Bonuses for Wall Street workers fell 26 percent in 2022, as a slowdown in deal-making cast a chill on the industry after a surge in previous years.
The data, which was released on Thursday by the New York State Comptroller, Thomas P. DiNapoli, is another sign of the change in fortunes for Wall Street bankers, who spent much of 2020 and 2021 in a deal-making frenzy, which generated outsize personal financial rewards.
The average bonus for an employee in New York’s securities industry last year was $176,700, down from $240,000 in 2021 and $213,700 in 2020. Last year’s bonus level was more in line with rewards recorded before the pandemic.
Now, instead of competing for workers by offering generous perks, like free Peloton bikes and less weekend workdays, investment banks have spent the past few months announcing layoffs. In January, Goldman Sachs cut thousands of jobs.
In 2022, steep declines in investment-banking fees resulting from fewer mergers, debt issues and public offerings, led to a 56 percent drop in pretax profit in aggregate on Wall Street. A year of rising interest rates, stubbornly high inflation and Russia’s war in Ukraine have curtailed financial activity of all kinds. The more recent collapse of Silicon Valley Bank, Signature Bank and the outbreak of fear about the health of the banking system could make 2023 an even leaner year for those working in high finance.
Many bankers have adjusted their spending accordingly, pulling back on everything from vacations to luxury cars. A select few high-performing hedge fund managers, however, have turned enormous profits during the turmoil, resulting in giant paydays.
Mr. DiNapoli, who is shepherding Manhattan’s economic recovery after the pandemic temporarily shuttered many of the city’s entertainment venues and has altered commuters’ habits, said the dent in industry profits had a limited effect on Manhattan’s financial stability.
“While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street,” Mr. DiNapoli said in a statement.
Still, Mr. DiNapoli estimated Wall Street was responsible for 16 percent of all economic activity in the city in 2021, making the industry “critically important to New York.”
In 2022, the securities industry employed about 190,800 people in New York, or about one in 11 jobs in the city, the highest level in many years. But the industry’s heft has more generally been on the decline over the long term, as employees have moved into industries like technology, and large firms have left the city.
Source: Read Full Article