The question remains whether this growth pace will continue during the second half of this year eventually reaching the record $61.4 billion in pretax revenue generated by Wall Street in 2009, said the office of the state comptroller in a statement.
The performance of the securities industry is traditionally measured by the pretax profits of the brokerage firms that are members of the New York Stock Exchange (NYSE). The exchange has now about 125 member firms, down from more than 200 in 2007, before the global financial crisis.
The significant gains in profitability during the last year and a half owe to record low-interest rates which have kept Wall Street expenses down, strong trading volume, as well as record revenues from underwriting, account supervision fees, and investment advisory fees.
Wall Street Jobs Decline
Despite continued strong profitability, employment in the securities industry in New York City has sagged. If the trend continues the industry in NYC is expected to lose 4,900 jobs in 2021—nearly 2 percent—after losing 3,600 jobs in 2020, the most since the Great Recession, the report said. Meanwhile, the nation is on pace to add over 23,000 jobs in the securities industry.
The Wall Street job loss may be attributed to “a combination of advances in technology and the relocation of jobs,” according to the statement.
By contrast, in the first quarter of 2021, the securities industry in Florida, Texas, and New Jersey gained nearly 6,700 jobs combined, the report said. New York State had about 196,800 securities industry jobs in 2020—twice the level of any other state—but it also experienced the highest number of job losses of any state.
The average salary (including bonus) for employees of the New York City securities industry was $438,450 in 2020 and it rose by 7.8 percent in comparison with the prior year, according to the report.
Wall Street’s Impact on City’s Economy
The decline in Wall Street jobs may impact the economic activity in the city. The high incomes earned by many industry employees create economic activity in other sectors.The office of the comptroller estimated that 1 in 9 jobs (or more than 11 percent) in New York City and 1 in 16 jobs (more than 6 percent) in New York State are associated with the securities industry. Each job gained or lost in the industry leads to the creation or loss of two additional jobs in other industries in the state, the comptroller office predicted.
Tax collections however have not declined due to job losses. Moreover, tax revenue from the securities industry rose to a record $4.7 billion in the 2021 fiscal year reaching the highest number since 1996, the report said noting that personal income tax revenue accounted for 74 percent of this amount.
“This performance reflects strong bonuses and near-record-high profits,” the report asserted.
New York State depends on Wall Street tax revenues even more than the city, because the State relies more heavily on revenue from personal income taxes and does not assess a real property tax.