They say, "The rich get richer" – and that's never been more true than this year, with Wall Street handing out record bonuses of well over $20 billion. On CNBC’s “Morning Call” Michelle Caruso-Cabrera examined whether those huge bonuses stem from greed or good ol’ capitalism.
Edward Wolff, NYU Professor of Economics, believes bonuses are a large factor in the inequality between rich and poor.
He said, “Incredible bonuses are paid on Wall Street where the top 1/10 of 1% see huge gains in earnings – but almost everyone else has seen little gains.”
“The stagnation of wages is in the middle – it’s true this past year was good – but if you go back to 2000 we are still down.”
“(Only) when the labor market tightens will real wages rise. But we need to see 3 or 4 years of this kind of wage gain (for mid-level workers to experience real benefit).”
Michael Darda, Chief Economist with MKM Partners, believes what's good for corporate America is ultimately good for working class America.
He says “There have been gains in all areas of corporate America. And we’re starting to see a tight labor market that’s driving (wages) more. Yes we have big bonuses but you have to reward people who take big risks – that’s what capitalism is all about.”
Earlier this month we told you that Goldman Sachs would be showering the biggest bonuses on its stars: $25 million each to about 50 top producers in the firm.