Wall Street cash bonuses are likely to drop for the second year in a row, the New York State Comptroller said on Tuesday.
The securities industry, one of the biggest employers in New York State, could also lose another 10,000 jobs by the end of 2012, according to the report.
The job losses would bring the total layoffs on Wall Street since January 2008 to 32,000, according to Comptroller Thomas DiNapoli's office, a contraction of about 17 percent. The industry shrank closer to 20 percent in the early 1990s and the early 2000s.
The outlook for the industry may be grim, but many employees are optimistic about their compensation, according to a separate survey on Monday.
Recruiting website eFinancialCareers said 62 percent of Wall Street employees think their 2011 bonuses will be the same or better than last year.
"People on Wall Street in general don't have small egos," said Malcolm Polley, chief investment officer at Stewart Capital Advisors, with $1.1 billion under management.
Polley added that people on Wall Street are always surprised when they lose their jobs, or their bonuses decline.
Wall Street employees are less optimistic than they were a year ago, when 71 percent thought their bonus would be flat to up -- but in the intervening year, there has been a significant downturn in the industry.
Trading profits have suffered as new regulations have forced banks to scale back on their proprietary trading activities.
Banks including Bank of America Merrill Lynch have announced layoffs, and Goldman Sachs -- seen as one of the savviest investment banks -- is expected to report its second loss ever as a public company next week. In addition, protesters against Wall Street have also taken over a park in lower Manhattan.
The European sovereign debt crisis, the weak U.S. economy, unstable stock prices and regulatory changes are weighing on the sector, according to DiNapoli's report.
"The reality today is that trading volumes are down and other businesses that were drivers of growth in the last decade are less vibrant," said Marshall Front, chairman of Front Barnett Associates with $600 million under management.
But, he added, there may be more bonus money to go around for those who remain.
RIPPLES IN NEW YORK
Last year, securities-related activities accounted for 14 percent of the state's tax revenue and almost 7 percent of the city's tax revenue, DiNapoli's report found.
One in eight jobs in New York City and 1 in 13 jobs in New York State are linked to the securities industry. Given the current weakness, tax collections are likely to fall short of city and state targets in their current fiscal years and may decline more the following year.
"It now seems likely that profits will fall sharply, job losses will continue, and bonuses will be smaller than last year," DiNapoli said in a statement.
"As we know, when Wall Street slows, New York City and New York State's budgets feel the impact, and that is a concern," DiNapoli said.
The average securities industry salary in 2010 was $361,330, or 5.5 times higher than the average private sector salary of $66,120, according to DiNapoli's report.
(Reporting by Holly McKenna in Albany, New York, and Clare Baldwin in New York City. Editing by Padraic Cassidy, Matthew Lewis and Bernard Orr)