Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on The Brian Lehrer Show, New York State Comptroller Thomas DiNapoli discussed his report on compensation on Wall Street.
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New York State Comptroller Thomas DiNapoli released a report on Thursday that found finding that 2010 was the second-best year on record for Wall Street firms, with recorded profits totaling $27.6 billion. This is second only to the 2009 record of $61.4 billion during the rebound. While overall compensation went up by six percent, bonuses fell by nine percent, and the overall tax revenue to New York City from Wall Street plummeted from thirteen percent to seven percent.
Comptroller DiNapoli explained some of the seemingly contradictory findings this way:
What we’re really seeing [in the cash bonus pool trends] is the overall pool has gone down by about 8 percent, but Wall Street has come back...certainly in terms of profits... I do think much of this has to do with...after Wall Street brought our economy down, the response to the federal reforms in terms of a new regulatory framework which is starting to be implemented in this country.
He said with those changes, people are getting paid differently.
The compensation is... less on the cash side, in terms of these kinds of bonuses that we used to see... instead it’s more deferred compensation — payouts over time, stock options [and] higher base salaries. So it certainly is an industry that is returning to health faster than other sectors of the economy.
DiNapoli said he thinks it’s a good thing that compensation is now tied to long-term sustainable profitability. “I think that’s a good trend and I hope that trend continues,” he said. He explained that the fall in tax revenue to the city is due to a shift in the relevant tax structures.
Some of the numbers speak to individual compensation, some of [them] speak to corporate profits, so you have different tax structures. And bear in mind the huge losses that the Street sustained had tax implications in terms of reducing the tax liability over a period of time...In terms of an individual’s taxes, the Street lost about 30,000 jobs, so we do have fewer people working in that part of our economy.
There has been some recent job growth, however. Between August and December 2010, about 3,600 jobs were added. Yet despite such a profitable year, employment is still down compared to 2008. So, there are fewer workers and record profits, but DiNapoli said there just isn't enough data to say whether that indicates a deeper concentration of wealth within the industry.
The state comptroller also addressed the ongoing protests in Wisconsin over Governor Scott Walker's proposal to eliminate collective bargaining rights for public employee unions. DiNapoli, who had significant backing from public sector unions in the 2010 election, said there haven't been any studies done on what collective bargaining actually costs New York, but he is not sure that trying to quantify the costs and benefits would even be possible.
We’re coming up on the hundredth anniversary of the Triangle Shirtwaist Factory fire. How do you quantify the cost of worker [and] workplace safety and fire prevention, and what’s the relevance of that? Because we’re trying to move forward as a society, so from my point of view, the right for workers generally — whether public or private — to be organized and have collective bargaining, is part of a progressive view of where a democracy should be headed.