Bonuses earned last year by Wall Street employees dropped nearly 17 percent to $153,700 on average, according to a new report.
State Comptroller Thomas P. DiNapoli said Tuesday an estimated $27.5 billion in bonuses was paid between December and this month for work performed in 2018. That compares with $32.1 billion in 2017.
The 2017 numbers were inflated by stock brokerages moving up payments to avoid federal tax law changes taking effect in 2018, he said. He also said more people were working in the securities industry last year, so the average bonus amount shrank.
“Bonuses declined in 2018, but the average bonus was still double the average annual salary in the rest of the city’s workforce,” said DiNapoli, of Great Neck Plaza.
A spokesman for Gov. Andrew M. Cuomo said Tuesday the new bonus numbers support the governor's contention that the state faces a $2.3 billion shortfall in its 2018-19 budget and must be prudent in crafting the 2019-20 budget, due Monday. The Democratic majorities in the State Senate and Assembly have each put forward spending plans that are higher than Cuomo's proposal.
"The comptroller’s analysis of declining bonuses paid to the securities industry is in line with our expectations, showing the value of making sound assessments when balancing a budget," Freeman Klopott, a spokesman for Cuomo's budget division, said Tuesday.
Wall Street bonuses boost the economies of New York City, Long Island and the northern suburbs, and the entire state. Bonus recipients contribute an outsized amount of tax revenue to the budgets of the state and city.
About 20 percent of Long Islanders commute to the city for jobs, many of them on Wall Street, according to research by the Long Island Association business group and the Center for An Urban Future in Manhattan. Those receiving bonuses often purchase second homes on the East End and apartments in Manhattan, automobiles, boats and vacations to exotic locales. Some also pay for private schools for their children.
DiNapoli based the size of the average bonus on total employment in the securities industry in the second half of 2018, but not all workers received a bonus. The estimate does not include people working outside of New York City or stock options and other deferred compensation for which taxes haven't been withheld.
He said while bonuses fell, the city's securities industry had a good year though the Dow Jones Industrial Average posted its worst December since 1931.
Brokerages’ pretax profit totaled $27.3 billion last year, up 11 percent from 2017. That’s the highest level since the recession officially ended in 2009.
“Profits grew in 2018 and have nearly doubled since 2015,” DiNapoli said.
The industry added 4,700 jobs in 2018, bringing the total to 181,300. That’s the highest level in a decade, though total employment remains below its pre-recession level.
The average salary plus bonus of a Wall Street worker totaled $422,500 in 2017, according to the most recent available data.
DiNapoli said, “It’s too soon to say how the industry will fare in 2019, but trade tensions, a slowing global economy and greater economic uncertainty are all factors that could affect results."