Signs that lower Wall St pay might be here to stay

In their National Bureau of Economic Research working paper, Thomas Philippon of New York University and Ariell Reshef of the University of Virginia found that the difference in pay between finance and the rest of industry was slight, if any, except in the late 1920s to 1930 and then again from the mid-1990s to 2006. In those boom years, compensation in finance was 30 percent to 50 percent higher than in the rest of industry.

The Wall Street pay differential with the rest of the economy, Mr. Philippon said on Wednesday, is falling and destined to erode further. “It will go back to something more normal,” he said. “The only reasonable number is zero or very close to zero.”