Here's a data point that puts America's income inequality into a new perspective: the total pot of Wall Street bonuses last year -- $26.7 billion -- was almost twice what all full-time minimum-wage workers combined earned in the same period.
If those banker bonuses had instead been spread across the 1.1 million full-time workers earning the country's baseline pay, those rock-bottom earners would have seen their pay doubled, according to an analysis by Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies.
While some might argue that bankers and other Wall Street employees are receiving justified pay for their hard work, the uneven balance of rewards -- a society where the rich are getting richer, while the lowest-paid workers are struggling to make ends meet -- has a destructive impact on the economy, Anderson said. That's because the rich can afford to sock away their money, which means only 39 cents of every dollar earned by a wealthy American adds to GDP. The poor, however, generally spend more of their earnings, providing a greater impact to the economy.
"Low-wage workers tend to spend every penny they make, whereas the wealthy squirrel away a greater part of their earnings," Anderson said in an interview.
Clearly, Wall Street bonuses are back in force, with the average bonus last year rising 15 percent to more than $164,000. That marks the largest average bonus since the 2008 global meltdown and is the third-highest ever.
"These big bonus numbers are good if you're someone selling Ferraris, or high-end watches," Anderson said. "The rest of the country is still struggling to recover from the financial crisis. We still have 3 million more unemployed people than we had in 2008, yet the Wall Street bonus culture has been roaring back."
That may help some segments of the economy, as Anderson notes, but her research also shows that the so-called multiplier effect (in this case, how an individual's earnings ripple through the economy) is much more muted when applied to the bonus pool. Wall Street's $26.7 billion bonus pot will result in the GDP growing by about $10.4 billion.
But if that same amount went to low-wage workers, the multiplier effect would result in a $32.3 billion boost to GDP because of minimum-wage workers' propensity to spend their earnings on consumer goods and services.
How the economy might benefit -- or suffer -- from an increase in the minimum wage is matter of debate. President Barack Obama has proposed boosting the baseline wage to $10.10 per hour, up from the current $7.25.
Supporters of the proposal, such as Anderson, argue that the increase would spill over into the economy, with low-wage workers using the additional earnings on food, clothes and other goods. Detractors, however, argue the result would be higher consumer prices and job losses.
But beyond the issue of how a minimum rise hike might help -- or hurt -- the economy, the Wall Street bonus culture should also be questioned, Anderson noted.
The structure provides an incentive to traders and other employees to take risks that can lead to fat bonuses, she said.
"You can make a bonus on a risky bet, but if it later blows up and goes bad, there's no real repercussion," she noted. "The bonus is still in their pocket. It's an ongoing problem you'd think we'd take more seriously in the wake of the 2008 crisis."