Wall Street Math: Raise Pay No Matter What
It's not an easy time for gigantic Wall Street banks. Not easy, I tell you! In the challenging post-recession business environment, thousands of Wall Street layoffs have not been enough to keep profits high. Where's all the money going?
The Wall Street Journal today has a large-scale overview of the state of the six biggest Wall Street banks in the last several years. They're working overtime on behalf of shareholders! They're doing everything they can! In response to the tough times, these banks have laid off tens of thousands of employees. Yet expenses at banks are up this year, and revenues fell almost 10% from 2009-2013. Is there a hole somewhere, leaking money?
The six largest banks already have cut about 7.5% of their staff, or 88,110 positions, since 2011, according to regulatory filings. But compensation hasn't gone the same way. Salaries and benefits for the six largest banks rose 5.5% from 2009 to 2012, to $149.6 billion, before easing slightly last year to $149.4 billion. As a percentage of revenues, the firms' salaries and benefits tallied about 35% last year, up from 30% in 2009 and 29% in 2007.
Across all U.S. commercial banks, the pay bump was even larger—15% to $176.1 billion between 2009 and 2013, SNL says.
Aha. Well. Nothing to be done about that. If laying off 88,000 workers is the only way to raise pay, so be it.
This isn't a charity operation, after all.
[Photo: AP]