Wall Street Bonuses Are Climbing, but Not Everyone Is Smiling
Click to Print This Page
Here’s a crazy fact, one that likely won’t sit well with Elizabeth Warren and other Wall Street detractors. The average bonus for employees in New York City’s securities industry actually increased in 2014 despite the fact that profit was down 4.5% from a year earlier, mostly due to embarrassing litigation costs. Though the narrative is a bit more complicated than what appears on the surface.
The average Wall Street bonus increased by 2% to $172,860, the high-water mark since the economic collapse, according to a new report from New York State Comptroller’s Office. The industry also added 2,300 jobs in New York City, ending a three-year run of headcount reductions.
While that’s all good news, the report includes a few dark clouds. One, you can make the argument that bonuses didn’t increase as much as they flat-lined. The average bonus increased 19% in 2013 as the industry pulled itself off the mat. Bonuses increased 52% over the two previous years.
New York State Comptroller Thomas DiNapoli was cautious with his words on Wednesday, noting that while job growth is certainly a good thing, “it remains to be seen whether this trend will be sustained.”
Another key to the report is that the numbers are based solely on personal income tax, meaning they don’t include bonuses that were deferred this year. However, the totals do include previously deferred bonuses and options that have vested for which taxes have been withheld. Considering share prices of bank stocks have doubled at some firms, last year’s bonus numbers may be artificially inflated a bit. Plus, banks like Morgan Stanley paid out more in cash in 2014, so there’s that.
Finally, DiNapoli includes one sobering statistic that suggests banks will never again regain their stature. During the two recoveries previous to 2009, the securities accounted for 10% of job creation in New York City’s private sector. This time around Wall Street has accounted for just 2% of job growth.