Each lost Wall St job costs NYC two other jobs: study

By Joan Gralla

NEW YORK (Reuters) - New York City could lose two jobs for every one cut on Wall Street, while anecdotal evidence shows that both residential and commercial markets might finally be starting to cool, a new report said on Wednesday.

Capsizing financial and real estate markets could torpedo the city budget.

"Barring a Wall Street (and Main Street housing market) miracle, the city faces a potential deficit reaching 5 percent of city-funded spending this year or more," the Manhattan Institute's report said.

Next year, there could be an even bigger deficit of 7 percent to 12 percent, the nonprofit research group warned.

Wall Street companies can produce up to one-fifth of city tax revenues. These employers added 20,000 workers from 2003 to 2006, causing other firms to hire 40,000 employees, the report said. Until scorched by the summer mortgage meltdown, this sector seemed poised to match or top 2006's record bonuses.

But now banks and brokerages are slashing tens of thousands of jobs, and Mayor Michael Bloomberg, who had to close a $5 billion deficit when his first term began in 2002, might again have to raise taxes or cut spending, the report said.

"New York began fiscal year 2008 in the thrall of an unprecedented tax boom, one not seen even in the torrid mid-1980s," the report said.

It bashed the mayor for missing a chance to slash what it said he calls "uncontrollable costs" that consume half of the city-funded budget. Those expenses are Medicaid, pension and health benefits, and debt repayment.