March 12 (Bloomberg) -- Wall Street employees’ base salaries may double as bonuses, which can account for the bulk of pay for bankers and traders, shrink, said Alan Johnson, who runs a compensation consulting firm.

Base salaries have ranged from about $80,000 to $300,000, with bonuses often climbing into the millions of dollars, Johnson said. Now, he says employees who received $250,000 in base salary may get an increase to $500,000 or $600,000.

“Regulators are either requiring it or imploring people to do it,” said Johnson, founder of New York-based Johnson Associates. “Their belief is that part of the reason that firms got in trouble was they had an excessive focus on bonuses because salaries were too low to live on.”

Bonuses will continue to retreat in 2009, extending the decline from last year, Johnson estimated. In a presentation he gave March 3 to the Wall Street Compensation and Benefits Association, Johnson predicted that incentive compensation will fall about 20 percent from 2008 levels because of weak business fundamentals.

Banks and brokerage firms worldwide have taken more than $880 billion of writedowns and credit losses since mid-2007 as losses in mortgage loans infected other types of assets. The U.S. government has pledged more than $11.6 trillion on behalf of American taxpayers over the period, according to Bloomberg data. That includes the $700 billion Troubled Asset Relief Program, the $787 billion stimulus package and myriad programs overseen by the U.S. Treasury, Federal Reserve, and other government agencies.

Taxpayers and elected officials including New York Attorney General Andrew Cuomo have criticized Merrill Lynch & Co., the investment bank that was acquired by Bank of America Corp. this year, for paying $3.6 billion in bonuses for 2008.

“Artificially low” base salaries have been unhelpful to the industry because it results in larger incentive, or bonus, pools and the “need to justify to external audiences,” Johnson said in the slides for his March 3 presentation.

Johnson, in the interview today, acknowledged that Wall Street’s current base salaries may seem sufficient to some people outside the industry.

“In the real world it’s a lot of money, but if you’ve made millions, to have a $250,000 salary is kind of silly,” he said.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.

Last Updated: March 12, 2009 00:01 EDT