The Wall Street Journal used a curious argument to to support the idea that CEO pay in the banking industry has gotten more conservative in recent years. It’s almost enough to make one pity Lloyd Blankfein.
The Jamie Dimons of the banking business are making a meager 124-times what the average employee at their company makes, The Wall St. Journal said, and that’s down from 273-times what ‘Joe Banker’ pulled in as of 2006.
The Journal takes that to mean that big banks’ CEOs aren’t seeing their 1%-pay rise commensurate to the rank-and-file who, for years, watched their pay languish compared to their baller bosses. So this inequality thing can’t be that bad, right?
But that comes as inequality, as measured professors by Juan G. Rodriguez and Gustavo Marrero, is tracking all-time highs. Rarely has the gap between the 1% in this country and everyone else been as great.
Yes, the average banking employee’s pay is rising, again. Still, in New York, it still hasn’t hit what it was before the financial crisis. It’s doubtful any of these people care how many times their income Jamie Dimon earns.
If pay is increasing in other cities, it isn’t clear. But, jobs are growing, and everywhere but in New York. Numerous Wall St. firms have tried to reduce costs by jettisoning staffers to places like Salt Lake City, which has a far lower cost of living.
If shipping employees to the middle of the United States to keep cost down doesn’t reflect inequality within the industry (while all the bosses get to keep digs on Park Ave. and elsewhere), it’s unclear what does.
And, using regulatory filings (which is what the WSJ says it did as part of its analysis) excludes one very important piece of information: break-downs of how many bankers, compared to tellers, remain with each institution. One need not dig too far into WSJ’s archives before realising that staffing levels throughout the industry are down double digits since the financial crisis.
Another thing the WSJ piece doesn’t explain is how, for some firms, CEO comp might have fared were several of Wall Street’s biggest not paying billions in Department of Justice fines.
In short: yes, the ratio of CEO pay to that of the average employee is less than what it once was. But an argument for improved equality on Wall St., that does not make.