Why non-bankers love Wall Street bonuses

Preparing pork belly at New York catering company Sonnier & Castle

This is the time of year when Wall Street bankers get their bonuses. The numbers can be staggering to those outside finance, with six-figure average payouts and high-level bonuses spiraling into the millions. This year looks to be uneven, with some bankers doing well and others, especially bond traders, getting less.

That money eventually flows through New York’s economy to a lot more people than one might expect, including armies of middle class workers and small business owners.

There may be national distaste for Wall Street, but there are many who don’t work there who nonetheless hope the big banks do well.

The New York catering company Sonnier & Castle produces elaborate dinners that cost hundreds of dollars per person. Recently, it catered the movie premiere of "The Wolf of Wall Street."

“A third of our business comes from the financial industry,” estimates co-founder David Castle. “Bonuses would be great for us. It would definitely translate into bigger spending and to more hiring, more jobs.”

Castle says corporate entertaining hasn’t fully recovered from the crash, but bank employees are spending again on personal events. That means their bonuses are more important than ever.

The catering company laid off workers in the financial crisis. But with sales up 20 percent last year amid a recovering economy, Castle is hiring again, adding staff positions as well as part-time servers and cooks, who rely on the extra income or use the jobs as stepping stones to full-time work.

"They're receiving income and in turn, they turn around, they spend it," says New York University economics professor Lawrence J. White. "The initial beneficiaries are the people who receive the bonus, but it doesn't stop there."

It's what economists call a multiplier effect, the rippling economic impact of all that bonus money as it passes through various hands.

Speaking of candlesticks, there are some rather nice ones in homes where Darren Henault designs the interiors.

Photos on the walls of his studio show the many rooms he created. They include the homes of some of the top people in finance.

The rooms look stunning, like lush film sets. Clients pay him hundreds of thousands of dollars to perfect the insides of their multi-million dollar properties. When a banker’s bonus comes up short, he knows.

"I have definitely had people say to me, 'I did not have a great year. Let's dial back,'" Henault says.

Many people reading this won’t care if a rich banker is less rich. It might even make them smile.

But before anyone gets too drunk on schadenfreude, it’s worth remembering that the fate of big banks can directly affect small business. If a banker scores a sweet bonus, he can give Henault a bigger budget. That means more pricey custom elements, and thus a lot more people going to work.

"More people are involved in the making of the higher-end things than the lower-end things," Henault explains, listing the types of people a big project will employ. "A custom painter, a faux finisher, out in Queens, there’s a company that does hand embroidery, all these different sort of artisans are people that we would bring in, as opposed to stock items which are being formed and spit out by machine."

And those giant bonuses are taxable, which means revenue from them helps fix streets, pay cops and fund programs low income residents depend on. That’s why New York politicians, even those on the left, rarely attack Wall Street pay.

Attacking bank bonuses is ever fashionable, providing meaty, easy targets for everyone from newspaper editorial writers to Washington politicians. But for regular people whose jobs depend on them, big Wall Street bonuses aren’t excessive. They’re vital.

Mark Garrison: We are miles from the financial district, inside the busy kitchen of New York catering company Sonnier & Castle. That sizzle is the sound of swine near the end of the line.

Later, the glistening cube will be skewered, then passed around by an impeccably dressed young server at a very fancy party.

The company’s most elaborate dinners cost hundreds of dollars per person. Today, the team’s prepping for an event for a famous fashion designer. Recently, it catered the movie premiere of “The Wolf of Wall Street.” Co-founder David Castle says the real Wall Street is critical to the company’s bottom line.

David Castle: A third of our business comes from the financial industry.

Castle says corporate entertaining hasn’t fully recovered from the crash, but bank employees are spending again. That means their bonuses are more important than ever.

Castle: Bonuses would be great for us. It would definitely translate into bigger spending and to more hiring, more jobs.

His catering company laid off workers in the financial crisis. But with sales up 20% last year, Castle is hiring again, full-time staff as well as part-time servers and cooks who rely on the extra income. From the owners to the dishwashers, the whole company reaps the benefits of Wall Street bonuses.

Lawrence J. White: They’re receiving income and in turn, they turn around, they spend it.

That’s what economists like NYU’s Lawrence J. White call a multiplier effect. All that bonus money ripples across the entire economy.

White: The initial beneficiaries are the people who receive the bonus, but it doesn’t stop there.

A big bonus banker orders a fancy steak dinner from a server, who uses the big tip to splurge on new home furnishings. Everybody wins. As the old rhyme goes: the butcher, the banker, the candlestick maker. Ok, I did tweak it a bit. Speaking of candlesticks, there are rather nice ones in homes where Darren Henault designs the interiors.

In his studio, he shows photos of rooms he created. They include the homes of some of the top people in finance. The rooms look stunning, like lush film sets. Clients pay him hundreds of thousands of dollars to perfect the insides of their multi-million dollar properties. When a banker’s bonus comes up short, he knows.

Darren Henault: I have definitely had people say to me, ‘I did not have a great year. Let’s dial back again.’

Chances are, you don’t care if a rich banker is less rich. But think about it this way. If a banker gets a larger bonus, he can give Henault a bigger budget, which helps small businesses.

Henault: More people are involved in the making of the higher-end things than the lower-end things.

If that banker goes for pricey custom elements, a lot more locals are going to work.

Henault: A custom painter, a faux finisher, out in Queens, there’s a company that does hand embroidery, all these different sort of artisans are people that we would bring in, as opposed to stock items which are being formed and spit out by machine.

And those giant bonuses are taxable, which means they help fix streets, pay cops and fund programs low income residents depend on. That’s why New York politicians, even those on the left, rarely attack Wall Street pay. For regular people whose jobs depend on them, big Wall Street bonuses aren’t excessive. They are absolutely vital. In New York, I'm Mark Garrison, for Marketplace.

About the author

Mark Garrison is a reporter for Marketplace and substitute host for the Marketplace Morning Report, based in New York.

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