NYS comptroller expects drop in Wall Street bonuses this year due to COVID-19
Bonuses paid to Wall Street workers are likely to take a dive this year because of the COVID-19 pandemic despite rising 3% in 2019, New York State Comptroller Thomas DiNapoli said.
The average bonus paid to employees in New York City’s securities industry increased to $164,100 last year, according to the annual estimates released Tuesday by the comptroller.The securities industry makes up about one-fifth of all private sector wages in the city despite employing less than 5% of the workforce. The comptroller’s office estimates that about one in 10 jobs in the city are directly or indirectly associated with the securities industry.
“The securities industry had a good year in 2019, but the serious damage that COVID-19 is inflicting on financial markets and the global economy will sharply reduce industry profits this year,” DiNapoli said.
DiNapoli estimates the securities industry accounted for 17%, or $13.2 billion, of the state’s tax collections in fiscal year 2019 and 6%, or $3.7 billion, of city tax collections in fiscal 2019.
After falling 12% in 2018, the comptroller’s office estimates the 2019 bonus pool for securities industry workers in the city rose 3% to $29.3 billion during the December-March bonus season.
“The securities industry is integral to New York state’s and New York City’s economies, as a source of tax revenue and job creator in other industries,” DiNapoli said. “The state and the city need to prepare for the severe budgetary implications of the coronavirus crisis.”
After 9/11, bonuses fell by 33% in 2001 and dropped 47% in 2008 during the financial crisis. Bonuses have decreased four times since 2008, with an average decline of 12%.
Pretax profits in 2019 for the broker/dealer operations of New York Stock Exchange member firms increased 2.8% to $28.1 billion. It was the fourth consecutive year of growth in profits, which have nearly doubled since 2015, DiNapoli said.
Recessions and economic shocks have historically damaged industry profitability, dimming the prospects for 2020, according to the comptroller’s office. After 9/11, profits fell by 50% in 2001.
In 2019, employment in the city’s securities industry rose 2,100 to 182,100. The industry has added jobs in five of the past six years, increasing employment by a net total of 16,200 jobs during this period.
However, DiNapoli said securities industry employment is still 4% smaller than before the 2008 financial crisis. In response to the financial crisis, the industry eliminated 22,700 jobs in the city before job growth resumed.