ALBANY – The total amount of bonuses paid to Wall Street executives rose 8 percent last year, and that is good news not just for the recipients but to New York state.
Taxes on the $20 billion in bonuses will help balance this year’s budget, state Comptroller Thomas DiNapoli reported today.
But in his closely watched annual examination of bonuses paid to financial services sector workers, DiNapoli warned that the numbers were partly skewed by how and when securities firms paid bonuses to its executives. He again sounded the alarms that the state should rely so heavily on Wall Street to bail out the state budget as it has in the past.
The profits of dealers and brokers of the New York Stock Exchange member firms totaled an estimated $24 billion in 2012. That is up three times from the 2011 level, driven in part by healthier Wall Street returns and continued downsizing of the securities industry in New York City.
The average cash bonus, above and beyond salary, paid to Wall Street executives was $121,900.
“It’s great work if you can get it," DiNapoli said.
For some New Yorkers, the issue of fat bonuses for Wall Street executives may produce a bit of not-so-positive emotions, especially in an economy that is still sour in many parts of the nation and memories of Wall Street’s excesses before the meltdown.
But in New York, taxes on the bonuses make up an important part of the annual state budget, providing money to pay for everything from education and health care to the parks department.
“It’s no secret when Wall Street is strong all New Yorkers benefit," DiNapoli said.
Before the financial meltdown, Wall Street bonuses accounted for about 20 percent of all revenues the state received in 2007.
That number now stands at about 14 percent of revenues.
The comptroller’s report estimated the total bonus pool rose 8 percent last year while the average per worker bonus went up 9 percent. The average salaries and bonuses paid to workers in the securities industry in New York totaled $362,900 in 2011, the most recent year for which both statistics are available. That is five times more than the average private sector job salary in the city, the comptroller said.
While the numbers suggest financial health on Wall Street, there are some worrisome trends. Since Wall Street’s meltdown, the securities industry in New York lost 28,000 jobs, and gained back only 8,500. That is a shift from the past, when high-paying Wall Street jobs helped lift New York state out of recessions. Now, most of the new hiring is being seen in lower-paying sectors.
The comptroller noted New York City – a major driver of revenues for the state budget – has gained back more jobs than lost during the meltdown, but the securities industry has gotten back only 30 percent of the lost jobs.
For Gov. Andrew Cuomo and lawmakers, the good news in today’s estimate is that they will not have to adjust overall revenue forecasts as they try to put together a new 2013 budget in the next month, DiNapoli said.
New York state has more securities industry jobs than any other state and nearly three times that of California, the state with the second highest number of such jobs.