Increase in Wall Street bonuses may boost LI economy

Wall Street's 17 percent increase in bonuses may anger Americans already upset about big payouts to bailed-out companies, but for Long Island it's potentially good news.

"On balance it's a positive development, but it's not going to pull Long Island out of recession," said Pearl Kamer, chief economist for the Long Island Association. "We need jobs. We need increased wages."

Employees at Wall Street firms received $20.3 billion in bonuses in 2009, the year after taxpayers bailed out the financial sector, New York State Comptroller Thomas DiNapoli reported Tuesday. Industry profits could exceed an unprecedented $55 billion, nearly three times the record, he noted.

The bonuses help the economies of Nassau and Suffolk counties.

About 20 percent of Long Islanders commute to jobs in New York City, working on Wall Street and in other high-paying positions, Kamer said. So bonuses translate into support for residential real estate and consumer spending. County and local governments could see some of that money in sales and property taxes. But many have yet to see the benefits.

"Many Wall Street employees are Nassau County residents, and we're rooting for the health of the industry," said Nassau County Executive Edward Mangano. "Unfortunately, while Wall Street bonuses increased, state and county sales tax revenues are down."

Small-business owners are cautious in their predictions.

"I am hoping that when summer comes around things will loosen up a bit, but I am not taking anything for granted," said Mark Smith, owner of four restaurants in the Hamptons.

Stephanie Finkelstein, owner of The Elegant Setting, a Southampton gift store, expects a busy summer but doesn't believe spending habits will shift soon. She said customers, many who work in the financial industry, are shopping but are mindful that their gifts do not appear "over the top."

Long Island's downtown merchants weren't saved by Wall Street's record bonuses in the past, and the 2009 boost won't be their savior now, said Ron Edelson, Great Neck Plaza Business Improvement District executive director.

But any trickle-down effect is better than none, said Anthony Sabino, professor of law and business at St. John's University.

Sabino said, "The bottom line is that any bit of loose coins in the pocket are a godsend in these troubled times."