The securities industry in New York earned profits of $9.3 billion in the first half of 2016, but bonuses could decline this year, according to a report released last week by New York State Comptroller Thomas DiNapoli.
The performance in the first six months puts it on course for higher profits than last year and could end three years of consecutive declines.
“Wall Street had solid profits in the first six months of the year and, barring a major setback, profits are on track to surpass last year,” DiNapoli said. “While the securities industry in New York City is smaller than before the financial crisis, it remains critical to our local economy and one of the largest contributors to city and state tax revenues. New York City continues to be the global capital of finance.”
Last year, the securities industry got off to a strong start, but it reported a small loss in the fourth quarter, the first quarterly loss since 2011. In total, the industry earned $14.3 billion in 2015, the third year of lower profits. Although the industry earned 18 percent less in the first half of 2016 than last year, it is still a good start by historical measures and profits are on track to surpass last year’s level. Industry performance is traditionally measured by the pretax profits of the broker/dealer operations of New York Stock Exchange (NYSE) member firms.
The securities industry in New York City added 2,400 jobs in 2014 and 4,500 in 2015, but job growth has slowed in 2016. Since March 2016, the industry has begun to shed jobs. In August 2016, there were 172,400 jobs (seasonally adjusted) in the securities industry in New York City, 2,600 fewer than in March 2016. Despite the recent decline, the industry may still post a small employment gain in 2016.
In March 2016, DiNapoli reported that the average bonus for securities industry employees in New York City was $146,200 in 2015, which was 9 percent lower than the year before. So far, the amount set aside by the member firms of the NYSE for compensation in the first half of 2016 was 7 percent less than last year, which suggests that 2016 bonuses could decline for the third consecutive year.
The average salary (including bonuses) of securities industry employees in the city declined by 4 percent in 2015 to $388,000, but it was still the highest by far of any major industry in the city. While the disparity in pay has narrowed since the financial crisis, the average salary in the securities industry was still five times higher in 2015 than the average salary of $74,100 in the rest of the city’s private sector.
The presence of the securities industry in New York City’s economy has changed since the financial crisis. The industry is smaller after shedding 8 percent of its jobs between 2007 and 2015, while the rest of the city’s private sector has grown by 17 percent. Between 1990 and 2007, the industry accounted for 39 percent of all private sector wage growth, but it accounted for just 11 percent between 2010 and 2015.
The securities industry has also moved beyond its traditional home in Lower Manhattan after the terrorist attacks on Sept. 11, 2001. In 2000, half of all industry jobs were located in Lower Manhattan, but the share fell to 19 percent by 2015. Two-thirds of the jobs are now located in Midtown Manhattan.
DiNapoli’s report also found:
- The securities industry accounted for 18.5 percent of state tax collections in state fiscal year 2015-2016 and 7 percent of city tax collections in the city’s fiscal year 2016;
- Even though the securities industry accounted for less than 5 percent of the jobs in New York City in 2015, it accounted for 21 percent of all private sector wages;
- The Comptroller estimates that 1 in 10 jobs in New York City and 1 in 16 jobs in New York state are either directly or indirectly associated with the securities industry;
- In 2015, 23 percent of securities industry workers in New York City earned more than $250,000, compared with 2 percent in the rest of the city’s work force;
- The securities industry was responsible for 6 percent of the high-paying jobs added in New York City between 2010 and 2015, compared with one-quarter between 1990 and 2007;
- Between 2000 and 2015, securities industry employment in Lower Manhattan declined by 60,100 jobs (65 percent) to 33,000. During the same period, industry employment in Midtown Manhattan increased by 42,400 jobs (59 percent) to 113,700;
- New York City accounted for 19 percent of the nation’s securities industry jobs in 2015, down from 32 percent in 1990;
- New York City accounted for 89 percent of all securities industry jobs in New York state, a share that has declined only slightly over the past two decades;
- New York state has more than twice as many securities industry jobs as California, the second ranked state; and
- The average salary of securities industry jobs in the city’s suburbs has been growing. In 2015, the average salary on Long Island was $352,100, more than twice the average 10 years earlier. In Westchester, the average salary grew by 70 percent to $263,300.