Rich Man; Poor Man in New York

March 14, 2014 at 8:52 am Leave a comment

New York has a schizophrenic relationship with wealth.  On one hand it prides itself on having a progressive pro-labor tradition in which it leads the way in protecting the average Joe against the perceived inequities of capitalism.  On the other hand, there is no state that has benefitted as much — including California — from a commitment to entrepreneurialism and unabashed capitalism. 

Today’s news highlights this dichotomy and the unique implications it has for New York.  First, President Obama is once again highlighting the regulatory powers of the Executive Branch by directing his Department of Labor to update regulations under the Federal Fair Labor Standards Act (FLSA).  Under the Act, non-exempt employees who work more than 40 hours per week are entitled to overtime.  However,there are various exceptions to this requirement including for executive and administrative employees who make more than $455 a week.  This threshold was last set in 2004.  Critics of the regulations claim that it hasn’t kept pace with inflation. 

The extent to which the regulations ultimately promulgated by the Department of Labor will impact New York remains to be seen.  New York has its own Fair Labor Standards Act and its threshold for non-exempt employees is already much higher than the federal threshold, $600 per week which will rise to $675 per week by 2016.  

Now for the rich man part of New York State.  According to a recently released report by New York’s Comptroller Thomas DiNapoli, the average bonus in the securities industry grew by 15% to a mere $164,530 in 2013.  According to the Comptroller, this is the largest average bonus since 2008 and the third highest on record. 

If you’re a Bill DiBlasio tax the rich kind of guy, stop reading right now.  If you’re not, then, as pointed out by E.J. McMahon, the increased bonuses in part reflect a decreased Wall Street bonus pool with fewer employees divvying up the bonus money.  In addition, while it is fun to criticize the governor for proposing tax breaks that would benefit some of the worlds’ most profitable banks, according to E.J. the hike in bonuses could translate into $100 million in higher tax revenues for New York City (that could pay for an awful lot of pre-k school programs).  Sixteen percent of all state revenues are generated by Wall Street.  In other words, as Wall Street goes, so goes New York.

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McWatters Nomination Held

The U.S. Senate Banking Committee held the weather-delayed nomination hearing of MarK McWatters.  If confirmed he would take over for board member Michael Fryzel.  What intrigues me most about the McWatters nomination, if confirmed, he will be the first NCUA regulator to come of age during the Great Recession.  In fact, he served on the committee monitoring the TARP program alongside future Massachusetts Senator Elizabeth Warren.

 

Entry filed under: General.

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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