That’s enough to end family homelessness in America
The 25 highest paid hedge fund managers in America took home $13 billion in compensation last year, according to Reuters.
They’re able to make such astronomical amounts thanks in part to the many loopholes in our financial regulation. So-called “activist” hedge funds, for example, abuse lax securities laws to gain large stakes in public companies, and then demand cost-cutting, layoffs, and more debt. These moves enrich the hedge funds while often dooming the companies they acquire.
To top it off, hedge funds are costly investments whose performance often just mirrors the stock market overall, despite charging exorbitant fees. In 2015, those fees added up to a cool $13 billion in compensation for the 25 managers at the top of Reuters’ list.
It’s hard to wrap your head around a number like $13 billion. To make it a little easier, here are a few comparisons — inspired by a report from the Coalition on Human Needs.
$13 billion could end family homelessness for ten years
The Department of Housing and Urban Development (HUD) has said that it would take $11 billion over ten years to provide housing subsidies to 550,000 more families — an amount that could effectively end family homelessness, since in January 2015, HUD found that 564,708 people were homeless on a given night.
And we’d still have $2 billion left over.
$13 billion could fund Pre-K for all low and moderate-income families for nearly two years
The Department of Education has a said that $75 billion would provide all 4-year-olds from low- and moderate-income families with access to high-quality preschool for ten years. $13 billion could cover over 20 months of this program.
$13 billion is enough to expand food programs for needy kids so they can access them all year round for 10 years
$12.2 billion is enough to create a nationwide Summer Electronic Benefits Transfer for Children Program, which expands availability of meals to children through the summer months for 10 years
Of the top 25 hedge fund managers, no one was paid more than the founder of the hedge fund Citadel, Ken Griffin, who pocketed $1.7 billion last year.
$1.7 billion is 46,101 times the pay of the average U.S. worker
According to the AFL-CIO, in 2015 the average non-supervisory American worker made $36,875. That means it would take the average American worker 46,101 years to make as much as hedge fund manager Ken Griffin made in 2015.
Assuming Griffin worked a hearty 80 hours a week and took no vacation, his hourly pay in 2015 was $408,653
So the average American worker would need to work for 11 years just to make as much as Ken Griffin makes in one hour. At the minimum wage, you could work a lifetime without earning as much as Ken Griffin made between breakfast and lunch on an average day last year.
What else would $1.7 billion buy?
President Obama’s 2017 budget has proposed a two year plan to address the prescription opioid and heroin abuse epidemic, at a cost of $1.1 billion. With the $600 million left over, we could expand access to mental health services, including initiatives to prevent suicide and to address mental illness among children.
Hedge funds make good use of many tax-dodging schemes like deferring their fees to corporations in the Cayman islands, or exploiting the “Bermuda reinsurance loophole.” The very least Congress can do is close these atrociously unfair loopholes, so that some of the nation’s wealthiest fund managers aren’t scuttling out of paying taxes the rest of us do.