Pay Down on Wall St in 2008

Last year was a terrible year for Wall St. The Credit collapse was fully recognizable by the early summer and no one  wanted to believe the real depth of it. So as the packaged mortgage investments went kaput in value I assumed the bonus packages for the Wall Streeters would too, but they didn’t. Pay on Wall St. last year held up. Perhaps compensation managers thought this was a short term issue. However, a year later the story has changed. Maybe it was Bear Sterns being forced on JP Morgan Chase that turned the tide. Either way, the NY Times is running an article by Patrick McGeehan called Wall St. Bonuses Could Fall by $10 Billion, Affecting City and State that documents the anticipated impact on bonuses for Wall St. firms. Some of the stats:

  • $18 billion less in pay and benefits compared to 2007
  • If true, this would easily surpass 2001 when the drop was by $6.5 billion
  • The city would lose about $10 billion in potential incomes to tax
  • Compensation for six of the largest firms show a decline of %9.5 billion in the first half of 2008 when compared against 2007

Other stats:

  • Year end bonuses for investment bankers usually comprises at least three-fourths of their income
  • Wall St. employs about 178,000 workers in NY city
  • Normally, these payments contribute to about 10% of NY city’s tax revenue and 20% for the state.
  • The projected decline in state tax revenue is by $700 million

These losses in potential income have a ripple impact because of the accompanying spending on items like clothes, watches and so on. These items and corresponding jobs aren’t needed without affluent investment bankers.

Two quotes I like:

“One of the things that highly compensated people do is they spend money,” Mr. Bleiwas said. “So when Wall Street suffers, the pain ripples through the rest of the economy.”

“The top market is fine. Upper-end people can still afford their Rolexes,” Mr. Kopel said. The marked drop-off has come in sales of items priced between $500 and $2,500, which he described as midrange.

Normal
0

<wunctuationKerning/>

false
false
false
<woNotPromoteQF/>
EN-US
X-NONE
X-NONE

<wontGrowAutofit/>

<wontVertAlignCellWithSp/>
<wontBreakConstrainedForcedTables/>
<wontVertAlignInTxbx/>

MicrosoftInternetExplorer4

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:”Calibri”,”sans-serif”;
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:”Times New Roman”;
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;}

About benleeson
My name is Ben Leeson. I currently work for a large financial company in IT. I went to school at Marist College in Poughkeepsie, NY. I graduated with a B.S. in Business Administration concentrating in HR. Professor William Brown taught me and I enjoyed his classes; even acquiring an appreciation for just about all things HR. I didn’t pursue a job in that field after college but I’ve kept up with it. This blog will further my fascination with all things HR. I hope to grow my knowledge of the area through thoughtful writings and spirited feedback. I will attempt to have a fairly routine style so anyone reading can come to expect certain segments. Please excuse my incorrect grammar and occasional misspelling.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: