‘Shocking’: Fed chief only earns as much as average Wall Street analyst
By Paulina Cachero
Federal Reserve Chair Jerome Powell may have the power to move markets with a single word, but he takes home the same pay cheque as the average associate on Wall Street.
Powell, 70, discussed his annual salary in a Q&A session with Carlyle Group co-founder David Rubenstein last week, sparking a flurry of social-media commentary about whether the man leading the US central bank is underpaid.
While Powell said he believes his pay of “around $US190,000” ($272,000) is fair, others have argued that his wages don’t reflect his role leading an organisation that serves as the gatekeeper of the world’s largest economy.
Powell’s take-home pay falls within the typical range of base salaries for investment-bank associates, who earn anywhere from $US150,000 to $US200,000, according to data from Wall Street Oasis, a website that tracks finance compensation. While associates usually have three or more years of experience, Powell began his career as a lawyer in the 1970s before becoming a banker. As Fed Chair, his pay is limited by Congress.
But the base salary doesn’t include a major source of Wall Street income: bonuses. On average, associates pocket bonuses that amount to about 50 per cent of their annual pay. That varies widely based on the year and the firm, however, with some elite boutique firms awarding over 100 per cent of the base salary as a cash bonus.
‘People hang on to every last syllable from Jerome Powell. What he says can make markets rip in other directions. If you look all in, he makes just a little more than a first-year analyst just out of college.’Patrick Curtis, WSO’s founder
When it comes to total compensation, the Fed Chair’s salary pay is closer to that of third-year analysts, who take home about $US194,000 on average, according to Wall Street Oasis data of top banks through 2021. Patrick Curtis, WSO’s founder, says Powell’s take home salary is “shocking for one of the most powerful financial positions in the world.”
“People hang on to every last syllable from Jerome Powell. What he says can make markets rip in other directions,” said Curtis. “If you look all in, he makes just a little more than a first-year analyst just out of college. That makes the compensation on Wall Street look even more impressive.”
However, with major Wall Street banks slashing bonuses by as much as 30 per cent, it’s unclear how Powell’s pay would measure up this year.
Is Powell’s pay fair?
Although Powell’s decisions reverberate across global markets, his salary is set by US Congress. Federal appointees are classified into levels that dictate their pay.
Senior political officials at the highest level and salary, including the Fed Chair and the Treasury Secretary, could only make as much as $US226,300 last year. Like other senior officials, Powell’s pay has been frozen since 2014.
A handful of government officials make far more than Powell. President Joe Biden, for example, pockets a salary of $US400,000.
While the Fed Chair’s salary may come as a shock to some, his years on Wall Street gave him plenty of time to amass a considerable nest egg. After serving as a managing director at investment banks Dillon, Read & Co. and Bankers Trust, he spent eight years as a partner at Carlyle.
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