Banking, finance, and taxes
Wall Street Bonuses Hit Third Highest Year Ever in 2014
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It is the time for yet another round of evaluating who makes what and how much they deserve. This round pertains to the contested Wall Street bonuses and pay.
New York State Controller Thomas P. DiNapoli showed that Wall Street bonuses edged higher in 2014, and the big number was that the securities industry actually added jobs, again rather than the contraction trend seen in recent years.
DiNapoli’s report noted that average bonuses paid in the securities industry in New York City gained 2% to $172,860 in 2014. The industry also added some 2,300 jobs in New York City in 2014.
While it may be ironic, that was on slightly less overall industry profitability due to the cost of legal settlements. It was also the first year total jobs gained since 2011.
Pretax profits for the broker/dealer operations of New York Stock Exchange (NYSE) member firms was $16 billion in 2014, down 4.5% from 2013 and on the heels of a 30% drop in the prior year. As additional drag on profits was tied to “weakness in fixed income and commodities trading, higher capital reserve requirements, and the continued cost of legal settlements stemming from the financial crisis.”
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The total gain to the securities industry employment in New York City was 1.4% to 167,800 workers. This is still 11% lower than in 2007 and lower than before the financial crisis. Some summary points seen were as follows:
Interestingly enough, the securities industry was not counted as a driving force in the current jobs recovery in New York City. The report indicated that the securities industry accounted for less than 2% of the private sector jobs added, compared with 10% during the two prior recoveries.
As far as whether high pay and bonuses are good for society, it may depend on where you stand. Then again, it may depend on what industry you are in, when it comes to thinking about who ultimately supplies the demand for your business. If you are in the services sector in New York or anywhere around it, chances are high that there is a codependence, whether it is appreciated or not. DiNapoli’s report said:
A resumption of job growth in the high-paying securities industry would benefit the city’s economy given the industry’s high multiplier effect. The Comptroller estimates that each new job in this high-paying industry results in the creation of two additional jobs in other industries in the city, and an additional job in the suburbs… securities-related activities accounted for 6.7 percent of all city tax revenue in city fiscal year 2014 and 19 percent of State tax collections in state Fiscal Year 2013-14.
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Below is a table showing the 29 year history of Wall Street bonus dollars and trends. This shows that the pool of bonuses was the third highest on record in both total bonuses and average bonuses.
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