The slight decrease in the average bonus is not unexpected. Wall Street’s earnings last year were mixed, and merger and acquisition activity was lackluster. “Wall Street’s profits were up 1.8% in 2023, but firms have taken a more cautious approach to compensation and more employees have joined the securities industry, which accounts for the slight decline in the average bonus,” DiNapoli stated.
For perspective, the average Wall Street bonus, which supplements the nearly half-a-million-dollar average Wall Street salary, was almost 2.5 times higher than the median U.S. household income of $74,580, according to 2022 Census data.
Wall Street bonuses and employment in the securities industry are crucial revenue streams for the New York State and New York City economies, recently accounting for 27% of the state’s tax collections and 7% of city tax revenue, as per DiNapoli’s office.
The securities industry in the city employed approximately 198,500 people last year, an increase from 191,600 the previous year. DiNapoli estimates that 1 in 11 jobs in the city are either directly or indirectly tied to the industry.
The total estimated bonus pool for 2023 was slightly lower than the previous year, projected to generate $4 million less in state income tax revenue and $2 million less in city revenue compared to bonuses in 2022.
Despite this, DiNapoli noted, “While these bonuses affect income tax revenues for the state and city, both budgeted for larger declines so the impact on projected revenues should be limited.”
It is important to note that the comptroller’s figures only reflect bonuses paid to securities industry employees working for firms based in New York City.
Beyond tax revenue contributions, Wall Street workers significantly boost the local economy. DiNapoli highlighted that more financial services employees (65%) are working in-office on any given day compared to 58% in other city industries, as of September 2023. Moreover, securities industry employees use the subway more than other city workers. Overall, he estimates Wall Street is responsible for roughly 14% of the city’s economic activity.
While this is vital, the city and state encompass much more than Wall Street alone. “The securities industry’s continued strength should not overshadow the broader economic picture in New York, where we need all sectors to enjoy full recovery from the pandemic,” DiNapoli emphasized.
