NY: Wall Street cash bonuses to drop 14 percent
Thursday, March 1, 2012
ALBANY, N.Y. (AP) — Wall Street cash bonuses for 2011 are expected to drop 14 percent and profits are expected to drop by half for the second year in a row, according to a forecast Wednesday by New York state Comptroller Thomas DiNapoli.
That would result in cash bonuses of $19.7 billion. Profits are expected to be less than $13.5 billion in 2011, compared to $27.6 billion in 2010.
The average cash bonus is expected to be $121,150 for 2011, down from $138,940 in 2010. Bonuses peaked before the recession in 2006 at $191,360.
DiNapoli said the forecast for this bonus season shows continued hard times on Wall Street two years after the recession officially ended. The securities industry lost 28,000 jobs, including 9,600 that had been briefly recovered before the slide began in April.
“Securities firms in New York City resumed downsizing in the second half of the year,” DiNapoli said. “The securities industry, which is a critical component of the economies of New York City and New York state, faces continued challenges as it works through the fallout from the financial crisis and adjusts to regulatory reforms.”
Wall Street has traditionally accounted for 20 percent of the state’s tax revenue, but that declined to 14 percent last year. During the same two years, Wall Street’s contribution to New York City’s tax revenue dropped to 7 percent from 13 percent.
Gov. Andrew Cuomo said he hadn’t seen the report, but is confident his 2012-13 budget proposal reflects the trends.
DiNapoli said in an interview that the state and New York City budgets appear to take into account the Wall Street losses.
The Democrat said Wall Street’s performance affects all New Yorkers, and job gains or losses there translate into gains and losses throughout the city and state.
“The average bonus is still $121,000, so obviously these jobs are still very well compensated,” DiNapoli said. “If you love or hate Wall Street, it’s still an important part of our economy ... people spending money always helps the rest of us.”
A strong first half in 2011 yielded profits of $12.6 billion, but that performance broke down in the third fiscal quarter, when Wall Street lost $3 billion.
DiNapoli says the figures appear to show a continued rise in deferred compensation, which will spread bonuses out of several years.
The average salary including bonuses was $361,180 in 2010. A 2011 estimate isn’t yet available.