Wall Street firms have figured out a way to beat inflation for their employees: Just hike annual bonuses to record amounts.
The average Wall Street bonus for 2021 hit a record high of $257,500, up 20% from $213,700 the year before, according to estimates released Wednesday by New York State Comptroller Thomas DiNapoli.
The payouts are obviously good news for employees in the securities industry, who make up 5% of private sector employees in New York City. But since their pay accounts for one-fifth of the city’s private sector wages, high bonuses are also good news for Gotham’s tax coffers.
DiNapoli estimated that, as a result of the record high payouts for 2021, the city will exceed its expected revenue from income taxes.
All in, Wall Street paid out an estimated $45 billion during the December to March bonus season, which is up $8 billion from the total bonus pool last year.
Of course, how much the average Wall Street employee got for 2021 depended on the money their employer set aside for total compensation. Goldman Sachs, for instance, said it reserved $17.7 billion for total compensation expenses last year, an increase of 33% from 2020. That works out to an average of nearly $404,000 for the firm’s 43,900 workers, including wages and bonuses.
DiNapoli attributed the record high bonuses to Wall Street’s swell in profits, but sounded a cautionary note that the uneven economic recovery from the pandemic and geopolitical turmoil could drive bonuses for 2022 lower.
“Markets are turbulent as other sectors’ recovery remains sluggish and uneven, and Russia wages an inexcusable war on Ukraine’s freedom,” DiNapoli said. “In New York, we won’t get back to our pre-Covid economic strength until more New Yorkers and more sectors – retail, tourism, construction, the arts and others – enjoy similar success.”
And even when these sectors do recover, many American workers will still not come anywhere close to earning a six-figure bonus, let alone a six-figure income. Nearly 52 million workers – or almost one-third of the nation’s labor force – earn less than $15 an hour, according to a study by Oxfam America. These workers, whose annual income is less than $31,200, are disproportionately women and people of color.
– CNN’s Paul LaMonica and Tami Luhby contributed to this report