Over the past 18 months, Wall Street did well despite a global pandemic, market volatility, and the loss of 3,600 jobs.
Grygo is the chief content officer for FTF & FTF News.
Securities trading firms in New York City have been doing well for the past 18 months despite the multiple challenges caused by a global pandemic, the ongoing market volatility, and the loss of 3,600 jobs, says New York State Comptroller Thomas P. DiNapoli in his annual report on firms that constitute Wall Street.
“Wall Street’s run of prosperity extended into the first half of 2021 with $31 billion in pre-tax earnings, beating 2020’s outsized first half profits of $27.6 billion, even as job losses accelerated in New York City’s securities industry,” according to DiNapoli’s report.
“Securities industry performance is traditionally measured by the pretax profits of the broker/dealer operations of New York Stock Exchange (NYSE) member firms. There are now about 125 member firms, down from more than 200 in 2007, before the global financial crisis,” the report finds.
Despite the boost in earnings, employment in NYC’s securities industry dropped “by nearly 2 percent (or 3,600 jobs) in 2020 to 179,900 jobs. The loss of industry jobs in the city, at a time when profits are soaring, may be attributed to a combination of advances in technology and the relocation of jobs,” according to the report. “In 2021, job losses appear to have accelerated with the industry on pace to lose 4,900 jobs.”
Thomas P. DiNapoli
Even with the staff cuts, NYC and New York state maintain an albeit tenuous hold on the title of “the capital of the securities industry,” according to the report. “Its statewide 196,800 securities jobs are double those of second-ranked California. New York’s share of those jobs continues to decline, however, and it could be losing jobs to other parts of the country as industry employment grows in other states. As of August, the city was home to 17.8 percent of all securities industry jobs, a 32-year low.”
Some of the other statistics and predictions are:
- “The average salary (including bonus) for employees of the New York City securities industry in 2020 was $438,450, a 7.8 percent increase over 2019’s $406,854 average salary.”
- “Wall Street salaries continued to be higher than any other industry and remained nearly five times higher than the $92,330 average compensation for the rest of the city’s private sector.”
- “The average bonuses paid out to NYC securities industry workers in 2020 grew by 10 percent to $184,000 and made up 41 percent of wages. Based on the industry’s increased set asides for compensation this year, the city forecast a 6.5 percent rise in the average bonus for 2021, which would raise bonuses above the post-recession record paid out in 2017;”
- And Wall Street “led the return to the office with a higher share of employees (29 percent) back at their workplaces (either hybrid or full-time) compared to Manhattan office workers overall (23 percent), in August 2021 according to survey data from the Partnership for New York City.”
The gains that have continued into the first half of 2021 “were driven by some of the same factors that boosted profits last year: record low interest rates kept expenses down, strong trading volume, record earnings in subsectors like global equities — which had the strongest six-month period since 1980 — and record revenues from underwriting and account supervision fees and investment advisory fees,” according to the report.
(Photo by Patrick Weissenberger via Unsplash.)
Looking forward to the third quarter of 2021, the initial results “show continued strength, but there is risk that the industry’s profit growth will slow as interest rates rise and make borrowing more expensive and federal monetary stimulus ebbs,” according to the report.
“It remains unclear if Wall Street’s second half will maintain a trajectory that raises year-end profits above 2020’s pre-tax revenue of $50.9 billion or reaches the record $61.4 billion the industry generated in 2009. The city’s June financial plan forecast Wall St.’s 2021 profits returning to pre-2020 levels, which would be equivalent to a 46 percent drop and is unlikely given strong first half results,” according to the report.
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