A report released Tuesday shows that Wall Street’s elite are making more money than ever, with the 25 highest-paid hedge-fund managers averaging US$540 million in compensation last year. The top three pocketed more than US$1 billion each.

But the investment environment that is making these men rich (and yes, the top 25 are all men) is coming at the expense of working Americans in the form of job losses, reduced health benefits and depleted retirement savings, according to a very different study released Tuesday by a labor union.

Taken together, the studies encapsulate the two ends of today’s economic spectrum in which Wall Street is enjoying transcendent profits while many rank-and-file workers feel left behind.

“You see this extraordinary accumulation of wealth in the hands of a relatively small group of people,” said Stephen Lerner of the Service Employees International Union, which represents government and health care workers. “It’s just not healthy for society.”

The SEIU study focused on private equity funds, which buy and restructure companies in hopes of selling them at a profit. These funds are close cousins of hedge funds, which are private investment pools that pursue a wide range of investment strategies.

Increasingly the lines between the two are blurring as both tiptoe into the other’s line of business, but big money has always been a shared trait.

In its annual survey of hedge fund managers, Institutional Investor’s Alpha magazine found that average compensation of the top 25 jumped 57 percent from last year and 127 percent from 2004.

Collectively, the managers earned more than US$14 billion. If you didn’t make at least US$240 million last year, you didn’t make the list.

Some critics argue that hedge-fund managers are vastly overpaid. These wizards of Wall Street have taken advantage of favorable economic conditions, buoyant financial markets and a cachet borne of their secretive investment styles to fool starry-eyed investors into thinking they are worth their outsized paychecks, this view holds.

“How does anybody say, ‘I worked hard enough. I earned (my) US$300 million,” said Peter Schiff, head of brokerage firm Euro Pacific Capital in Darien, Conn. “That’s ridiculous.”

Investments in hedge funds typically come from pension plans, wealthy individuals and others looking for returns that will beat what they can get from plain-vanilla stocks, bonds and mutual funds. But many hedge-fund managers use borrowed money, Schiff noted — a strategy that beefs up returns when investment bets pay off, but can also escalate losses when the bets go sour.

The highest-paid manager on Alpha’s list was a former Department of Defense code breaker named James Simons, who runs Renaissance Technologies Corp. in East Setauket, N.Y. Simons took home an estimated US$1.7 billion last year.

Next was Kenneth Griffin, head of Chicago-based Citadel Investment Group at US$1.4 billion. Edward Lampert, whose Greenwich, Conn.-based ESL Investments owns the Sears department-store chain, was third at US$1.3 billion.

The Alpha survey notes that most hedge fund managers don’t earn anywhere near these sums.

Most Americans don’t either, which is the point of the SEIU study.

The labor union’s report contends that the vast profits being earned by private-equity managers as they buy and resell companies shows that profits are high enough to share a larger portion with employees.

“The buyout deals and money-generating strategies that are generating immense wealth for this industry and its investors can have harsh consequences for workers and the companies they buy and sell,” the report said.

Yet a third study released Tuesday underscored the broader issue of affluence in America, and how the rising wealth of those at the top is forcing some to rethink the definition of rich.

The annual survey of affluent Americans by U.S. Trust Co. used to define wealthy people as those with household income of US$300,000 or total net worth, including their homes, of US$5.9 million.

But U.S. Trust altered that this year to define wealthy people as those with US$5 million in investable assets, not including homes. It also added an “ultra” high-net worth category — people with assets of US$25 million or more.

The change reflects the fast-rising net worths of the wealthiest 1 percent of Americans, said Tracey Warson, head of the western region for U.S. Trust, a money manager for the wealthy.

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