Wall Street’s shrinking bonus pool is taking a bite out of the Big Apple.
New York state Comptroller Tom DiNapoli said yesterday that the fallout from the financial crisis, new regulations and the sluggish economy will likely lead to another down year for the financial industry — and fewer dollars for city and state coffers.
Cash bonuses for Wall Street workers are expected to fall for a second year after dropping an estimated 13.5 percent to $19.7 billion in 2011, according to DiNapoli’s latest update on the health of the sector.
Average salaries also shrank from an estimated $400,000 in 2007 to around $362,00 last year.
While 2012 got off to a “strong start” in the first half, DiNapoli warned that the impending “fiscal cliff” of higher taxes and government spending cuts could hammer the Street’s profits in the second half.
Five years after Wall Street was rocked to its very core, the industry is still facing new regulations, capital requirements and economic headwinds that suggest that its pain might be a lasting one.
“I think we’re all trying to figure out what the new normal is,” DiNapoli said during a CNBC TV interview. Wall Street, which lost 28,100 workers during the height of the financial crisis in 2007, has only gained back 28 percent of those workers, DiNapoli said.
Despite dwindling employment, Wall Street continues to be the lifeblood of the city, accounting for billions in tax revenues.
DiNapoli has said that he is seeing other industries outside of Wall Street begin to account for a bigger portion of the city’s job growth.
That said, it’s hard to see any industry replacing Wall Street, which accounts for 5.3 percent of employment but represents about 23 percent of wages in New York.
The Post reported this week that most of the Street is expecting to see bonuses ranging from down to flat compared with last year, with hard-hit equity traders facing declines of as much as 35 percent.