Although profits continue to grow on a still rocky Wall Street, jobs are declining along with tax revenue that’s vital to the state and New York City, according to a key annual earnings and employment report released Tuesday by New York state Comptroller Thomas DiNapoli.
DiNapoli said that although profits this year are projected to reach $15 billion, or twice the level of 2011, the “new normal” hasn’t yet been found. The clearest evidence: The employee bonus pool critical to state and city budgets is expected to decline for the second year in a row.
“The securities industry is still grappling with the fallout from the financial crisis, new regulations and slow economic recovery,” DiNapoli said. “How the industry negotiates this continued uncertainty could impact profitability and the finances of New York City and New York state.”
High on that list of uncertainties is the global economy. On Tuesday, stocks continued a slide following another weak forecast of global economic growth and concern that a downturn afflicting developing nations is spreading.
Still, New York employs by far the most securities workers in the United States, with 1.5 times as many of the jobs as in second-place California, and rocky times continue on Wall Street.
The outsized impact of the industry is clearly felt in the anxious weeks before Wall Street bonuses are announced at the end of each year. The six- and seven-figure bonuses are taxed as income and add up to so much revenue that state budget crafting has been delayed to await better forecasts.
DiNapoli is even more pessimistic now than in his February report. Back then, the Democrat said the cash bonus pool for securities workers declined by 13.5 percent to $19.7 billion. The uncertainty is compounded by the option of deferring the bonus or taking it in other than cash.
The average salary including bonuses on Wall Street is $363,000, according to DiNapoli’s report.
The impact is being felt well beyond lower Manhattan.
The financial district led past economic recoveries for the city and state. But the city’s recovery this time is led by other industries, with lower paying jobs. Wall Street tax revenue that once accounted for 20 percent of state revenues now accounts for 14 percent. The revenue that once provided 12 percent of the city budget now provides 7 percent.
Employment has been up and down during the uneven recovery. But DiNapoli sees a sharp decline in recent months. In August, the securities industry employed 168,700 people, which was 4,800 fewer than in May.
Overall, the industry lost a net 1,200 jobs this year and DiNapoli expects more job losses through the year.
“The securities industry remains in transition and volatility in profits and employment show that we have not yet reached the new normal,” DiNapoli said.
Copyright 2012 The Associated Press.