their profit to pay their highest performing employees. Many of these firms HAVE NOT been sucessful that's why we had the bailout MORON and even thoughthey are not sucessful they still payout HUGE compensations to their 'highest performing' employees. Also highest performing with regards to stockbrokers, bondbrokers and many others on Wall street are nothing more than glorified salesmen. As far as picking good stocks for their clients many do not and they still make money in the form of commissions. So it's not about how much money you make for your clients in the form of making good investment desicions it's about making alot of transactions to generate comissions and about opening new accounts to get more suckers to invest their money. B/c the firm and broker makes money whether or not the client does. And then on top of it many like Goldman Sachs make money illegally by ignoring or changing laws and not paying their fair share of taxes. Motto on Wall street shld be : WE MAKE MONEY WHETHER YOU DO OR NOT
And don't forget that all our foreclosed houses and assets of closed businesses are being bought at bargain rates by the only people who have any money to invest...those same people on Wall Street who started all this trouble in the first place.
The money just keeps trickling up while the middle class disappears.
That “speculation” is a bit more planned than “gambling” in reality. There are many economists and mathematicians with Ph.D.s who generate data and risk analysis, etc. You just don’t understand how it works so you simplify it as some bully kid in the school making up all the rules. Sometimes they make mistakes true…sometimes everyone else is greedy and wants large houses so they feed on that, true…and heck, maybe laws need to be in place to fix this for the future.
But don’t be so shortsighted to say that finance and their employees are as useless to society as a tyrant family in Mexico or whatever. If it wasn’t for these multi-billion dollar businesses and what you call “speculation”, Bill Gates would not have been able to hire 1000 ppl needed to make what’s in front of you recognize your input…IBM would have never been able to develop what 95% of the desktop standards STILL IN USE TODAY proliferated near ubiquitous computing. Not to mention all the CAT scan machines and cancer drugs that wouldn’t exist to give jobs to your precious neurosurgeons and biologists!
Call it withever you want....there were plenty of 'traders' on Wall Street gaming the system. The bundling of mortgages that banks made to poor risk borrowers, that were then sold as 'good' investments to everyone! Wall Street has been selling scams for the last 10 years! And the experts all said the collapse was bound to happen because of poor or non-existent regulation. They deserve more and bigger bonuses, what a crock of BS!
The rest of the "neurosurgeons" are just normal workers like that accountant in the financial firm who makes < $100K.
Lol @ rasmasyean for saying Neurosurgeons are just "normal workers...". Clearly you are not aware of how gifted, talented, and driven one must be to become a neurosurgeon. Not just anyone can become a physician for that matter. I.e. NONE OF THEM ARE AVERAGE. There are those who are better than others, but even the best neurosurgeons do not have the same earning potential as the best traders.
I would argue it is much easier for traders to reach that monetary level of success than it is for neurosurgeons simply because of what the job entails. Traders focus on $$$$...Simply stated, $$$$ makes the world go round. Yes, they put in CRAZY hours (very comparable to physicians), but they have a greater potential return on their educational investment at a much faster rate than docs.
mpm1 - I bet you are one of the folks claiming right wing political rhetoric "drove" the nut in AZ to his shooting spree
And here I am, thinking the surgeons are making too much money.
It's Wall Street's Nation, they can compensate themselves as the see fit.
But this pathology will have consequences beyond what our social fabric can survive.
The cancer researcher merely dedicates his or her life to improving the human condition, whereas the financier typically dedicates his to her life to ripping people off in some fashion or another. Even in a person without a functioning conscience, a lifetime of such brigandage has to take its toll. Maybe the extra money is to make up for the toll taken on traders for the role they play in society. (Imagine if disabled veterans were similarly compensated for the tolls taken on them by the roles they play in society.)
And yet we just elected a congress that has pledged to FURTHER strip any regulations from Wall Street. How many yachts can these guys waterski behind, to coin a phrase?
Bob,
Highly relevant comparison...
The study synopsis referenced in the article has a graph that compares "The Regulatory Index" to income, where the index is an inverse of degree or regulation in financials. It is an overwhelmingly direct correlation. Obviously as rules, and enforcement, were relaxed some growth might be expected, but this was direct correlation. And the last decade shows more than ten-fold increases in pay, as regulation was dismantled.
The old joke used to be that the reason a bank had 14 vice-presidents was that it couldn't afford to give the tellers a raise, but titles were free. Funny thing is that this is still true of the small local banks while the large banks and brokerage houses can give pool secretaries 5-6 figure bonuses. The more interesting question here may be whether we will lose all small, generally conservative, banks in this country; being left with only BoA, Merrill and Wells Fargo. And you think times are hard now?
What I find sad is that they make most of their money by fees and by speculating on prices. Most of the money these firms make is actually money derived from the value of other things. The money they strip from the markets just results in higher prices for the rest of us.
That "growing the financial sector from 20% to 40% of GDP in 10 years" in America is called POST INDUSTRIALIZATION. Just because we don't make as much crap as we used to and are more of a service economy now that we have 3rd world nations make everything for us doesn't mean it doesn't "add anything to America". If you don't have a bank, what are you going to do wiht your money? If there is no investment banking, what is the person you work for going to do wiht his money? So what if some ppl figured out how to "game the system" and make a little profit for the investment bank. Even the investment bank needs money to operate and SERVICE that person who hires you...or that person who wants to open a massive factory in China to produce cheap computers for you to type all your crap into!
This happens because we live in a society that values nothing of real substance. Teachers and policeman and researchers struggle to survive and some moron on Wall street who produces nothing or some athlete who plays a sport makes millions. America is screwed up when it comes to its priorities.
With all the talk about going to school and earning degrees, I find it depressing that with less education people can make much higher incomes in finance than in research or in engineering. It's no wonder that there is no interest among young people today in careers requiring 6-10 years of schooling. They must be smart because so many have already figured it out, dropping out of school and saying show me the money. Well, as parents, we can say you are right young person, a career that requires an advanced degree will not provide much reward or compensation, even if you are lucky enough to find a job to pay for those school loans.
While Wall Street is very unpopular, and I share some (though not all) of the feelings of other posters here about the banking sector's lack of social utility, I also recognize something very clear: if you want to make a ton of money, work in the finance industry.
If I were employed by a finance firm, I could show up to work every day, month after month and year after year. I'd engage in some serious, honest-to-goodness financial research. I'd use that research to make some big financial bets (always easier with other people's money) and hope for the best. And I'd have my bank account ready for the direct deposit of my salary and bonus money.
Apparently, that's the basic jist of the traders' job.
Anybody know where I sign up?
Anyone can learn to trade the Market. Understanding your limitations and not being greedy is the key. An average Trader can make $100,000. I'm not saying its the norm, but just how many out there have the dedication. Believe me. It beats the hell out of unemployment.
what these articles fail to mention is the traders that make this big money are the elite of the best traders. They are like the best pro atheletes and movie stars, few and far between not your average trader.
they also fail to mention the trader is only as good as his last trade. a surgeon has a long career and and many traders have a short careers.
Some drug dealers also do $$$ better than brain surgeons. Never mind those brain surgeons may end up having to fix the brains of those messed up by said drugs, but I digress.
It's none of your business what a trader makes, or a brain surgeon makes, or an engineer makes. The only person's salary you should be interested in is your OWN. We all need to re-learn "minding your own business". Now...when a firm gets government handouts, that's a different story. But under a capitalist system, these government handouts WOULD NOT happen. It's the diversion away from capitalism that has lead to this monstrosity that we call our economy.
Prius1111,
On an individual basis you are correct. But we are not discussing individuals here, we are discussing professions, and their social and economic cost/benefit ratios. For example, young people entering college should have a clear understanding of what rewards await the investment of time, money and skill required to earn a degree.
Further, I love the continuing laissez faire definition of capitalism. If you wish to carry this definition to its ultimate extant, you will end up in a society with NO government; but rather fiefdoms, each with its own army, its own taxes, and its own trade standards (intentionally at odds with its neighbors).
BTW, most of the financial traders are with firms that took government money in the bailout. It is sort of like they crapped in their own nest, we paid to have cleaned and repaired, and they were given fat checks for what they "produced".
Modern central banking systems and finance is simply a legal version of a cartel. It preys on innocents and uses their earned money to advance their own agenda at great expense to the public. Most of their trading and financing practices are insured to a large degree by the US government in one form or another. The last example came by way of a massive federal bailout to secure the losses of these institutions that in many cases, KNOWINGLY made bad and even corrupt financial moves. If the common person actually knew the extent of corruption and the consequences on their personal and families' finances as a result of today's modern financial system there would be bankers everywhere swinging from the utility poles and trees.
"Give me control of a nation's money and I care not who makes the laws."
- Mayer Amschel Rothschild
Incidentally, these things are not capitalism. They are a bastardization of capityalism. Allowing firms to fail when they do poorly is what capitalism is all about, not government intervention to prop up poorly run organizations at the taxpayers' expense.
Just shows you how warped our values have become.
I see the Glenn Beck gold nuts out out in force. He's running a scam folks and I hate to tell you but there's no way we're going back on the gold standard. It would be a disaster if we tried and would make the Great Depression look like a walk in the park.
You might try educating yourselves with real economics first and leave the fantasies for children.
Mr.100, I agree, believing the gold standard and capital flows can somehow be coupled is the same as believing in the tooth fairy. However commodity speculation maybe a good play this quarter as the G-20 regulators are looking at throwing up a few rules to dampen down the market. Inflation is the #1 concern globally.
If you think our current markets are a den of thieves, trying handling physical gold. Is it really gold? Or some gold-toned alloy or gold-plated? Is it actually an ounce? Is it 24k, 22k, 14k, 10k or some other alloy? Regardless of where you go, you will always buy high and sell low. Just like today, when you pay premium prices, a buyer's fee and then a storage or delivery charge.
Coins, by the way, are about as easily counterfeited as paper money. Perhaps more easily than the new bills that not even the Bureau of Printing and Engraving seem to be able to handle.