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BREAKING: It’s going to be a rough year for bonuses.Of course, you already knew that, but now New York comptroller Thomas DiNapoli is saying that it’s going to be a bad year for bonuses, and that the economy of New York City will be slammed.
After adding 9,900 jobs between January 2010 and this April, the industry shed 4,100 jobs through August and could lose nearly 10,000 more by the end of 2012, DiNapoli said. That would bring the total industry loss to 32,000 positions since the economic crisis of 2008. The sector employed 166,600 people in investment banks, securities trading firms and hedge funds as of August.
There are also comments from Bloomberg in there about more woes for the NYC economy.
Really, there’s no real shocker, just more depressing talk about the cash vanishing and the ramifications.
Here’s the full press release on the bonus news
Economic uncertainty due to the European sovereign debt crisis, a sluggish domestic economy, volatile stock markets, and regulatory changes are among the chief contributors to a weakened outlook for Wall Street profits, jobs and bonuses for 2011, according to an annual report on the securities industry released today by New York State Comptroller Thomas P. DiNapoli.
“The securities industry had a strong start to 2011, but its prospects have cooled considerably for the second half of this year,” DiNapoli said. “It now seems likely that profits will fall sharply, job losses will continue, and bonuses will be smaller than last year. These developments will have a rippling effect through the economy and adversely impact State and City tax collections. As we know, when Wall Street slows, New York City and New York State’s budgets feel the impact and that is a concern.”
The economies and budgets of New York City and New York State are very dependent on the securities industry. According to the Office of the State Comptroller, last year securities-related activities accounted for 14 per cent of New York State’s tax revenues and almost 7 per cent of New York City’s. In addition, one in 8 jobs in New York City and 1 in 13 jobs in New York State are linked to the securities industry. Given the current weakness, tax collections are likely to fall short of City and State targets in their current fiscal years and may decline by more the following year.
DiNapoli’s analysis also found that:
- The member firms of the New York Stock Exchange earned $9.3 billion in the first quarter of 2011 (almost half of the City’s $20 billion target for the entire year), but profits declined sharply in the second quarter. The Office of the State Comptroller forecasts that profits are unlikely to reach $18 billion for all of 2011, which is one-third less than in 2010.
- After adding 9,900 jobs between January 2010 and April 2011, the securities industry has lost 4,100 jobs through August 2011. Job losses are likely to continue given declines in profitability and recent layoff announcements. OSC estimates that the securities industry could lose nearly 10,000 additional jobs by the end of 2012, which would bring total industry job losses to 32,000 since January 2008.
- Cash bonuses are likely to be smaller in 2011, the second year in a row in which they have declined.
- The average salary in the securities industry in 2010 grew by 16.1 per cent to $361,330, 5.5 times higher than the average salary in the private sector of $66,120. The disparity between average salaries in the securities industry and the rest of the private sector narrowed in 2008 and 2009, but widened in 2010.
- In 2010, the securities industry accounted for 23.5 per cent of all wages paid in the private sector despite accounting for only 5.3 per cent of all private sector jobs.
- The State Comptroller’s Office estimates that each job gained (or lost) in the securities industry leads to the creation (or loss) of almost two additional jobs in other industries in the New York City and another job elsewhere in New York State.
“Excessive risk-taking on Wall Street was a major factor leading to the financial crisis and the recession,” DiNapoli said. “Regulatory changes that reduce risk and focus attention on long-term profitability rather than short-term gains will enhance stability. Despite the weaknesses we are seeing, the securities industry remains profitable and is a key component of the economies of New York City and New York State.”
Click here for a copy of the report.