Wall Street Bonuses Drop in 2022
According to a study released on Thursday by New York State’s comptroller, average Wall Street bonuses fell significantly last year to $176,700 due to weak profits and recessionary concerns. The average bonus for workers in the securities sector in New York City decreased by 26% from 2021, when it was a record $240,400, according to an annual estimate by New York state Comptroller Thomas DiNapoli.
Reasons for the Drop
In a prepared statement, DiNapoli stated that “Wall Street’s cash bonuses were expected to fall as several factors weighed on the profitability of the securities industry in 2022.”
According to the comptroller, a sharp fall in investment banking fees brought on by rising inflation, interest rates, and Russia’s invasion of Ukraine caused Wall Street’s pretax profits to drop by 56% in 2022. The bonus fund for 2022 was $33.7 billion, a 21% decrease from the record-breaking $42.7 billion in the year before.
Impact on the Economy
An estimated 22% of the state’s tax collections and 8% of the city’s tax collections are attributed to the securities industry, which also contributes significantly to state and local tax income. For the city and state to completely recover, DiNapoli stated that employment in leisure and hospitality, retail, restaurants, and construction must continue to improve.
Despite the drop in bonuses, incentives reached their pre-pandemic levels last year. While the securities industry is a significant contributor to the economy, it is not the only industry that must recover for the city and state to fully recover. Moving forward, it is important to continue to monitor the securities industry and its impact on the economy.