A little more than one year ago, Wall Street gambled with borrowed money and played a game of Russian roulette with complex, risky investment securities-- a less-than-savvy move that led to the worst financial crisis in America since the Great Depression. One year later, job levels on Wall Street are slow to rebound and unemployment in New York rose to 8.9 percent, with New York City, home to the financial highway, bearing the brunt of it all, with jobless levels coming in at 10.3 percent for the second month in a row. With that said, it may not seem like it, but Wall Street would be the ideal place, in theory, to jumpstart job re-creation in America. Don't think so? Let me explain.
Earlier I stated that jobs on Wall Street were slow to rebound. But that's not because there isn't enough money to go around on Wall Street. In fact, there's more than enough money to go around. A couple of weeks ago, the federal government reported that new jobless claims held steady at 505,000 for the second straight week. New jobless claims are a measure of the rate of job layoffs and companies' willingness, not ability, to hire new workers. And while Wall Street is obviously not willing to hire new workers, they are definitely able to get the American economy up and on its feet again. Earlier in the month, it was reported that three Wall Street financial giants, Morgan Stanley, Goldman Sachs and JPMorgan Chase, would pay executives $30 billion in bonuses. That sure is a heck of a lot more than the $50,303 median household income earned in the U.S. in 2008. Where am I going with this? Let's do the math. New jobless claims remained unchanged at 505,000 for two consecutive weeks, Wall Street executives got $30 billion in bonuses, and the median household income for 2008 was $50,303. If each of the 505,000 individuals reporting joblessness were paid the median household income of $50,303, that $30 billion circulating around Wall Street would be more than enough to put all of those individuals back to work, with slightly more than $9,100 left to spare. Yet rather than refuse these pork-laden bonuses and re-hire laid off workers or employ new ones, Wall Street's tycoons would rather fatten their own pockets instead. I guess they don't realize that if no one else has any money, theirs will eventually run out as well.
So why then should we count on the same people who got us into this mess in the first place, and wish to continue to keep up in this mess, to get us out of it? Well, I didn't say it was a perfect plan, but it is doable. In order for it to work, however, the federal government needs to once again crack down on Wall Street, but far more severely this time than the last attempt, since it seems the imposed salary cap for top executives at the firms mentioned above was an obvious flop. While restrictions were placed on salary only, it left the door wide open for hefty compensation in the form of restricted stock and huge bonuses. Maybe the Obama administration should make it a rule that in times of economic hardship, any company bringing in that much profit should forfeit any bonuses and be required to hire new workers to ease the tension on an already strained economy. If left in the hands of Wall Street, however, I'm afraid America's economy may never recover.
Originally posted on RUSE the.magazine