The average bonus paid to employees in the New York City securities industry rose 3% last year to $164,100, but the coronavirus-induced stock market and economic decline will reduce such payments in 2020, Thomas DiNapoli, the New York state comptroller, said Tuesday.
"The securities industry had a good year in 2019, but the serious damage that COVID-19 is inflicting on financial markets and the global economy will sharply reduce industry profits this year," Mr. DiNapoli said in a news release.
"Recessions and economic shocks have historically damaged industry profitability, dimming the prospects for 2020," the news release said. After the 9/11 terrorist attacks, profits fell by 50% in 2001.
"The securities industry is integral to New York state's and New York City's economies, as a source of tax revenue and job creator in other industries," Mr. DiNapoli said. "The state and the city need to prepare for the severe budgetary implications of the coronavirus crisis."
The securities industry accounts for 20% of private sector wages in New York City, even though it represents less than 5% of private sector employment, the news release said. "Nearly 1 in 10 jobs in the city are either directly or indirectly associated with the securities industry," according to the comptroller's office estimates.
The news release said Mr. DiNapoli estimated that the securities industry accounted for 17%, or $13.2 billion, of state tax collections for the state fiscal year that ended March 31, 2019.
He estimated that the securities industry accounted for 6%, or $3.7 billion, of New York City tax collections for the city fiscal year that ended June 30.
After a 12% drop in 2018, Mr. DiNapoli estimates that the 2019 bonus pool for New York City securities industry workers increased by 3% to $29.3 billion during the traditional December-March bonus season, the news release said.
Pretax profits in 2019 for the broker/dealer operations of New York Stock Exchange member firms — the traditional measure of securities industry profits — rose 2.8% to $28.1 billion.
"It was the fourth consecutive year of growth in profits, which have nearly doubled since 2015," the news release said.
In 2019, employment in New York City's securities industry increased by 2,100 jobs to 182,100. The industry has added jobs in five of the past six years, increasing employment by a net total of 16,200 jobs during this period, the news release said.
However, securities industry employment is still 4% below the total before the 2008 financial crisis, the news release said.
The comptroller releases an annual estimate of bonuses paid during the traditional December through March bonus season to securities industry employees who work in New York City. Bonuses paid by firms to their employees located outside of New York City — domestic and international locations — are excluded.
The comptroller's estimate is based on personal income tax withholding trends and includes cash bonuses for the current year and bonuses deferred from prior years that have been cashed in. The estimate does not include stock options or other forms of deferred compensation for which taxes have not been withheld.
