When A Wall Street Bonus Is Really A Pay "Cut" - Millennial Money with Cliff Mason

BIO

Cliff Mason is the author of Millennial Money. He is the Senior Writer of CNBC's Mad Money with Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Rich and Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like. Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.

MILLENNIAL MONEY RELATED LINKS

LATEST FROM OUR BLOGS

» More

RSS FEED

» Help

Subscribe to this RSS feed
Stay up to date with the Millennial Money blog.

CNBC ON DIGG

Text Size

Feb.02

2:16 PM ET

Monday, 2 Feb 2009

When A Wall Street Bonus Is Really A Pay "Cut"

Posted By:Cliff Mason

Topics:Executive Compensation | Wall Street | Stock Market

Bankers Bonus
iStockphoto
There aren't a whole lot of places where an intelligent person can work hard, as in sixteen-hours-a-day for six or seven days a week hard, and make a boatload of money.

Wall Street is one of those places, and we should keep it that way.

With most jobs you "pay your dues" and gradually make more and more money as you get older. And you know what? That's great for most people. If we lived in a pure meritocracy, then the least talented 50% of the population would have a really rough time, and I just don't think that's fair.

But people should have the opportunity to work in a field that's as close as we get to a true meritocracy.

Now it's true that guys like Dick Fuld, Jimmy Cayne, and John Thain, just to name a few, have tarnished the image of Wall Street, making it look like a place where the very rich just make themselves richer without adding any real value. That may be the case at the very top of most of these firms, but we shouldn't let the chicanery of a handful of executives ruin things for everyone else.

When I was in college, all my artsy friends would look down their noses at the kids who wanted to be investment bankers just to make lots and lots of money. I always thought that was silly. If you believe that work should be about making money, not personal fulfillment or having a great time, then of course you should want to work at place where you can get paid a lot for your hard work.

There should be places that fill this meritocratic niche. Obviously mismanagement has already done a lot to kill off these jobs, but the last thing we need now is for politicians to come in and go after compensation on Wall Street, and I say this as a Marxist.

You want to raise the top marginal tax rate and make these people pay higher taxes, that's fine with me. But don't dismantle the system. Don't destroy these high-paying jobs just because of the word bonus.

I don't want to live in a world where we're compensated like government employees who get to clock out at 5PM every day, can't ever be fired, and don't make all that much money.

And let me add one more thing. The average "bonus" in 2008 was 44% smaller than in 2007.

Since bonuses make up a big chunk of people's salaries on Wall Street, that could amount to 25% pay cut, and not for the fat-cats at the top, but for the regular, if highly-paid, hard working white collar employees lower down on the ladder.

Can you imagine the outcry if workers in another industry were forced to swallow at 25% pay cut? The United Auto Workers certainly wouldn't be too happy with it.

But when we see that Wall Street bonuses were down 44%, we want to know why they were allowed to keep the other 66%. There's something wrong with that picture.