Slammed by the European debt debacle and turbulence in the financial markets, the New York securities industry could slash another 10,000 jobs by the end of next year, a new report from the New York State Comptroller estimated on Tuesday.
Continue Reading Below
The potential job cuts and shrinking bonuses are likely be very painful for the New York City and New York State economies, which rely heavily on the financial services industry.
In his 2011 annual report on the securities industry, New York State Comptroller Thomas DiNapoli said employers could cut nearly 10,000 jobs by the end of 2012 -- bringing total industry job losses to 32,000 since January 2008.
The securities industry has lost 4,100 jobs through August, wiping out many of the 9,900 job gains between January 2010 and April 2011, the Office of the State Comptroller report said.
“The securities industry had a strong start to 2011, but its prospects have cooled considerably for the second half of this year,” DiNapoli said a statement. “It now seems likely that profits will fall sharply, job losses will continue, and bonuses will be smaller than last year. These developments will have a rippling effect through the economy and adversely impact State and City tax collections.”
According to the OSC, securities-related activities accounted for 14% of New York State’s tax revenues and nearly 7% of New York City’s. One in eight jobs in the city and 1 in 13 are tied to the industry.
Moreover, the report said each job gained or lost in the industry leads to the creation or loss of almost two additional jobs in other industries in New York City.
“As we know, when Wall Street slows, New York City and New York State’s budgets feel the impact and that is a concern,” DiNapoli said.
Investment banks are forecasted to report big declines in third-quarter earnings in the coming weeks due to big trading losses in the financial markets. On the other hand, retail banks appear to have weathered the storm better.
Profits for member firms of the New York Stock Exchange are seen tumbling to $18 billion in 2011, marking a one-third decline from the year before.
The OSC said the expected new job cuts are due to the current debt crisis in Europe, the “sluggish” domestic economy, turbulence in the stock markets and regulatory changes aimed at forcing banks to be less risky.
Like many analysts, the OSC said cash bonuses are expected to shrink this year, marking the second-straight year of declines. On the other hand, it said the average salary in the securities industry jumped by 16.1% last year to $361,330, compared with an average salary of $66,120 in the private sector.