Big Wall Street firms slashed year-end bonuses 26% — a sharp decline from the record payouts handed out during the pandemic — as rising interest rates and recession worries hit bank profits, according to data released Thursday by New York State Comptroller Thomas P. DiNapoli.
The average bonus last year for those working in the New York City securities industry dropped to $176,700 — a 26% decrease from the $240,400 average those in the securities industry received in 2021.
While 2022 was a dramatic dip from the lavish pay bankers received over the last few years, it puts bonuses in line with what many received pre-pandemic.
“A 26% decline brings the average bonus closer to what financial employees received prior to the pandemic,” DiNapoli said in a statement.
“The fall to pre-pandemic levels mostly reverses the pool’s dramatic growth of 25% in 2020 and 15% in 2021.”
“While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street. Employment in leisure and hospitality, retail, restaurants and construction must continue to improve for the city and state to fully recover.”
DiNapoli lamented the fact that the smaller bonuses will mean a decline in income tax revenue for both the city and Albany.
Collectively, Wall Street’s bonus pool totaled $33.7 billion, which was 21% lower than the record-high of $42.7 billion from 2021, according to DiNapoli’s office.
Overall, Wall Street’s pretax profits fell 56% last year compared to 2021 as macroeconomic headwinds that were exacerbated by the ongoing war in Ukraine, soaring inflation, and sky-high interest rates took their toll.
According to DiNapoli’s report, the finance industry employed some 190,800 people — the highest level in more than two decades.
The report estimates that 1 in 11 jobs in New York City are either directly or indirectly linked to finance.
But the city’s share of jobs in the securities sector is shrinking due to the departure of some firms.
Several New York City-based firms, including Goldman Sachs, private equity giant Apollo Global Management, Blackstone, D1 Capital, Elliott Management Corp, Moore Capital, PineBridge Investments, Virtu Financial, and the Steve Cohen-run hedge fund Point72Asset Management — announced that they would be establishing a footprint in the Greater Miami area, cementing the region’s reputation as “Wall Street South.”
DiNapoli’s office reported that Wall Street firms have seen a rise in the number of employees who have returned in-person to the office.
Financial services company reported that 59% of its employees were in the office on a given day in January of this year — compared to 52% of employees who work in other sectors of the economy.
According to DiNapoli’s report, 43% of Wall Street employees take the subway, which is higher than the citywide average.
Remote work, which became a necessity during the pandemic but has endured since the lifting of COVID-related lockdowns, has led to a sharp drop in subway ridership, lower occupancy in commercial real estate, and steep declines in income for small businesses that rely on daily commuter foot traffic.