Wall Street employees took home a hefty bonus last year, but New York is warning of a “sharp fall” in what workers can expect in 2020, as the coronavirus pandemic continues its chokehold on the industry.
Last year, Wall Street bonuses jumped 3% to $164,100 on average, according to annual estimates released Tuesday by New York State Comptroller Thomas DiNapoli. But that’s all changed with the walloping global markets are getting from the pandemic.
“The serious damage that COVID-19 is inflicting on financial markets and the global economy will sharply reduce industry profits this year,” DiNapoli said in a statement.
Last year, the securities industry profited when markets rallied 29%. But in the past month, stock indexes have plummeted 27%, which erased roughly three years’ worth of gains on the S&P 500. On Tuesday, the stock index rose more than 8% in response to Congress making progress on stimulus measures.
But a decline in wages in the securities industry will have ripple effects in New York City, the comptroller argued. One-fifth of private sector wages in New York City come from the securities industry, despite it accounting for less than 5% of private sector employment. The securities industry also accounted for about 17%, or $13.2 billion, of tax collections for the state last year.
“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,” the comptroller continued. “The state and the city need to prepare for the severe budgetary implications of the coronavirus crisis.”
Wall Street bonuses have previously declined in the middle of other financial crises. After the September 11 attacks, bonuses fell about 33% in 2001. In 2008, they fell about 47%.
Meanwhile, in Singapore, the sovereign wealth fund Temasek said last month that senior management would have their bonuses cut by 5% and 15%, depending on seniority. At the time, the fund said its employees would be “sharing gains and pains” along with its shareholders.