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Gotham Gazette

The Place for New York Policy and politics

Wall Street Bonus Babies

Every year at this time, wine sellers take out their $500 bottles of Bordeaux; car dealers expect a rush on $100,000 Bentleys, Porsches and Lamborghinis; real estate agents witness perfectly normal-looking people plunking down several million dollars -- in cash -- to buy an apartment. “I call them ego apartments,” one agent told the New York Sun.

It is bonus time on Wall Street, and this year in particular, there are some very happy people, from luxury suit salesmen to municipal tax collectors; the total estimated amount of bonuses(In PDF format) given out this quarter for work done in 2004 is expected to be the second biggest in history -- $15.9 billion.

Officially, the average bonus on Wall Street is $100,000. But this is an example of when statistics bear little relationship to reality. The truth is that there are a relative handful of people who work on Wall Street who get bonuses, and what they get can be astronomical.

So who are the Wall Street bonus babies?

Overwhelmingly they are involved in securities and investments, according to an analysis of Census and other data. They either help make markets, make sales, make deals, or give advice – brokers, investment bankers, traders, financial analysts, financial advisers, portfolio managers, and a few chief executive officers.

Working on Wall Street does not guarantee a high income, as most any Wall Street secretary, food service worker, or techie can attest. So can the average auditor and accountant; one-quarter of the 11,000 auditors and accountants who work in the investment and securities industries in Manhattan make $38,500 or less; the worst-paid brokers make little more than that:

Income of Financial Occupations in Investment and Securities in Manhattan
Bottom Quartile
Top Quartile
General Manager
Financial Executive
Account, Auditor
Financial Analyst
Personal Financial Analyst
Other financial Occupation
Based Upon 2000 Census Data


The median income for the 23,000 highest earners on Wall Street – the ones most likely to get a year-end bonus – is so high that the U.S. Census Bureau stops counting after $347,000. For 2004, merger specialists expect to receive total compensation on average of $900,000, while commodities traders in oil and gas can expect to earn $1.3 million or more. Compare this to the median income for all other earners in the securities and investments industries – a mere $60,000. (The median income for all other workers in Manhattan was $35,000).

Bonus babies (many far from babies) are much more likely to be white, male and married, as the accompanying table makes clear. They are virtually all college graduates.

Workers in Financial Jobs in Securities and Investment Sector and Others in Manhattan
Top Earners
Other Earners
Other Manhattan Workers
Median Income
More Than $347,000
% White
% Hispanic
% Married with Spouse
% Male
% Born in United State
% At Least 4 Years College
Based Upon 2000 Census Data

And they almost all work in Manhattan. Pay in the financial services industry in Manhattan towers above that in all the other 3042 counties in the United States. Manhattan is the center of this whole industry. During the first quarter of 2003, the average wagespaid in that industry in Manhattan was $5,680 per week. Fairfield County in Connecticut, which includes Greenwich, was a distant second at $1,492.

The annual bonus can easily be 90 percent of the average investment banker's or bond trader's total annual income. An investment banking analyst right out of college will make about $65,000 salary, plus a $35,000 bonus, while an associate just out of business school might make $85,000 in salary and $115,000 in bonus. At the other end of the career ladder is Lloyd Blankfein, president and chief operating officer of Goldman Sachs, who made $20.1 million in 2003 -- only $600,000 of which was salary. That same year, E. Stanley O'Neal, chief executive of Merrill Lynch, made $500,000 in salary, but received a bonus of $13.5 million.

Since so much of their compensation is based upon bonuses, some of these highly paid executives and financial professionals have very volatile incomes. One year they make their base and several times that in bonuses; other years the bonuses may be much less than their base salaries, and during real down turns (such as existed in 2000 through 2002). they may face lay-offs.

The bonus-setting process is highly political and largely secret. Each group or division in a firm argues for bonuses based upon their "contributions" to earnings; then each professional argues for his or her share. So the relative size of each bonus indicates an employee's worth, while the money can affect his or her life-style immensely.

Members of the financial community are quite close mouthed when it comes to compensation, yet using the information we have we can make an educated guess about the size of an average or median bonus for a high earner in this sector. Let us assume that the 23,000 high earners split about three quarters of the $15.9 billion of bonuses. This would mean that the median bonus on Wall Street would be approximately a half a million dollars. But even here, one would expect a great deal of inequality. Some will make multi-million dollar bonuses; others will have to settle for a few hundred thousands. So these 23,000 very privileged New York workers really did find their fortune on Wall Street.

Andrew A. Beveridge has taught sociology at Queens College since 1981, done demographic analyses for the New York Times since 1993, and provides expert testimony on a range of cases, including housing discrimination. The opinions expressed are his alone.

















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