By Edward Krudy
NEW YORK, March 12 (Reuters) - The average bonus on Wall Street jumped 15 percent last year to the highest level since the 2008 financial crisis and was the third largest on record, New York State’s budget watchdog said on Wednesday.
The cash bonus pool swelled to $26.7 billion in 2013, pushing the average cash bonus to $164,530, a post-2008 high in a industry shrunk by the financial crisis, according to the New York state comptroller’s annual estimate.
The increased payouts came as Wall Street posted a fifth consecutive year of profits after record losses during the crisis. Profits for broker-dealer operations of New York Stock Exchange member firms, however, fell 30 percent to $16.7 billion in 2013, the report said.
“Wall Street navigated through some rough patches last year and had a profitable year in 2013. Securities industry employees took home significantly higher bonuses on average,” Comptroller Thomas DiNapoli said in a statement.
The comptroller’s report provides early hard estimates of the bonus pool for security industry employees in New York City during the traditional December-to-March bonus season.
The estimate is not an exact view of 2013 bonuses because it reflects cash bonuses and deferred pay from which taxes have been withheld. The estimate does not include stock options or other forms of deferred compensation. Bonuses paid to employees outside New York City are not included in the estimate.
The comptroller’s office compiles estimates on Wall Street bonuses because of their importance to state and city tax revenues. The report estimates that New York City gained $3.8 billion in taxes from the securities industry in fiscal year 2013, 27 percent more than in the previous year and the second highest level on record.
It also estimates that city tax revenues could be $100 million higher than forecast in the city’s budget because the budget assumed a 5 percent decline in the bonus pool.
The securities industry accounted for 8.5 percent of the city’s tax revenues during the 2013 fiscal year, below its peak of 11 percent prior to the 2007-2009 recession.
New York state collected $10.3 billion in taxes from Wall Street during the financial year, accounting for about 16 percent of all state tax revenues. That compares to 20 percent before the recession.
Regulation in the securities industry has gone through major changes since the financial crisis, with firms deferring more bonuses. Over the last two years the bonus pool has jumped 44 percent, lifted by compensation deferred from prior years, the report said.
The crisis also led to a significantly smaller securities industry in New York. The report estimates the industry employed 165,200 workers at the end of 2013, 12.6 less than before the crisis. DiNapoli said that employment in the industry has likely stabilized.
Bonuses in the financial industry have been a highly contentious issue since the financial crisis. Bill de Blasio, New York City’s first Democrat mayor in twenty years, took office this year after campaigning on income inequality.
The average salary in the securities industry, not including bonuses, was $360,700 in 2012, the latest year for which data is available. That was more than five times higher than the average $69,200 salary for other private sector jobs, the report said.
Wall Street accounted for 22 percent of private sector wages in New York City in 2012 but only 5 percent of private sector jobs, according to the report.
The Institute for Policy Studies, a left-leaning think-tank, pointed out that Wall Street’s $26.7 billion bonus pool would be enough to more than double the pay of all the federal minimum wage workers in the United States, who number over a million.