Erm, so what?

Wall Street firms have always been famous for their generous bonuses to managers and traders — their so-called rainmakers. The graph above shows that employee bonuses have actually exceeded the estimated pretax profits of United States securities dealers in many years.

Staff compensation has been larger than profits for just about ever in just about every company I can think of.

So?

8 comments on “Erm, so what?

  1. yes, that’s not a terribly strong point is it – if every business paid in line with aggregate income shares, we’d expect to see total employee compensation of double profits, wouldn’t we.

    I’d be interested to see what the labour / capital shares are in banking … that might tell us whether labour is “exploiting” capital or not

    (it that right? labour share apprx. 2/3, does it imply the above?)

  2. The fact that bonuses in loss years 2007 and 2008 were quite high makes one think that the compensation system rewards something other than profitability and does not punish losses.

    P&L statements might look better if the system were re-arranged.

  3. that’s interesting Mark – so does the aggregate split of roughly 2/1 arise because of profits made by landowners and property owners?

  4. “Wall Street firms have always been famous for their generous bonuses to managers and traders — their so-called rainmakers.”

    There are rainmakers, and there are piss-artists…

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