Why non-bankers love Wall Street bonuses
This is the time of year when Wall Street bankers get their bonuses. The numbers can be staggering to those outside finance, with six-figure average payouts and high-level bonuses spiraling into the millions. This year looks to be uneven, with some bankers doing well and others, especially bond traders, getting less.
That money eventually flows through New York’s economy to a lot more people than one might expect, including armies of middle class workers and small business owners.
There may be national distaste for Wall Street, but there are many who don’t work there who nonetheless hope the big banks do well.
The New York catering company Sonnier & Castle produces elaborate dinners that cost hundreds of dollars per person. Recently, it catered the movie premiere of “The Wolf of Wall Street.”
“A third of our business comes from the financial industry,” estimates co-founder David Castle. “Bonuses would be great for us. It would definitely translate into bigger spending and to more hiring, more jobs.”
Castle says corporate entertaining hasn’t fully recovered from the crash, but bank employees are spending again on personal events. That means their bonuses are more important than ever.
The catering company laid off workers in the financial crisis. But with sales up 20 percent last year amid a recovering economy, Castle is hiring again, adding staff positions as well as part-time servers and cooks, who rely on the extra income or use the jobs as stepping stones to full-time work.
“They’re receiving income and in turn, they turn around, they spend it,” says New York University economics professor Lawrence J. White. “The initial beneficiaries are the people who receive the bonus, but it doesn’t stop there.”
It’s what economists call a multiplier effect, the rippling economic impact of all that bonus money as it passes through various hands.
Speaking of candlesticks, there are some rather nice ones in homes where Darren Henault designs the interiors.
Photos on the walls of his studio show the many rooms he created. They include the homes of some of the top people in finance.
The rooms look stunning, like lush film sets. Clients pay him hundreds of thousands of dollars to perfect the insides of their multi-million dollar properties. When a banker’s bonus comes up short, he knows.
“I have definitely had people say to me, ‘I did not have a great year. Let’s dial back,'” Henault says.
Many people reading this won’t care if a rich banker is less rich. It might even make them smile.
But before anyone gets too drunk on schadenfreude, it’s worth remembering that the fate of big banks can directly affect small business. If a banker scores a sweet bonus, he can give Henault a bigger budget. That means more pricey custom elements, and thus a lot more people going to work.
“More people are involved in the making of the higher-end things than the lower-end things,” Henault explains, listing the types of people a big project will employ. “A custom painter, a faux finisher, out in Queens, there’s a company that does hand embroidery, all these different sort of artisans are people that we would bring in, as opposed to stock items which are being formed and spit out by machine.”
And those giant bonuses are taxable, which means revenue from them helps fix streets, pay cops and fund programs low income residents depend on. That’s why New York politicians, even those on the left, rarely attack Wall Street pay.
Attacking bank bonuses is ever fashionable, providing meaty, easy targets for everyone from newspaper editorial writers to Washington politicians. But for regular people whose jobs depend on them, big Wall Street bonuses aren’t excessive. They’re vital.
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