"The securities industry has already lost tens of thousands of jobs and the industry is still continuing to write off toxic assets," says DiNapoli in a release. "It's painfully obvious that 2009 will probably be another difficult year for the industry."
DiNapoli's office estimates that the bonus pool paid by the securities industry to its employees in New York City totaled $18.4 billion in '08--based on personal income tax collections and other factors--including industry revenue and expense trends. This represents a 44% drop compared with the $32.9-billion pool seen in 2007. The $14.5-billion decline is the largest on record in absolute dollars and the largest percentage decline in more than 30 years. However, the size of the bonus pool is still the sixth largest on record, according to DiNapoli.
The average bonus declined by 36.7% to $112,000 in '08. The decline in the average bonus was smaller than the decline in the bonus pool because the pool was shared among fewer workers as Wall Street downsized by 10.2%. DiNapoli says the reduction in bonuses will cost the state nearly $1 billion in personal income tax revenues and the city another $275 million.
The comptroller also estimated that the traditional broker/dealer operations of the New York Stock Exchange's member firms lost more than $35 billion in '08, or more than three times the record losses seen in '07. Industry losses were actually much greater when other business services, such as mergers and acquisitions, were factored in.
Additionally, a review of the 2008 year-end statements of the major financial firms headquartered in New York City--including Merrill Lynch, which was not formally acquired by Bank of America until January--showed a tax credit of $31.3 billion for '08. That will reduce the firms' future tax payments for years to come, DiNapoli's office says.
Wednesday's report was the second grim assessment of New York City's job market to come out of Albany in less than a week. Last Friday, the state Department of Labor reported that the city's unemployment rate jumped from 6.3% in November '08 to 7.4% in December, slightly more than the state (7.0%) or national (7.2%) jobless rate. The city's unemployment rate for December '07 was 5.1%.
Currently, the unemployment rate for the five boroughs is higher than that of any other metro area within the New York region, although all increased from November to December. The unemployment rate for Nassau and Suffolk counties stands at 5.8%; for Putnam-Rockland-Westchester, it's 5.6%; for Poughkeepsie-Newburgh-Middletown, 6.3%.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
