And individual bankers continue to reap the rewards: Case in point, the NYS report revealed – amid a welter of coverage surrounding the 10th anniversary of the Lehman collapse – that the the average compensation for Wall Street employees climbed 13% last year to $422,500 last year. That’s the highest (inflation-adjusted) level since Lehman went belly-up in 2008, ushering the most acute phase of the financial crisis.
Financial services professionals still enjoy a higher average compensation than any other industry in New York State. Taxes on their compensation account for more than one-fifth of private-sector wages paid out in the state last year, despite employing only 5% of the state’s workers. And while the highest salaries were paid to workers toiling away in Manhattan skyscrapers, compensation for bankers based out on Long Island were nearly as high as their colleagues down town.
The increase in total comp was largely driven by higher bonuses, with DiNapoli estimating that the bonuses increased by an average 17% to $184,200, the highest level in a decade.
The average salary (including bonuses) in New York City’s securities industry increased by 13 percent to $422,500 in 2017, the highest since 2008 and the third-highest on record after adjusting for inflation. The securities industry has the highest average salary of any industry in New York City, and accounted for 21 percent of all private sector wages in 2017 even though it accounted for less than 5 percent of employment.
The average salary in the securities industry on Long Island is nearly as high as in New York City. On Long Island, the average salary grew by 10 percent in 2017 to $389,000. The level was boosted by the presence of hedge-fund firms in Suffolk County, where the average salary was $599,800, the highest of any county in the nation.
In March 2018, DiNapoli estimated that the average bonus for securities industry employees in New York City increased by 17 percent to $184,200. After adjusting for inflation, it was the highest average bonus in a decade and the fourth-highest on record. Bonuses accounted for an estimated 40 percent of securities industry wages in 2017, a larger share than in any other major industry in New York City.
And while it’s too early to say for certain, data collected during the first half suggest that salaries and bonuses will continue to grow during 2018.
Here’s a breakdown of the report’s highlights (courtesy of a press release from the NYS Comptroller’s Office):
- Nearly one-quarter (24 percent) of securities industry workers in the city earned more than $250,000 in 2017, compared to 2.5 percent of the rest of the city’s workforce.
- The disparity between average salaries in the city’s securities industry and the rest of the private sector peaked in 2007, when it was six times higher. The gap narrowed after the financial crisis but has remained at least 5 to 1 since 2010, with a ratio of 5.5 to 1 in 2017.
- 62 percent of the industry’s employees live in the city, while 38 percent commute, which is the highest share of commuters in any major industry.
- One-fifth of the work force commuted from New Jersey, 6 percent from Long Island and 6 percent from Westchester County.More than half (55 percent) of the commuters from Connecticut and 38 percent from Westchester earned more than $250,000 per year.
- More than two-thirds of the city’s securities industry workers were male and nearly two-thirds were white. More than one-fifth were Asian; 13 percent were Black or Hispanic. One-third were immigrants, the majority from Asia and Europe.
- DiNapoli estimates that tax collections attributable to the city’s securities industry grew by 29 percent to $4.2 billion in CFY 2018, the highest level in a decade. The growth resulted from large increases in profits, bonuses, and capital gains in calendar 2017, which were boosted by recent changes in the federal tax code and a 2008 federal law that required repatriation of deferred compensation held overseas by the end of 2017. The industry accounted for 7 percent of city tax collections in CFY 2018.
- The average salary in the securities industry in New York state increased by 12 percent in 2017 to $403,100, the highest since 2008 and the third-highest on record after adjusting for inflation. New York had the highest average salary of any state in the nation, reflecting the concentration of highly compensated employees, such as chief executive officers, in New York City.
- DiNapoli estimates that tax payments attributable to the securities industry in State Fiscal Year (SFY) 2017-18 rose by 7 percent to $14 billion, the highest level in a decade. As a result, the industry accounted for nearly one-fifth (18 percent) of state tax collections in SFY 2017-18.
- DiNapoli estimates that each job gained or lost in the industry leads to the creation or loss of three additional jobs in other sectors.
- After adjusting for inflation, pretax profits in 2017 were the highest since 2012 and profits in the first half of 2018 were the highest since 2011.
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Bankers’ rising pay is an anomaly in contemporary American society, where wages for the average worker have been stagnating for years (though the August AHE print inspired some optimism, though the stirrings of inflationary pressure highlighted by that data have yet to be confirmed).
It’s just the latest piece of evidence pointing to the hollowing out of the middle class, as nearly all of the wage growth documented since 2009 has occurred in the extreme lower- and higher-end of the wage range.
The Financial Select Sector SPDR Fund (XLF) rose $0.04 (+0.14%) in premarket trading Thursday. Year-to-date, XLF has gained 3.31%, versus a 9.57% rise in the benchmark S&P 500 index during the same period.
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