It’s not a great time to be a banker.
The average Wall Street bonus was down a whopping 26 percent in 2022, The Wall Street Journal reported on Thursday. While financial workers took home a record $240,000 bonus in 2021, they received a more modest $176,000 last year, according to a report from the New York state comptroller’s office. That’s the biggest drop since the 2008 financial crisis.
The decreased bonuses didn’t come as a surprise, given the past couple of years banks have had. In 2021, thanks to companies striking deals and going public, firms brought in more money. But last year, with fewer deal-advising fees, stock offerings, and bond sales, companies experienced a $50 billion drop in revenue, according to data cited by the WSJ. That was reflected in a smaller overall bonus pool—$33.7 billion compared with $42.7 billion in 2021.
As a result of those lessened profits, banks have been laying off thousands of people over the past few months. After increased hiring during much of the pandemic, companies from Morgan Stanley to Goldman Sachs are now letting employees go. Even for those who have managed to keep their jobs, they may not receive any bonus at all this year, a tactic banks use for alerting workers about their underperformance.
While an average bonus of $176,000 is still more than many people make in a year, the lower amount will have effects beyond just bankers raking in less cash. The comptroller’s office estimated New York would bring in $457 million less in income tax revenue when compared with 2021 because of the bonus cuts. New York City itself is projected to get $208 million less.
However, the comptroller’s office said the city and state had expected these losses, and they have updated their budgets accordingly. “While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street,” State Comptroller Thomas DiNapoli told The Wall Street Journal.
Still, a lower bonus—or a complete lack of one—is just another kick in the kneecap for the banking industry this year (Silicon Valley Bank, anyone?).