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The average Wall Street bonus dropped by 26% to $176,700 in 2022 from a record in 2021, according to a study released on Thursday by New York State Comptroller Thomas DiNapoli.
After a record-breaking 2021, the economy deteriorated last year and deal markets stagnated, which hurt banks’ earnings.
“A 26% decline brings the average bonus closer to what financial employees received before the pandemic,” DiNapoli said.
The total 2022 bonus pool for employees of the New York City securities industry decreased by 21% to $33.7 billion during the traditional bonus season that runs from December to March. This is the largest decrease since the Great Recession and significantly less than the previous year’s record of $42.7 billion.
Employment in the sector fell by 5.1% between 2022 and 2000, the year that marked the city’s employment peak in the securities industry. According to DiNapoli, the securities business is either directly or indirectly involved in one out of every eleven jobs in the city.
Over 190,800 individuals were employed in the city’s securities industry at its peak in 2022, the largest number in more than 20 years.
DiNapoli predicts that in comparison to the prior year, the bonuses in the securities business in New York City will most certainly result in $457 million fewer in state income tax receipts and $208 million less for the city.
Pretax profits for Wall Street fell 56% in 2022 compared to the previous year because of a decline in investment banking fees brought on by the U.S. Federal Reserve’s sharp increases in interest rates, inflation, and geopolitical unrest brought on by Russia’s invasion of Ukraine.
The securities industry accounted for 22%, or $22.9 billion, of state tax collections in the 2022 fiscal year and 8%, or $5.4 billion, of city tax collections.
Profits increased in 2021 as lucrative markets for IPOs, mergers, and acquisitions resulted in record fees.
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