by Walter Brasch
If you don’t mind working hard—and partying even harder—why not get a business degree, take a couple of state and federal tests, and become a Wall Street trader?
These are the people who are the current crop of Gordon Gekkos—you know, the pretend-fictional character portrayed by Michael Douglas in Wall Street. The men spend thousands of dollars on suits, ties, and cocaine. The women spend thousands just to own a closet of Jimmy Choo shoes.
But their existence is shrouded by a coop they call an office or cubicle. Their tools are multiple phone lines and computer screens.
The chase for money—and perhaps the excitement in getting people to give up a chunk of their earned income after hearing a finely-tuned pitch—drives these college graduates.
But, the rewards are high.
Last year, Wall Street paid $28.5 billion in bonuses. That’s an average of $172,000 per person. Some got more. Some less. But, overall, those who worked on Wall Street made, just in bonuses, about $172,000. Summer interns in investment banking earned about $6,000 a month for their summer. The salaries and compensation rise significantly after they get their business degrees and begin a career of the search for the holy grail. In their case, the holy grail is nothing less than a pile of luxuries that the rest of us only know about because of ads in Fortune Magazine.
Why these people earn 6, 7- and 8-figure incomes is because business and the greed for piling up stock options, not service to mankind, dominates the American workforce. More important, they know they can not just enter the gray area of ethics but step over it; almost none of them were fined or jailed for leading the country into the housing crisis and Great Recession that began near the end of the Bush–Cheney administration.
Now, let’s take a look at the rest of us. The ones who don’t get corporate welfare, government bailouts, and golden retirement bonuses.
Last year, about one million Americans worked full-time for minimum wage. Their combined earnings were about $8 billion. A full-time worker making the federal minimum wage earns about $7.25 an hour. That’s about $15,080 a year. The nation’s poverty threshold is $11,770. Thus, the worker, if she or he has no dependents, earns only about $12.70 a day more than the poverty guidelines.
If the worker has one dependent, the poverty guideline is $15,930; thus, the worker is earning less than what the federal government says is a poverty wage.
Now, let’s pretend the employer is generous and pays $10 an hour—that’s $20,800 a year. Figure rent, utilities, car expenses to get to the job, car and health insurance, and the usual local, state, and federal payroll deductions, and the worker would have to borrow the funds to go to a movie and buy a soda and popcorn.
But, business owners say they can’t afford to increase minimum wage. It’d ruin the economy they say. It’ll bring down capitalism, they claim. $7.25 an hour—maybe even $10 an hour—is fair. But, a minimum wage of $15 an hour—like what Los Angeles recently passed—and which won’t take effect for five years—well, that’s just unreasonable.
With the support of the local Chambers of Commerce, employers declare that raising wages would mean an increase in retail prices. What many small business owners don’t fully understand is that their customers are usually from the lower- and middle-classes. When wages are depressed, purchasing is diminished. By paying their own employees sub-standard wages, the owners, no matter how good employers they may be, cause fewer purchases for all community businesses.
For megacorporation retailers, the situation is slightly different, one based upon a corporate philosophy of “maximizing profits” and paying bigger dividends to investors than wages to the people who actually do the work.
At Walmart, the six Walton family owners have a combined worth of about $160 billion. Management just raised the minimum wage to $10.10 an hour, and then complained it was costing $65 million a month. Assume even a $1 billion a year increase for Walmart’s workers, that would still leave a net profit of about $15 billion a year.
McDonald’s CEO Dan Thompson earned $9.5 million last year; his full-time workers earn an average of $16,000–$19,000 a year. A pay increase would affect the owners of 30,000 franchise locations, but increase the price of a double quarter-pounder cheeseburger only pennies. Anyone willing to pay $6.79 for a fast-food burger probably won’t notice a $6.85 charge.
A study conducted by Dr. Kathleen Maclay of the University of California revealed that American taxpayers contribute about $7 billion a year in welfare payments to the low-paid workers in the fast-foods industry. In contrast, McDonald’s had about $5.7 billion in net profits in 2013.
Back on Wall Street, brokers and traders would be apoplectic if all corporations improved wages, benefits, and working conditions. There would be less return on investment, and clients might not invest as much. Clients who don’t invest as much also means the Wall Street Zoo will receive less income, since much of their own wages are determined by commissions.
So, Wall Street needs to make sure they hustle customers and keep them pouring money into corporations.
It’s just “good business practices.” After all, they and the million-dollar company executives they support deserve it. They studied business in college.
[Dr. Brasch is an award-winning social issues journalist. His latest book is Fracking Pennsylvania, an analysis of the history, economics, and politics of fracking, as well as its environmental and health effects.]