Last year wasn’t the most lucrative for Wall Street bankers, but their bonus payouts still easily trounced US median household income.
The average Wall Street bonus for 2023 was $176,500, according to estimates that will be released Tuesday morning by New York State Comptroller Thomas DiNapoli. That’s down 2% from the $180,000 recorded in 2022. Both those averages were well below the $240,000 paid out in 2021.
That the average bonus was slightly down isn’t surprising. Wall Street earnings last year were mixed, and merger and acquisition activity was underwhelming. “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,” DiNapoli said in a statement.
Nevertheless, a little perspective: The average Wall Street bonus, which comes on top of the nearly half-a-million-dollar average Wall Street salary, was itself almost 2.5 times higher than the median US household income of $74,580, according to Census data for 2022.
Wall Street bonuses and general employment in the securities industry provide vital revenue streams for the New York State and New York City economies, accounting most recently for 27% of the state’s tax collections and 7% of city tax revenue, according to DiNapoli’s office.
The securities industry in the city employed roughly 198,500 people last year, up from 191,600 the year before. And DiNapoli estimates that 1 in 11 of the city’s jobs are either directly or indirectly associated with the industry.
The total estimated bonus pool for 2023 was slightly lower than the year before and is projected to bring in $4 million less in state income tax revenue and $2 million less for the city revenue than bonuses in 2022 did.
Still, DiNapoli noted, “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.”
It should be noted that the comptroller’s numbers only reflect the bonuses paid to securities industry employees working for firms based in New York City.
Beyond bringing in tax revenue for government coffers, Wall Street workers contribute substantially to the local Gotham economy.
DiNapoli said that more employees in financial services (65%) are working in-office on any given day compared to 58% working in other industries in the city, at least as of September 2023. And that securities industry employees use the subway more than other workers in the city. All in, he estimates that Wall Street is responsible for roughly 14% of economic activity in the city.
As critical as that is, the city and state are about much more than just Wall Street. “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,” DiNapoli said.
