Wall Street Recession Strategy: Fire People and Give Survivors a Raise
Wall Street is a place where the strong survive (and keep getting raises), while the weak get laid off, even as markets grow stronger.
Over the last two years, New York’s financial industry has eliminated thousands of jobs. During this same time, compensation for those remaining employed has continued to climb, and may soon break a record, according to the New York State comptroller.
Total compensation on Wall Street in 2011 increased 4%, totaling more than $60 billion. This amount was the third highest ever, topped only by the pre-financial crisis years of 2007 and 2008.
Almost half of Wall Street revenue goes to salaries and other compensation. The average annual compensation for securities industry employees in New York has gone up 16.6% in two years to $362,950.
On the one hand, giving out higher bonuses would be in line with the industry’s revenue growth. After last year yielded $7.7 billion in earnings (which the state comptroller deemed “disappointing”), the first half of this year has produced $10.5 billion, and 2012 could end up making $15 billion.
Yet, despite firms making more money, they’re still laying people off—1,200 so far in 2012—this after shedding 20,000 positions since 2007. Bank of America alone dropped 12,624 employees over the past year.
To Learn More:
A Bigger Paycheck on Wall Street (by Susanne Craig and Ben Protess, New York Times)
The Securities Industry in New York City (New York State Comptroller) (pdf)
Wall Street CEOs Got 20% Raises Last Year…Did You? (by Noel Brinkerhoff, AllGov)
Income Gulf between CEOs and Workers 11 Times Greater than in 1965 (by Matt Bewig, AllGov)
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