Posted by: Mark Gimein on October 21, 2011 at 1:39 PM
“We are the 99%” is the iconic rallying cry of the Occupy Wall Street movement, but it leads naturally to a question: just how much of the top 1% does Wall Street make up. The New York Times’ Catherine Rampell and New Deal 2.0’s Mike Konczal give some interesting answers which come down to “probably not as much as you might think.” They bring up an analysis by economists John Bakija, Adam Cole, and Bradley T. Heim that estimates the financial industry share of that top slice at about 13.9%, or roughly—a smaller share than doctors or non-financial managers. Move up to the top 0.1%, and the share goes up to 18%, still less than you’d think.
A better way of thinking about the Occupy Wall Street Movement, though, is to look at what happens at the very top, in the rareified upper reaches of hedge fund land. In his investigation of investment bank bonus payments for 2008, New York attorney general (and now governor) Andrew Cuomo, found that 774 employees of the top 5 investment banks took home close to $4.2 billionin bonuses. That report prompted extensive bonus rage. But here’s a more stunning number to compare it with: for the same year, the top 25 hedge fund managers reaped $10.6 billion in gains, according to Insitutional Investor’s AR Magazine. Let’s set those numbers down again:
â€¢ 774 investment bankers: $4.2 billion
â€¢ 25 top hedge fund managers: $11.6 billion
There’s more: in 2009, the top 25 hedge fund managers made $25.3 billion, and in 2010 it was $22 billion.
Measured as a proportion of the people in the top 1%, financial types might not be the biggest part. Move up to the very top, and the the share of those finance is absolutely huge. Maybe “We Are The 99.999%” is a more accurate sign, but Wall Street is the right spot for the protests. We may not be sure of just who makes up the top 1%, but who’s at the pinnacle is clear.
Still, exactly which part of the financial world is pulling in the most money is something that’s worth thinking about closely. The focus of popular anger, and of proposals for reform, have been mainly banks and bankers. But if the most outsized compensation is not, ultimately, in the big investment banks but at the hedge funds, it’s not clear that reforming the bank reform will markedly change this distribution—or resolve the central complaint of the protests.