February 27, 2011
NY: Wall Street 2010 bonuses estimated at $20.8B
ALBANY, N.Y. (AP) — Wall Street paid an estimated $20.8 billion in bonuses to New York City securities industry employees for 2010, the first full year after the national recession officially ended, New York state Comptroller Thomas DiNapoli said Wednesday.
The number reflects an industry shift toward deferred compensation and higher base salaries, DiNapoli said. "Cash bonuses are down, but that's not an indication of weakness on Wall Street," he said.
The estimate of bonuses is down 8 percent from $22.5 billion actually paid in 2009. But it is $500 million more than DiNapoli's bonus estimate a year ago. Bonuses extended into March and April last year, beyond the traditional season.
"We're not expecting it to creep up as much as the previous year," comptroller's spokesman Eric Sumberg said.
The estimate was about one–third less than the 2007 bonuses before the financial crisis. In 2008, Wall Street firms gave out $17.4 billion in bonuses even though that year was one of its worst.
The comptroller's report said Wall Street profits of broker–dealer operations of New York Stock Exchange member firms totaled $27.6 billion in 2010, second only to $61.4 billion in 2009 when the industry benefited from massive federal bailouts and low interest rates.
"This is not going to save us from budget shortfalls, but it's not going to make a bad situation worse," DiNapoli said. The state government is facing a projected $10 billion budget deficit in the coming fiscal year, while tax collections from Wall Street have declined from about 20 percent of the state's total revenues to about 13 percent.
"The industry's greater emphasis on deferred compensation will hold down tax collections this year, but the state and the city will benefit in future years when taxes are paid on this deferred compensation," DiNapoli said. He said "a more stable and less volatile securities industry" is in everybody's best interests.
Wages paid to workers in the securities industry in New York City in the first half of 2010 were 21.9 percent higher than in the previous year, reflecting lagged cash bonuses, higher base salaries and deferred compensation that was paid.
Bonuses paid by New York City–based securities firms to employees located elsewhere were not included in the estimate.
While the industry lost 30,700 jobs during the recession, a decline of 16 percent, or 3.5 times the rate of total job loss in the city, it added 3,600 jobs between August 2010 and December 2010.