Eugene Grygo, Chief Content Editor, FTF News
Before we close the books on this year, I think we should review some of the statistical information that the state of New York’s Office of the State Comptroller (OSC) gathered about the windfalls that have been boosting the bottom line for Wall Street firms. The information, made public last month, serves as a good predictor for the kind of bonus season Wall Street will have next year.
The OSC annually gathers data on the bonuses of truly Wall Street firms as the information stems from securities industry positions based in New York City.
Despite the trend of pushing back on bonuses after the Great Recession, they “remain an important part of the compensation packages paid to securities industry employees,” according to the OSC’s findings.
In fact, researchers say that “bonuses account for about one-third of the average salary of industry employees working in New York City. … As such, most of the resources that are being set aside for performance-related compensation during 2017 will be paid in January through March of 2018.”
The bonus season for next year may benefit from “a very strong start in 2017, with profits of $12.3 billion in the first half, 33 percent higher than one year earlier,” according to the OSC. “Revenue from trading and underwriting rose 29 percent on the strength of the financial markets. Although trading revenue is easing, profits will likely exceed last year’s level of $17.3 billion, barring a major setback. This would be the second consecutive year of higher profits, following three years of lower profits.”
Another good sign is that the “amount set aside by the industry for compensation in the first half of the year was 3.8 percent higher than one year earlier,” according to the report. “This suggests bonuses could be higher than last year. After a weak start, job growth in the securities industry in New York City has strengthened and is now on track for a small gain in 2017.”
Some of the other highlights from the OSC report are:
- The bonus pool paid to New York City’s securities industry employees in 2016 rose by two percent to $23.9 billion, “the first increase in three years;”
- In 2016, the average bonus was $138,210, a one percent increase over 2015. “The average bonus rose at a slower rate than the bonus pool because the pool was shared by a larger number of employees than in the previous year,” according to the report;
- The “average salary” for a person working on Wall Street “was more than five times higher than the average in the rest of the City’s private sector ($74,800);”
- The securities industry represents “one-fifth of private sector wages even though it accounted for less than 5 percent of the jobs;”
- During 2016, more than one-third, 38 percent of those working in the securities industry “commuted from outside of the City, almost twice the citywide share;”
- The report finds that nearly 25 percent of “the employees in the securities industry in the City earned more than $250,000, compared with one-tenth of the industry in the rest of the nation;”
- One-third of the employees in the securities industry of New York City were immigrants;
- And for the previous fiscal year, the securities industry “accounted for18 percent of state tax revenues and six percent of City tax revenues.”
While it’s unwise to make predictions, it’s fair to say that Wall Street could be heading toward a big, fat bonus season in 2018.
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