The average annual Wall Street bonus dipped to $176,500 last year, a 2% decline from the previous year’s average of $180,000, according to New York State Comptroller Thomas P. DiNapoli’s annual estimate. Wall Street’s profits were up 1.8% in 2023, but firms have taken a more cautious approach to compensation and more employees have joined the securities industry, which accounts for the slight decline in the average bonus.
“Wall Street’s average cash bonuses dipped slightly from last year, with continued market volatility and more people joining the securities workforce,” DiNapoli said. “While these bonuses affect income tax revenues for the state and city, both budgeted for larger declines so the impact on projected revenues should be limited. The securities industry’s continued strength should not overshadow the broader economic picture in New York, where we need all sectors to enjoy full recovery from the pandemic.”
The $33.8 billion bonus pool for 2023, which closely matched the 2022 pool, was well below the 25% growth seen in 2020 ($37.1 billion) and the 15% jump seen in 2021 ($42.7 billion), but slightly over the pre-pandemic high of $32.1 billion.
Wall Street bonuses have a significant impact on tax revenue in the state and city budgets. DiNapoli estimates that the securities industry accounted for approximately $28.8 billion in state tax revenue, or 27.4% of the state’s tax collections, for State Fiscal Year (SFY) 2022-23, and $5.4 billion in city tax revenue, 7% of total tax collections for City Fiscal Year (CFY) 2023.
In 2022, bonuses generated $447 million less in state income tax revenue and $204 million less for the city compared to the prior year. DiNapoli projects the 2023 bonuses in New York City’s securities industry will generate $4 million less in state income tax revenue and $2 million less for the city when compared to the previous year. The Governor’s proposed budget assumed bonuses in the broader finance and insurance sector would decrease by 2.7% in SFY 2023-24, while the city’s CFY 2024 financial plan assumed a decrease of 7.8% in securities industry bonuses. These anticipated declines should minimize any significant impacts to their budgets in the short-term.
The securities industry also has a significant impact on the city’s employment and overall economy. In 2023, the sector employed about 198,500 people, up from 191,600 the prior year. DiNapoli estimates that 1 in 11 jobs in the city is either directly or indirectly associated with the securities industry. While the city remains the capital of the U.S. securities industry, its share of the sector’s jobs has been declining over time. Sector employment in 2023 was 1.3% lower than in 2000, which represented the peak for securities industry employment in the city.
As more securities employees are back in the office, there is increased spending in the city. Financial services firms reported 65% of employees were in the office on any given day in September 2023 (post-Labor Day), compared to 58% for all firms in the city, according to the Partnership for New York City’s survey.
Additionally, 42% of securities industry employees ride the subway, a higher rate than the citywide average for workers. DiNapoli estimates Wall Street was responsible for 14% of all economic activity in the city in 2022, and thus the financial sector’s ability to generate revenue and turn profit is critically important to New York.
Methodology
DiNapoli’s office releases an annual estimate of bonuses paid during the traditional December through March bonus season to securities industry employees who work in New York City. Bonuses paid by firms to their employees located outside of New York City, whether in domestic or international locations, are not included. The Comptroller’s 2023 estimate is based on personal income tax withholding trends and includes cash bonuses paid for work performed in 2023 and bonuses deferred from prior years that have been cashed in. The estimate does not include stock options or other forms of deferred compensation for which taxes have not been withheld.
Charts
Bonus Pool Chart from 1993 to 2023
Annual Profits and Employment Chart
Related Work
Report
The Securities Industry in New York City, October 2023
Dashboard
Securities Sector Industry Dashboard
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