Lisa Chow is the economics reporter at WNYC. She tries to explore in her stories surprising aspects of New York’s many economies—in plain view or hidden, in neighborhoods or sectors.
Large But Not Supersize: Wall Street's 2010 Profits
Tuesday, November 16, 2010
Wall Street is on track to earn more than $19 billion in profits, making 2010 the industry's fourth most profitable year in 30 years.
A report by New York State Comptroller Thomas DiNapoli says while the profits are significant, they're down nearly 70 percent from last year's record because of lower revenues from proprietary trading and investment banking activities. The financial industry also started to restructure itself as Congress passed new financial regulations this summer.
"We're seeing a slowing down of activity that has implications for the revenue to the state," DiNapoli said.
Before the financial crisis, 20 percent of the state's tax revenue came from Wall Street. Now it's 15 percent. "Wall Street, in terms of their profits, they're not going to bail us out of our budget problems. We're going to have to confront the spending issue in New York on its own," DiNapoli said.
Wall Street bounced back strongly last year, after facing two years of losses. Aided by low interest rates and federal bailout money, the industry earned a record $61.4 billion in profits in 2009 -- nearly triple the amount earned in 2006 before the financial crisis hit.
During the recession, one in every six jobs lost in New York City was in the securities industry, which has shed 30,000 jobs, or 16 percent, since the beginning of 2008. DiNapoli says he expects Wall Street to suffer more job losses before it begins to expand again.
Last year, the average wage fell by 20 percent to $311,330. Wall Street employees, on average, earn 5 times more than what others private sector workers do.