Brother, can you spare ten mil? Wall Street's bonus army

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On Thursday, The New York Times reported on James Haas, a 47-year old member of American International Group (AIG)'s troubled financial products unit, and one of three AIG execs who have been identified as major bonus recipients. Haas, whom the New York Post has dubbed "Jackpot Jimmy," fought back tears as he spoke to a reporter on the front steps of his Fairfield, Connecticut mansion.

Apparently, the media's scrutiny of AIG has made Haas persona non grata on his street; one neighbor was quoted as saying "It's despicable . . . They should be forced to give every cent back." These are particularly strong words for Fairfield, a staid, upper-class suburb on Connecticut's gold coast. The town is also home to Douglas Poling, another AIG employee who raked in a huge bonus, and is right down the road from Wilton, where AIG has an office. It was also listed as one of the "Preppiest Suburbs" in 1980's The Preppy Handbook.

Fairfield is the kind of upscale locale that most people only see in movies like The Stepford Wives and Revolution Road, both of which were filmed there. The median household income is over $83,000 and the median family income tops $100,000. The town-owned marina is named "Ye Yacht Yard," and high-priced private schools abound. In fact, Poling contributes money to Fairfield Country Day School, where the tuition is over $29,000 a year. In 2006, Money Magazine ranked Fairfield the second safest municipality in the United States, and Jeffrey Immelt, Jack Welch, and Martha Stewart are among its present and former residents.

While this glimpse at a wealthy Connecticut town might seem like an egregious and obvious appeal to populist rage, it actually serves a larger point. For people outside New York City's über-wealthy class, it might be hard to understand the extreme level of entitlement that underlies the bonus brouhaha.

While the word "bonus" literally means "something over and above that which is due," many Wall Street companies have transformed it into a fundamental aspect of their pay structure. At its best, this has allowed employers to tie a large part of pay directly to performance. In many cases, however, it has narrowed their employees' focus to the extreme short-range and led to a widespread belief that performance-related bonuses are not, in fact, tied to performance. This, incidentally, explains why one AIG employee compared the public's bonus rage to McCarthyism, claiming that the bonuses were actually "payments that had been promised long ago to workers."

Even this sense of entitlement, however, doesn't really explain the money attitudes that one sees in this city. My sister, for example, used to work for a prominent doctor. One day, noting that her pay was well below scale for her position, she asked for a raise; her employer responded that he was unable to pay her any more money.

In most cases, this would have been the end of the story. However, as the doctor's executive assistant, my sister was tasked with keeping track of her employer's personal finances. She knew, for example, that he had impulsively bought two antique maps for $50,000 the month before. The month before that, he had replaced his house's towels at a cost of $80,000, and his wife had spent $20,000 to see one game of the World Series. My sister knew how much her boss spent on yard work and country club memberships, how much it cost him to pay a car service every day, and how much his sons' tuitions were. Perhaps most important, she knew that her $40,000 annual salary was a fraction of what he could afford, and a fraction of what she was worth. She quit a month later.

For the denizens of Westchester County, Suffolk County, Fairfield County and New York's other elite communities, seven and eight figure incomes aren't a privilege; they're a right. They are the basis of an entire lifestyle; this is a culture where people can unblinkingly and unironically claim that they "need" $53,000 a week to survive. The real question, of course, is whether or not taxpayers need to foot the bill for the wealthiest one percent.
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