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Wall Street Employment Rebounds as Earnings Continue to Buoy New York’s Economy
Wall Street is holding its own in New York, with employment in the financial industries near its highest level since 2000, average wages that tower of any other sector and soaring profits this year that will translate into a much needed tax revenue windfall next year.
While other industries like tech have become much more important in the economy, Wall Street remains the most important sector in the city and state.
“The preliminaries for the first half of this year are very strong and we are looking at a pretty good year that will translate into higher bonuses next year,” said state Comptroller Tom DiNapoli, who Wednesday issues his office’s annual comprehensive report on the securities industry.
Employment in 2023 in the city reached 198,500, the highest total since 2000. There has been some attrition this year, with preliminary figures through August showing a loss of 3,400 positions, though employment remains well above the pre-pandemic level.
The economic impact of Wall Street results from its extraordinarily high compensation and profits.
Average pay on Wall Street last year was $471,370, which is five times the $98,700 average compensation in the rest of the private sector. It also outpaces the No. 2 sector — information services, at $284,880 — by 67%.
High pay translates into a lot of tax revenue. The comptroller estimates that Wall Street accounted for $19.4 billion in state tax revenue, or just about 20% of the total. The city took in $5.1 billion, or about 10% of all collections.
As impressive as those numbers are, they represent a decline from 2021 and 2022. Since Wall Street firms borrow billions of dollars to run their business, profits soared in 2020 and 2021 when the Federal Reserve slashed interest rates and fell in 2022 and 2023 as the Fed raised rates.
For example, the average wage has declined for two years in a row from its peak of more than $500,000 in 2021, primarily because of a drop in year-end bonuses, which account for a significant percentage of annual compensation. As a result, state tax revenues from the securities industry fell by a third from their recent peak and city revenues by one-fifth.
But with interest rates coming down and the stock market near a record high, Wall Street profits are bouncing back. The comptroller estimates that full year profits will surge to $47 billion in 2024, which will translate to much bigger bonuses for this year and another surge in tax revenues early next year.
“We are seeing trends to pre-pandemic levels or profits and that suggests we are back at a point where we will see a sustainable level of strong profits,” DiNapoli said.
Yet financial firms see other locations in the U.S. as more attractive when they want to expand. New York City’s share of all Wall Street jobs has declined every year since 2008 and stands at 17.4% — compared with 33% in 1990.
Many of those jobs are winding up in Dallas, Texas. Fidelity, Schwab, Wells Fargo, Bank of America and Goldman Sachs have all established major operations there. Goldman Sachs’ new tower will house 5,000 people when it opens in 2027, its largest office outside New York.
Finance jobs in Dallas have grown 16% since January 2020. New York finance positions increased by only 8%. (The surge is so recent, the Bureau of Labor Statistics has yet to break out financial sector employment in the Dallas area.)
Even within New York, the number of tech jobs surpassed those on Wall Street in 2022.
Still, a huge gap remains between New York and cities with growing finance sectors. The 373,000 finance jobs in New York City are almost one-third greater than those in the Dallas metro area.
“We don’t see Dallas or Miami as competitors to NYC as a global financial capital,” said Kathy Wylde, chief executive of the trade association Partnership for New York City, which includes all the major securities firms. “The concentration in NYC of top financial experts from all sectors, including legal, tech, accounting, real estate, and marketing talent, is just too dense for either city to match in the foreseeable future.”
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