Wall Street 2011 Bonuses Lowest since 2008 But Still Exceed GDP Of Paraguay
Wall Street bonuses for 2011 were $19.7 billion, which reflects a decrease of 14% from 2010 and is the lowest since 2008. That works out to an average $121,000 bonus per employee.
The decrease was due to significant reductions in profits that resulted from fears about the financial crisis in Europe. There were also 4,300 job cuts in the industry in 2011. As a comparative, bonuses in 2006 were $34.3 billion, which reflected their peak. Wall Street executives are predicting that the slow downs are temporary.
“Cash bonuses were down in 2011, reflecting a difficult year on Wall Street,” Thomas DiNapoli, New York Comptroller, said. “Profits were down sharply and securities firms in New York City resumed downsizing in the second half of the year. The securities industry, which is a critical component of the economies of New York City and New York State, faces continued challenges as it works through the fallout from the financial crisis and adjusts to regulatory reforms.”
When you consider that the reduced bonus pool exceeds the GDP of 90 small countries including Paraguay, Estonia, Iceland and Jamaica it is still a staggering amount.
The bonus and employee reductions also impacted tax revenue. Before the start of the financial crisis, business and personal income tax collections from Wall Street related activities accounted for up to 20 percent of New York State tax revenues, but that contribution declined to 14 percent last year. Wall Street’s contribution to the City’s tax collections has declined from 13 percent of City tax revenues to less than 7 percent.
The financial data is based on projections reported by the Office of the New York State Comptroller.