Wall Street Bonuses, Profits Grew in 2020, Despite Pandemic, State Comptroller Says

Despite a global pandemic that crippled the economy in New York state, average bonuses paid on Wall Street still grew by 10% last year, according to a report released Friday by State Comptroller Tom DiNapoli’s office.

The average bonus paid to workers in New York City’s securities industry grew to $184,000 last year, according to the report.

“Wall Street’s near-record year shattered all expectations,” DiNapoli said. “The early forecast of a disastrous year for financial markets was sharply reversed by a boom in underwriting activity, historically low interest rates, and surges in trading spurred by volatile markets.”

The entire pool of bonuses paid out to workers on Wall Street was estimated to be about $31.7 billion last year, an increase of 6.8% compared to the prior year.

That’s not bad news; the securities industry generated about a fifth of the taxes collected by the state in the last fiscal year, according to DiNapoli’s office, and about one in 10 jobs in New York City are associated with Wall Street in one way or another.

But it’s also unusual, DiNapoli’s office said. Bonuses on Wall Street usually drop after major economic events. They fell by a third after 9/11, and were cut by nearly half after the Great Recession. They’ve dropped four times since 2008, according to DiNapoli’s office. 

The same abnormality was felt in profits on Wall Street. Pretax profits nearly doubled in 2020, according to DiNapoli’s office, with an increase of 81% over 2019.

That boost was largely the result of an increase in trading and underwriting activity, coupled with lower-than-usual interest rates, DiNapoli’s office said. Underwriting is the process by which an entity essentially raises funding from investors. 

That could all spell good news for the state’s finances. The state Division of Budget had projected a dip in bonuses on Wall Street in January, when Gov. Andrew Cuomo proposed his plan for the state budget.

Because both profits and bonuses exceeded expectations, that success will likely be felt in the state’s coffers, DiNapoli said. The state budget is due Wednesday.

“Income tax revenue from New York City’s securities industry will help shore up state and city budgets that are strained by steep declines in other industries, but it comes with a caution,” DiNapoli said. 

“New York benefits when Wall Street succeeds, but our economy won’t fully recover until other sectors can reopen and all New Yorkers have a chance to share in economic success.”

Despite the industry’s success, about 3,600 jobs were lost last year, according to DiNapoli’s office. That’s about 2% of the industry’s workforce.