Cross-posted from New Deal 2.0.
A Bloomberg article from yesterday compared some numbers that should serve as a stark wake-up call: traders and investment bankers (read: people on Wall Street) make more in this country than neurosurgeons, cancer researchers, engineers, and four-star generals. That's right, folks -- if you go into the noble profession of trying to eradicate one of the most pernicious diseases, you can't expect to get paid nearly as much as someone trading derivatives of oil prices. I also suspect that General Patraeus feels his sacrifice to our country and his four-star status should earn him more than someone on the floor of the stock exchange. But of course you can't look to the banking industry for some humility in recognition of their sky-high checks. "The bottom line is all the people in investment banking understand that they work harder and are under more stress," Jeanne Branthover, a managing director at Wall Street recruitment firm Boyden Global Executive Search, told Bloomberg. "Many don't think they're paid enough." What a terrible life that must be! If only they could afford to buy yachts and go relax in the Caribbean.
But the outrage doesn't end there. Compare the estimated $2 million in pay that an M&A banker with 10 years of experience can expect to the $80,970 per year the average teacher in the top 10% will get. (Median teachers will be paid between $47,100 and $51,180 per year.) What's the value a dedicated teacher adds to our society? Educated children, who can expect higher incomes, greater productivity, and a better chance at coming up with the new ideas that take our country forward. Not to mention the harder-to-calculate benefits of children who learn to share, make friends, abide by social norms, and understand their role as citizens. What's the value that we get from a derivatives trader? It's still unclear.
Not to mention that those truly suffering right now (as opposed to the stressed out bankers who demand more zeroes on their bonus checks), i.e. the unemployed, when lucky enough to find a job are now landing ones that have dismal pay. Sixty percent of new jobs last year were in temp work, leisure and hospitality, and retail. Leisure pays an average hourly wage of $13.14 and retail will get you $11.84, while temp packagers only get $8.62.
All of this sends a signal to young people as we live through this great recession. As I've mentioned before, we face some serious financial insecurities, greater than what many of our parents had to face when they were growing up. This means many of us will be calculating when we choose what to study in college and where to aim our career goals. Should I become a cancer researcher or a banker? The pricetag comes into play. Add to this the debt students are asked to take on at every step of their education, and the prospect of being awarded $2 million for two years in an MBA program versus $571,000 for 2-3 years in medical school and 6-8 years in residency that neurosurgeons must go through seems pretty enticing. Primary care doctors, which we desperately need more of, can expect to earn $186,044 per year for about the same amount of school and residency it takes to get into surgery. No wonder, then, that the smart calculate that they're better off going into specialties when looking at their student loan bills. The even smarter skip medicine and head straight to lower Manhattan.
Compensation is a way of valuing an employee. As the bankers rightly point out, harder work should usually lead to higher pay. So should the value put back into society. Bankers work hard, and we need them to facilitate lending and make the gears of the economy run smoothly. But does that value outrank the work a neurosurgeon does to save someone's life, like Dr. Rhee's miraculous work that led to Rep. Giffords opening her eyes two days ago? Should a banker make 20 times what a cancer researcher does? Our compensation scales are out of whack.
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