Today's Outrage is published weekdays at 9:30 a.m. EDT and is available as an RSS feed.Once again, AIG ( AIG) wants to pay out bonuses to its staff. At least this time, the beleaguered insurer is asking for prior approval from its government overseers. I don't begrudge anyone a well-earned bonus. But in this climate it's hard to understand those who think they are more deserving than the rest. Across America there are millions of hard-working folk who are suffering pay cuts, furloughs and layoffs. Many no doubt deserve bonuses but they would be happy to just keep their jobs at this point. With almost 15 million Americans out of work, the $235 million in pending retention bonuses AIG wants to pay could cover the median household income of $50,233 for almost 4,700 unemployed Americans without cutting the base pay of any employees. The $50,233, by the way, is the combined income for the entire household. I know this is a huge issue for AIG, as well as Citigroup ( C), Bank of America ( BAC) and the other financial institutions coming to grips with the consequences of receiving taxpayer bailouts. Clearly it's hard to retain the talent needed to remain competitive if rivals can poach your best employees with promises of bonuses that you can't offer. That said, aren't bonuses supposed to be somehow related to the performance of the company? Can you justify bonuses even for top-performing employees when the business stinks so much that you have to accept $180 billion in taxpayer money to stay afloat? Where does the money for all these bonuses come from if a company is that short of cash?
This disconnect between company performance and the desire to pay out millions of dollars in bonuses is what has many Americans and, by proxy, their political representatives, scratching their heads. I think AIG and other underperforming financial institutions are rightly concerned about their competitive disadvantage. Paying out bonuses isn't going to fix that. They've got to focus on making the business a profitable and therefore desirable place to work. Bonuses from a failing institution are like Band-Aids that don't stick.