According to figures released Thursday by New York State Comptroller Thomas DiNapoli, the average annual Wall Street bonus dropped to $176,700 last year, a 26% decrease from the average of $240,400 the year before.
The 2022 bonus amount is more than twice what US households make on average each year.
The bottom line of Wall Street corporations has been impacted by rising interest rates, recession fears, and Russia’s invasion of Ukraine. Due to this, there were much fewer mergers and acquisitions last year and fewer initial public offerings, which often result in enormous profits for the banks managing such large-scale transactions.
One only needs to consider Morgan Stanley and Goldman Sachs, both of which reported significant declines in sales and profit for the fourth quarter of last year. Both had previously announced layoffs. The CEO of each company also had his remuneration reduced.
According to a statement from DiNapoli, “a 26% drop brings the average bonus closer to what financial personnel got prior to the pandemic.”
Overall, Wall Street businesses had a bonus pool of $33.7 billion for 2022, which is 21% less than the record-breaking $42.7 billion set the year before and the worst decline since the Great Recession.
Still, a bonus payment average of $176,700 is not insignificant when you realize that the typical American household income according to the most recent Census was $70,800 in 2021.
Given that employees in the securities industry make up 5% of the city’s private sector workforce and that their pay makes up 22% of the city’s private sector wages, bonus season means a welcome boost in revenue for New York City and New York State coffers. According to estimates, Wall Street accounted for 16% of the city’s total economic activity in 2021.
According to estimates from DiNapoli’s administration, the lesser incentives will result in $457 million less in state income tax receipts and $208 million less for the city than the previous year.
But for the local economy to bounce back to its pre-pandemic levels, more than just bonus-driven revenue is required.
Our economic recovery is not primarily dependent on Wall Street, even though decreased bonuses have an impact on the state and city’s income tax receipts. For the city and state to fully recover, employment in leisure and hospitality, retail, restaurants, and construction must keep improving, according to DiNapoli.