Wall Street bonuses fell 26% in 2022 amid rising interest rates and fears of a recession.
According to a report released Thursday from New York State Comptroller Thomas DiNapoli, bonuses dropped to an average $176,700, closer to what financial employees received prior to the COVID-19 pandemic.
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“While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street,” DiNapoli said. “Employment in leisure and hospitality, retail, restaurants and construction must continue to improve for the city and state to fully recover.”
The total 2022 bonus pool for New York City securities industry workers shrank by 21% to $33.7 billion during the bonus season that traditionally spans December to March, much lower than the previous year’s record of $42.7 billion, and the largest drop since the Great Recession.
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Meanwhile, sector employment in 2022 was 5.1% lower than in 2000, which represented the peak for securities employment in the city. DiNapoli estimates that 1 in 11 jobs in the city are either directly or indirectly associated with the securities industry.
Employment in the city’s securities industry came in at about 190,800 people in 2022, the highest level in more than two decades.
Also in 2022, pretax profits for Wall Street decreased 56% compared with the previous year due to a slump in investment banking fees that was driven by hefty interest rate hikes by the U.S. Federal Reserve, inflation and geopolitical turmoil stemming from Russia’s invasion of Ukraine.
The securities industry accounted for 22%, or $22.9 billion, of state tax collections in the 2022 fiscal year and 8%, or $5.4 billion, of city tax collections.
Reuters contributed to this report.