Wall Street job cuts could hurt LI economy
Job losses expected on Wall Street this year could have a ripple effect on Long Island.
State Comptroller Thomas DiNapoli released a report Tuesday projecting a net loss of 1,200 securities industry jobs in New York City, even as profits are expected to double to more than $15 billion this year.
Irwin Kellner, chief economist for MarketWatch, said job declines on Wall Street can mean job losses for Long Islanders and the loss of their spending in the local economy.
"Those kinds of jobs are one of the few on the Island that are really high-paying jobs," said Kellner, who writes in Port Washington. "It's going to hurt governments who will get less tax revenues from this very important group of workers."
The securities industry continues to tread a volatile path after record losses of more than $40 billion in 2008 and record profits of more than $60 billion in 2009. DiNapoli estimates that since November 2007, Wall Street lost 28,100 jobs and has added 7,900 in the recovery. Profits this year started stronger than they are expected to finish and hiring in the beginning of the year has turned into net loss.
"Part of how the industry is going to maintain profits is to cut costs," DiNapoli said. "Cutting costs often translates into cutting employees. That's what we're starting to see."
Adding a job on Wall Street creates two more jobs in the city and one more in the state, typically in the suburbs, according to the report. The reverse is true when jobs are lost.
If the industry continues to contract, over time Long Island will feel the loss of salaries, DiNapoli said.
"You will see an impact in terms of the folks that have a $363,000 average income and [are] going home to Great Neck," DiNapoli said. "If there are fewer of them that means less money spent locally in the shops and restaurants."
That decline could affect revenue at the county level, said Standard & Poor's analyst Lindsay Wilhelm. "Their primary source of revenue is their sales tax and so to the effect that this affects spending would be the main impact on the counties," Wilhelm said.
There are fewer brokers and dealers who work in the securities industry in Nassau and Suffolk than in the city -- 6,516 people worked in the industry on Long Island in the first quarter compared to 164,185 in New York City, according to state data. A review of employment data shows that jobs in the industry on Long Island generally rise and fall in sync with the city.