Wall Street awash in profits despite COVID but bleeding jobs: DiNapoli

Wall Street profits surged in the first half of 2021 thanks to record low interest rates — but the securities industry is bleeding jobs, which could spell doom for New York’s economy, according to an analysis released Thursday by the state comptroller.

Wall Street recorded its strongest first half since 2009, generating a hefty $31 billion in pre-tax earnings in the first six months of the year, the report from Comptroller Tom DiNapoli said.

The financial industry’s success has been a boon to the state’s economy as it recovers from the COVID-19 pandemic, but as interest rates are expected to rise and coronavirus-related federal stimulus dries up, DiNapoli worries the bull may stop running.

“Financial markets move in cycles, however, and profits will subside at some point,” DiNapoli said.

“As we prepare for an eventual slowdown in Wall Street’s record activity, we need to ensure New York’s Main Street, and its other vital sectors, are also recovering.”

But perhaps even more worrisome, the report warned, is the continued shedding of high-salaried Wall Street jobs — which provide substantial tax revenues to both New York state and New York City government coffers.

Employment in New York City’s securities industry declined by nearly 2 percent — or 3,600 jobs — in 2020, according to the report.

The securities industry produced one-fifth of all wages paid in New York City last year.
AP Photo/John Minchillo

And in 2021, the jobs outlook is even worse, with the industry on pace to bleed 4,900 jobs, the report said, attributing the loss of jobs amid soaring profits to advances in technology and the relocation of jobs elsewhere.

As of August, the city was home to just 17.8 percent of all securities industry jobs, the comptroller noted — a 32-year low.

By comparison, the US as a whole is projected to add 23,000 securities jobs this year.

Wall Street has long been a cash cow to Albany and City Hall coffers because of income tax revenues collected from its employees’ big-bucks salaries and bonuses.

Traders work on the floor of the New York Stock Exchange (NYSE
Employment in New York City’s securities industry declined by nearly 2 percent — or 3,600 jobs — in 2020, according to the report.
REUTERS/Brendan McDermid

Therefore, the loss of financial industry jobs to other states could end up bleeding New York governments of millions of dollars in revenues that feed the budgets and pay for public services, the comptroller’s analysis warns.

Since 2007, the industry’s average salary in New York has been the highest in the nation.

The average salary, including bonuses, for workers in the Big Apple securities industry in 2020 was $438,450 — nearly five times higher than the $92,330 average compensation for the rest of the city’s private sector, the report said.

Despite the securities industry accounting for just 5.2 percent of the city’s private-sector employment, it produced a disproportionate one-fifth of all wages paid in New York City last year, as well as 55 percent of all private-sector bonus payments.

The New York Stock Exchange
Albany’s greater reliance on personal income taxes for revenue makes it even more dependent on Wall Street for tax revenue than the city.
AP Photo/John Minchillo

It was also responsible for 14 percent of all economic activity in the city in 2020 — more than any other industry, according to the analysis.

It comprised 6.8 percent of the entire state’s economy in 2020.

In fact, Albany’s greater reliance on personal income taxes for revenue makes it even more dependent on Wall Street for tax revenue than the city, which levies a property tax.

In the fiscal year that ended in March, Wall Street accounted for 18 percent of all New York state tax collections — a total of $14.9 billion.

In addition, the state comptroller’s report pointed out that Wall Street has led the return to the office, with 29 percent of its employees returning to office workplaces — higher than the 23 percent rate for all of the city private-sector workers.

Four in 10 Wall Street workers also commute from outside of the city — the highest share of commuters of any major industry, the report said.

According to a recent report by New York City Comptroller Scott Stringer, working from home instead of at Manhattan’s gleaming skyscrapers during the pandemic could potentially cost the Big Apple $111 million in sales tax revenues alone if the trend becomes permanent.

Fewer commuters in the city means less spending at eateries and retail stores, resulting in less sales tax revenue, the report said.