State Comptroller Thomas P. DiNapoli said an estimated $33.7 billion in...

State Comptroller Thomas P. DiNapoli said an estimated $33.7 billion in Wall Street bonuses were paid between December and this month for work performed in 2022, compared with a record $42.7 billion in bonuses for 2021. Credit: Jeff Bachner

Bonuses earned last year by Wall Street employees fell 26% to $176,700 on average as rising interest rates and fears of a recession reduced the fees collected by securities firms, according to a report released on Thursday by state Comptroller Thomas P. DiNapoli.

He said an estimated $33.7 billion in bonuses were paid between December and this month for work performed in 2022. That compared with a record $42.7 billion in bonuses for 2021.

The year-over-year decline of 21% in the total paid out was the largest since the 2007-09 recession. It also represents a near reversal of the gains seen in 2020 and 2021, when the economy also was briefly in recession due to the coronavirus but the stock markets still soared.

“A 26% decline [between 2021 and 2022] brings the average bonus closer to what financial employees received prior to the pandemic,” said DiNapoli, a Democrat from Great Neck Plaza. “While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street.”

DiNapoli cited important sectors of the metropolitan-area and state economies — construction, retail, restaurants and the tourism sector — that have yet to fully bounce back to their pre-pandemic level. They "must continue to improve for the city and state to fully recover," he said.

Securities industry bonuses typically boost the Long Island economy because they go toward the purchase of second homes on the East End, high-end automobiles, boats and other luxury items, and private-school tuition for children.

About 20% of Island residents are employed by New York City-based firms, 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.

"A robust financial services industry is a cornerstone of New York's economic health and propels commercial activity, which means smaller bonuses will result in reduced tax revenues and less spending on Long Island where many of these employees live," said Matt Cohen, CEO and president of the LIA.

Taxes on the securities industry, including on employee salaries and bonuses plus business taxes, produce about 20% of state government revenue, according to the comptroller's report.

DiNapoli projected that state tax collections from Wall Street will be $457 million less than the $22.9 billion collected in the 2021-22 fiscal year.

However, he said Gov. Kathy Hochul factored in the revenue decline in her proposed 2023-24 budget.

The bonus data is only for securities-industry employees assigned to work in New York City and doesn't include stock options and other deferred compensation for which taxes haven't been paid. Not all workers receive a bonus.

The industry employed 190,800 in the city last year, an increase of 10,500 from 2021, and the highest level in more than two decades, according to the comptroller's report.

Pre-tax profits for one segment of the sector — stock brokerages that are New York Stock Exchange members — fell 56% last year to $25.8 billion.

Still, Wall Street employees earn far more than others in the private sector, said Sarah Anderson, global economy director at the liberal think-tank Institute for Policy Studies in Washington.

"Since 2008, the average Wall Street bonus has climbed by more than 75 percent, compared to just a 54 percent increase in the average earnings of all private sector workers" nationwide, she said. The 2022 bonus payments are "on top of base salaries, which averaged $516,560 for New York securities-industry employees in 2021."

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