What You're Worth

There's not much good coming out of the current economic crisis, and at first read, the news that Swiss bank UBS is raising its salaries sounds like more bad news. But USB is raising its salaries because it's lowering the bonus system, frequently blamed for encouraging financial industries to take risks and seek profit by creating increasingly complicated instruments to trade. They're trying to find out another way to put a number on what their employees are actually worth.

I think this could be a potentially positive outcome of the recession, or depression, or whatever this turns out to be. I don't think it's controversial to say that certain kinds of compensation have become wildly divorced from the actual value people bring to their employers, and those kinds of compensation are clearly no longer viable in a major downturn. Companies will be forced to reassess what they're paying, and as salaries come down, it seems possible that the gap between public and private sector pay will shrink. That may no be a permanent change, and it's hardly the best way to achieve pay parity. But the federal government's conversation about pay is long-running, deep, and serious. It's great that other sectors of the economy are following suit; it's just too bad these are the circumstances under which that conversation could happen.