New Yorkers seen earning record $381 bln this year

By Joan Gralla

NEW YORK (Reuters) - New York City residents should earn a record $381 billion this year because the thousands of job cuts on Wall Street will have a delayed impact and 2006 was such a profitable one for the financial sector.

The estimate for this year would top last year's record by almost $17 billion, according to Marsha Van Wagner, a financial analyst for Democratic Comptroller William Thompson. And it would smash the 2005 record of $343 billion.

Until the subprime mortgage sector this summer morphed into a profit-eating monster, Wall Street's success had lifted New York City's economy for several years after the deadly September 11 attacks throttled the economy in 2001.

Though banks and brokerages only account for 5 percent of the city's jobs, the companies pay about 20 percent of all wages. Many bankers and brokers earn a base salary of $200,000 or more -- and their bonuses can be quite generous.

The comptroller, at an Association for a Better New York breakfast, said Wall Street paid $33.6 billion in bonuses in 2006. Thompson's new estimate surpassed the previous year, also a high-water mark, by $10.8 billion, Van Wagner noted.

Thompson declined to forecast this year's bonuses. Citing layoffs and market turmoil, he added: "The reality is that we have to believe that bonuses on Wall Street are going to be down."

IF WE HAD MORE HARD HATS ...

Thompson also stressed the need for the city to build a more diverse economy, partly by strengthening vocational schools. They should be graduating more workers who can become construction supervisors, for example, so that companies do not have to hire out-of-state workers, as they do now, he said.

Construction is one of the healthiest sectors of New York City's economy now, as demand for new offices and apartments far outstrips supply. And so far this year, city taxes on personal income have yet to falter. In September, the jobless rate fell six-tenths of a percentage point to 5.1 percent.

But these positives might camouflage future hazards.

It can take several months for out-of-work bankers and brokers to turn up in the payroll statistics because they often get handsome severance payments and postpone job hunting. Further, the city gets its withholding taxes from severance payments, just as if they were regular paychecks.

Noting both the 2006 and 2007 forecasts for personal income were not yet final, Van Wagner added: "Our estimates might be a little on the low side; the increase could be even greater." Only the 2005 revenue total is a final number, she explained.

Though the weak dollar hurts some parts of the U.S. economy, boosting the price of oil and other imports, the city benefits from bargain-hunting tourists from overseas, Van Wagner said.

Its post-September 11 experience also reveals just the possible pattern that plunging profits on Wall Street might take.

Though financial firms also laid off workers in the months after the 2001 attacks, bonuses that year totaled $16.5 billion -- $300 million above the 2000 amount, Van Wagner said.