The average annual Wall Street bonus slipped 2% to $176,500 in 2023 from the $180,000 average reported in the prior year, according to New York State Comptroller Thomas DiNapoli’s annual estimate released Tuesday.
While profits at Wall Street firms increased 1.8% last year, DiNapoli said securities companies have taken a more cautious approach to compensation. The number employed in the industry grew, he said, which also contributed to the decline in the average bonus.
“Wall Street’s average cash bonuses dipped slightly from last year, with continued market volatility and more people joining the securities workforce,” DiNapoli said in a statement.
Bloomberg News
The $33.8 billion bonus pool for 2023 closely matched the previous year’s, but was below the 25% growth to $37.1 billion seen in 2020, and the 15% jump to $42.7 billion seen in 2021.
Wall Street bonuses have a large impact on tax revenue in both the state and city budgets.
The comptroller’s office estimates the securities industry accounted for roughly $28.8 billion in state tax revenue, or 27.4% of what the state took in, in the state’s fiscal 2022-2023 and $5.4 billion in city tax revenue, or 7% of total tax collections, in the city’s fiscal 2023.
In 2022, bonuses generated $447 million less in state income tax revenue and $204 million less for the city compared to the prior year.
DiNapoli estimates last year’s bonuses in the city’s securities industry will generate $4 million less in state income tax revenue and $2 million less for the city when compared to the previous year.
“While these bonuses affect income tax revenues for the state and city, both budgeted for larger declines so the impact on projected revenues should be limited,” DiNapoli said.
Gov. Kathy Hochul’s proposed budget assumed bonuses in the broader finance and insurance sector would decrease by 2.7% in fiscal 2023-2024, while the city’s fiscal 2024 financial plan assumed a decrease of 7.8% in securities industry bonuses.
The securities industry also has a significant impact on New York City’s employment and overall economy. The securities sector employed about 198,500 people in 2023, up from 191,600 in 2022.
DiNapoli estimates that one out of 11 jobs in the city is directly or indirectly associated with the securities industry.
While the city remains the capital of the U.S. securities industry, its share of the sector’s jobs has been declining. Sector employment in 2023 was 1.3% lower than in 2000, the comptroller’s office said, which represented the peak for securities industry employment in the city.
However, as more securities employees are returning to their offices, the city has seen increased spending.
Financial services firms reported 65% of employees were in the office in the city on any given day after Labor Day, compared to 58% for all other firms, according to the Partnership for New York City’s survey.
Additionally, 42% of securities industry employees ride the subway, a higher rate than the citywide average, the survey said.
DiNapoli estimates Wall Street was responsible for 14% of all economic activity in the city in 2022, and so the financial sector’s ability to generate revenue and turn profits is important.
However, he said, all sectors of the economy must feel a rebound for the city to remain strong.
“The securities industry’s continued strength should not overshadow the broader economic picture in New York, where we need all sectors to enjoy full recovery from the pandemic,” DiNapoli said.