Average Wall Street bonus plunges 26% to $234,500

New York – The average Wall Street bonus plummeted 26 per cent last year as a slump in dealmaking and banks’ efforts to contain costs weighed on compensation.

The industrywide bonus pool sank to US$33.7 billion last year, down 21 per cent from 2021, according to an analysis by New York State Comptroller Thomas DiNapoli. This meant the typical bonus paid to employees in New York’s securities industry fell to US$176,700 (US$234,500), the lowest since 2019 and the biggest percentage decline since the global financial crisis.

“A 26 per cent decline brings the average bonus closer to what financial employees received prior to the pandemic,” Mr DiNapoli said in a statement. “While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street.”

The industrywide deal slump and subsequent hit to banker bonuses threaten New York City’s already uncertain pandemic recovery, with rising interest rates quelling demand for real estate after remote work arrangements dented the commercial property market.

The comptroller’s estimate is based on trends in personal income tax withholdings and includes cash bonuses for work in 2022 as well as bonuses deferred from prior years that have been cashed in. It does not take into account stock options or other types of deferred compensation.

This year’s analysis stands in stark contrast to Mr DiNapoli’s report from just one year ago when Wall Street’s biggest firms were locked in a vicious bidding war for talent, sending average bonuses to a record level. The slump in compensation is bad news for legions of bankers and traders, whose annual bonuses can stretch into millions of dollars and are often multiples of their annual salary.

It comes as investment banking fees across the five biggest Wall Street banks plummeted 49 per cent in 2022, according to Bloomberg Intelligence, as Russia’s invasion of Ukraine roiled markets and damped corporate confidence. The Federal Reserve’s

aggressive push to contain inflation by raising interest rates

also crimped activity in capital markets for much of the year.

For the first time since before the pandemic, New York’s securities industry had added jobs, Mr DiNapoli found, with total employment across the industry rising to 190,800 in 2022, the highest level in more than two decades.

Some financial firms sought to move employees to lower-cost locations, and Mr DiNapoli found that New York’s share of the securities industry continued to slip. Still, in New York City, one in 11 jobs is directly or indirectly tied to the sector. BLOOMBERG