It’s getting a lot tougher to make a living on Wall Street.
Average bonuses paid out in New York’s financial services sector tumbled 9 percent last year, to an average $146,200 — its lowest level in three years, the state’s fiscal watchdog said on Monday.
The decline in the treasured bonus was the result, in large part, of a 10.5 percent decline in profits on Wall Street to $14.3 billion in 2015, according to the report from the watchdog, state Comptroller Thomas DiNapoli.
The slip in profits shrank the bonus pool at the state’s broker-dealers 6 percent to $25 billion, DiNapoli said, which could reduce tax revenues for both the Empire State and the Big Apple.
The 6 percent drop in the bonus pool — plus the addition of 4,500 jobs, for a 2.7 percent jump in payrolls, to 172,400 jobs — resulted in the 9 percent decline in average bonuses.
“Wall Street bonuses and profits fell in 2015, reflecting a challenging year in the financial markets,” DiNapoli said in a statement. “Lower profits could mean fewer industry jobs and less tax revenue.”
That drop in profits ended up dampening bonuses in another way, too — through depressed stock option prices, DiNapoli said.
Most bonuses are now partly paid out in deferred compensation, like options that won’t vest until years down the line, he said.
Last year, five of the six major Wall Street banks saw their stock prices sink — with Morgan Stanley falling the furthest, down 18 percent. Only JPMorgan ended the year better, up 5.5 percent.
“Because of the markets being down, we have to assume that some of those options being exercised now are of less value than they were a year or two ago,” DiNapoli said during a press conference.
Another drag on the average bonus size is from a spree in hiring relatively lower-paying compliance professionals, DiNapoli said. Banks have hired thousands in compliance to make sure that the days of billion-dollar regulatory fines are behind them.
The job increase on Wall Street in 2015 followed an increase the prior year — making it the first time jobs swelled in two consecutive years since the financial crisis of 2007-2009.
The state comptroller releases an annual estimate of bonuses paid to securities industry employees in New York City. The state and city budgets rely on the securities industry and lower profits can affect tax revenue.
DiNapoli estimates that the securities industry accounts for tax revenue of $3.8 billion, or 7.5 percent, for New York City and $12.5 billion, or 17.5 percent, for the state.
