Compensation for Wall Street executives in New York dipped last year, according to an analysis from the New York State Comptroller’s Office.
In a report issued Tuesday, state Comptroller Thomas DiNapoli’s office said that while Wall Street profits rose in 2023, the average annual bonus paid to employees declined to $176,500, about 2%.
DiNapoli said the numbers are a sign that firms have taken a “more cautious approach” to compensation. He said the numbers also suggest more employees have joined the securities industry, contributing to the slight 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. “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. 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.”
The $33.8 billion bonus pool for 2023, which closely matched the 2022 pool, was well below the 25% growth seen in 2020 ($37.1 billion) and the 15% jump seen in 2021 ($42.7 billion), but slightly over the pre-pandemic high of $32.1 billion, according to DiNapoli’s office.
Wall Street bonuses have a significant impact on tax revenue in the state and city budgets. DiNapoli estimates that the securities industry accounted for approximately $28.8 billion in state tax revenue, or 27.4% of the state’s tax collections, for State Fiscal Year (SFY) 2022-23, and $5.4 billion in city tax revenue, 7% of total tax collections for City Fiscal Year (CFY) 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 projects the 2023 bonuses in New York 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. The Governor’s proposed budget assumed bonuses in the broader finance and insurance sector would decrease by 2.7% in SFY 2023-24, while the city’s CFY 2024 financial plan assumed a decrease of 7.8% in securities industry bonuses. These anticipated declines should minimize any significant impacts to their budgets in the short term.
The securities industry also has a significant impact on the city’s employment and overall economy. In 2023, the sector employed about 198,500 people, up from 191,600 the prior year. DiNapoli estimates that 1 in 11 jobs in the city is either 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 over time. Sector employment in 2023 was 1.3% lower than in 2000, which represented the peak for securities industry employment in the city.