Wall Street’s 2022 bonus payout is a 26% drop from the year before.
As companies and government institutions tightened their belts amid a challenging economy, many people across the income spectrum saw their finances take a plunge. The Bureau of Labor Statistics calculated that average hourly earnings were down 3.6% year-over-year in the summer.
Corporate profits also fell by 2% in the last quarter of 2022, the biggest decline observed in the last two years.
High-earning traders were also not immune to a drop to their total income in 2022. According to a new report released by New York State’s comptroller’s office, the average Wall Street bonus sat at $176,000.
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Money Going To Wall Street Bonuses Hasn’t Been This Low Since 2008
While this number may appear exorbitantly high to the average earner, it actually represents a 26% decline from 2021 and the biggest drop in the total paid out since 2008 — $33.7 billion in 2021 compared to $42.7 billion in 2022.
Dropping Wall Street profits was one factor in the lower payouts but the number is also a correction from record-high numbers seen in the two years following the outbreak of covid-19.
In 2021, the average bonus paid out totaled $240,000. This was a 20% increase from 2020 and the highest number on record.
“Wall Street’s cash bonuses were expected to fall as several factors weighed on the securities’ industry profitability in 2022,” New York State Comptroller Thomas P. DiNapoli said in a statement. “A 26% decline brings the average bonus closer to what financial employees received prior to the pandemic.”
The comptroller’s report looks solely at bonuses rather than salary, stocks and other compensation. The average Wall Street base salary was, in 2022, $516,560.
Wall Street bonuses are heavily dependent on the state of the economy and profits brought in by investment firms. Amid the war in Ukraine and the Federal Reserve‘s interest-rate hikes, Wall Street’s profits fell by 56% between 2021 and 2022.
The entire industry has 5.1% fewer jobs than it did in 2000 but, according to the comptroller’s office, one in 11 jobs in New York City is “either directly or indirectly associated with […] securities.”
‘Our Economic Recovery Does Not Depend Solely On Wall Street’
The report also says that taxes from the securities industry brought in $22.9 billion in state taxes last year. This is 22% of the state’s total taxes. The city of New York, meanwhile, brought in $5.4 billion or 8% of total city tax collections.
“While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street,” DiNapoli said. “Employment in leisure and hospitality, retail, restaurants and construction must continue to improve for the city and state to fully recover.”
Though the numbers reflect only 2022, 2023 is so far shaping out to be just as challenging a year — by the end of the first quarter, the banking world was thrown into disarray amid SVB’s and Signature Bank’s collapse as well as UBS (UBS) – Get Free Report‘s acquisition of Credit Suisse.
“Wall Street was responsible for 16% of all economic activity in the city in 2021, and thus the financial sector’s ability to generate revenue and turn profit is critically important to New York,” the comptroller’s office writes.