Working For Chicken Feed

While the financial industry is pulling in record bonuses in 2009, keep in mind the rest of us saw the lowest rise in wages on record since 1982.

Employment compensation for U.S. workers has grown over the past 12 months by the lowest amount on record, reflecting the severe recession that has gripped the country.

The Labor Department said Friday that employment costs rose by 1.8 percent for the 12 months ending in June, the smallest annual gain on records that go back to 1982.

The department said that for the April-June quarter, its Employment Cost Index rose by just 0.4 percent, just slightly above the 0.3 percent rise in the first quarter, which had been the smallest quarterly gain on record.

Companies, struggling to cope during the current hard times, have been laying off workers, trimming wage gains and holding down overtime to save costs.

The 1.8 percent increase in overall compensation for the past 12 months included a record low 1.8 percent rise in wages and salaries, which account for 70 percent of compensation costs.

Benefits, which include such things as health insurance and contributions to pension plans, also rose by 1.8 percent during the past year, the lowest annual gain in this category since a similar increase during the 12 months ending in September 1997.

Of course, this recession hasn't hurt compensation for those lucky recipients of taxpayer money:

Citigroup and Merrill Lynch, which each lost more than $27 billion in 2008, handed out, respectively, $5.3 billion and $3.6 billion in bonuses. They also received TARP funding worth about $55 billion. Fun fact: Citigroup handed out bonuses of $1 million or more last year to 738 bankers and traders. That still lagged behind Goldman Sachs, which bestowed bonuses worth at least $1 million to 953 employees. Laissez les bons temps rouler, anyone?

Speaking of Goldman, its bonus totals, as well as those at Morgan Stanley, and JP. Morgan Chase last year exceeded their institutions' individual net income.

• Goldman earned $2.3 billion and paid $4.8 billion in bonuses. It received $10 billion in TARP funding

• Morgan Stanley earned $1.7 billion and paid $4.5 billion in bonuses. It got $10 billion in TARP funding.

• JP Morgan Chase earned $5.6 billion and paid nearly $8.7 billion in bonuses. It received $25 billion in TARP funding.

Another takeawy: the party mindset which predominated during the boom carried over when after the sub-prime crisis hit. While the recession forced the rest of Corporate America to press the reset button, Wall Street - with the exception of a financial institution here and there going under - didn't rethink its compensation practices.

"For instance, at Bank of America, compensation and benefit payments increased from more than $10 billion to more than $18 billion in between 2003 and 2006. Yet, in 2008, when Bank of America's net income fell from $14 billion to $4 billion, Bank of America's compensation payments remained at the $18 billion level. Bank of America paid $18 billion in compensation and benefit payments again in 2008, even though 2008 performance was dismal when compared to the 2003-2006 bull market."

So while folks like you and me are going through the third year with no raise, these guys are making millions a piece, thanks to taxpayer TARP payments.

Something to think about when you are paying your bills here on the last day of July. All the TARP program did was make Wall Street safe for seven and eight figure payouts. Record bonuses for them, record low wage growth for us.

And people wonder how we're going to get out of this economic hole, and why consumer spending is in the toilet.

[UPDATE 3:58 PM] The House has passed a bill allowing company stockholders to have a vote on compensation and authorizing government regulators to limit executive pay.

The bill, which passed 237-185, came in response to public outrage over lavish pay received by executives at Wall Street firms that took billions in emergency aid from the government. But the measure faces a more difficult road in the Senate, where lawmakers have been expressing concerns about whether the bill would draw the government too deeply into the inner workings of scores of firms.

The bill would ban pay that "could threaten the safety and soundness of covered financial institutions" or that "could have serious adverse effects on economic conditions or financial stability."

It also would require that members of corporate compensation committees have greater independence than in the past and would empower U.S. regulators to ban pay that could encourage traders and executives to take "inappropriate risks." The bill would not apply to financial institutions with assets of less than $1 billion.

It's a start.