Wall Street bonuses dry up, threatening public, private revenue
Bonuses on Wall Street have dipped again this year following the purging of thousands of financial jobs in 2011, according to State Comptroller Thomas DiNapoli. And that's bad news for both the public and private sectors.
Cash bonuses fell 14% last year to an estimated $19.7 billion for securities workers, a three-year low, according to the report. That translates to $121,150 per exec on average.
Wall Street passed out 4,300 pink slips from April to December, DiNapoli said. "This is fallout from the financial crisis," he told MSNBC.
Companies took a hit, too. DiNapoli's report found New York Stock Exchange firms earned $13.5 billion in 2011, tumbling 51% from 2010.
DiNapoli and others said the 2010 Dodd-Frank Act, meant to prevent another Wall Street meltdown, was a factor.
"Wall Street's not making a lot of money, and the cost of complying with all of the new regulations is going through the roof," Mayor Michael Bloomberg told reporters yesterday.
New York state and the city benefit from Wall Street through tax revenues from businesses and personal income. But Edward Nell, an economics professor at the New School for Social Research, said it's not necessarily bad that the rich pass on some luxury indulgences.
"When you're making $300,000 a year, whereas maybe a quarter is your bonus, then a cut in the bonus means you don't buy a new Lexus or another yacht," Nell said.
Jonathan Miller, CEO of the real estate appraisal firm Miller Samuel, said a battered Wall Street could jeopardize the city's housing market.
"The bigger concern is higher unemployment levels. To me, that signals whether people can even afford their rents or homes," Miller said.
After the pullback in big spending when the economy hit the skids in 2008, those in the service industry are hoping Wall Street's woes won't hurt them again.
"There may be fewer bonuses handed out on Wall Street, but thankfully sales at many restaurants are up since the economic downturn," said Andrew Rigie, of the New York State Restaurant Association.
How the district's downturn hurts
1. Tax revenue: With leaner Wall Street profits, state revenues from business and personal income tax fell to 14% last year. The city's tax revenues from Wall Street fell to less than 7%, according to the state comptroller.
2. Consumer spending: High-end businesses are hurt when Wall Streeters curb spending, economists said. A study last fall found that high-end consumers bought fewer luxury goods than they did during the same period last fall.
3. Housing: Losing a job can force a homeowner into foreclosure - and Wall Street shed 4,300 positions between April and December of last year.