Wall Street bonuses go up as the number of jobs goes down
NEW YORK — On Wall Street, profits are down and the number of workers is shrinking.
But bonuses continue to swell.
Those payouts to Wall Street employees in New York City rose 15 percent on average last year, to $164,530, according to estimates released on Wednesday by Thomas P. DiNapoli, the state comptroller. That was the biggest average bonus since 2007, the year before the financial crisis struck.
Overall, workers in the securities industry in the city made $26.7 billion in bonuses last year. The bonus figures encompass everyone from the low-ranking employee to the chief executive, so high payouts to top managers can bring up the average.
That bonuses rose during a challenging environment for the banks reflects a cardinal rule of Wall Street: Firms are willing to pay big for the top talent. This held true even as profits overall fell 30 percent to $16.7 billion, according to the comptroller’s report.
The total included payments that had been granted in prior years. That was because Wall Street firms, since the crisis, have sought to keep a temporary lid on costs by deferring a portion of cash compensation. Some of this cash that had been withheld was paid out last year, making bonuses larger than they otherwise might be.
While Wall Street bonuses have raised eyebrows in Washington in recent years, they are an important ingredient in the industry’s pay, often making up the bulk of a workers’ earnings.
From the perspective of the city, which had expected bonuses to go down, the increase is welcome news, bolstering a major source of tax revenue. DiNapoli estimated that the higher bonuses could translate into $100 million in tax revenue for the city in the current fiscal year above what had been anticipated.
A variety of businesses in New York — from restaurants to luxury real estate — pin their fortunes to Wall Street pay. While the financial industry makes up just 5 percent of jobs in the city, those jobs account for 22 percent of the city’s wages, DiNapoli said.
“Wall Street is one of the key economic indicators and engines for our city and our state,” he said at a conference in Manhattan on Wednesday. “We certainly know that the impact of the Great Recession was felt profoundly in the securities industry here in the city.”
The aftershocks of that difficult period continue to be felt. Banks grappled with challenging markets last year, in part because of uncertainty over the Federal Reserve’s extraordinary economic stimulus program. On top of that, bank profits were dented by a barrage of legal issues stemming from the crisis.
The number of jobs in finance declined slightly last year, as firms sought to keep costs in check. The industry employed 165,200 people as of last December, a decline of 1.2 percent from 2012 and the second straight year of declines.
Wall Street compensation continues to dwarf the pay in other industries.