NEW YORK (Reuters) - The Wall Street bonus pool rose to $28.5 billion last year, and the industry added jobs for the first time since 2011 even as profits in the securities sector fell, New York state’s budget watchdog said on Wednesday.
This was a 3 percent increase compared with $27.6 last year. According to the state comptroller, the average bonus on Wall Street was up 2 percent to $172,860. Bonuses rose as pretax profits at the broker-dealer operations of New York Stock Exchange member firms fell 4.5 percent to $16 billion.
“Industry profits were lower because of weakness in fixed income and commodities trading, higher capital reserve requirements and the continued cost of legal settlements,” said the report by New York state comptroller Thomas DiNapoli.
At the same time, New York City’s securities firms added 2,300 jobs during the year, an increase of 1.4 percent, bringing employment in the sector to 167,800 workers. It was the first time the industry added positions since 2011.
However, the industry is still smaller by 11 percent, or more than 20,000 jobs, than it was before the 2008 financial crisis, DiNapoli said. The comptroller cautioned job growth would not necessarily continue in 2015.
The comptroller’s report provides early hard estimates of the bonus pool for securities industry employees in New York City during the traditional December-to-March bonus season.
The estimate is not an exact view of 2014 bonuses because it reflects cash bonuses and deferred pay from which taxes have been withheld, but not stock options or other forms of deferred compensation.
Wall Street bonuses have been a contentious issue since the financial crisis. This year’s pool was more than double the combined earnings of 1 million American full-time minimum wage workers, according to an Institute for Policy Studies.
Still, the average bonus is 10 percent below its pre-crisis peak of $191,360 in 2006 after several years of cuts.
Morgan Stanley said last month it would pay less revenue in bonuses to bankers and traders even if revenue increases. Goldman Sachs has reduced that ratio steadily in past years, from 42.4 percent in 2011, to 36.8 percent in lat year.
Although Wall Street is smaller than before the crisis it is still an important economic engine for New York state and city. The sector accounts for about 21 percent of private sector wages in the city even though it accounts for less than 5 percent of private sector jobs.
Reporting by Edward Krudy; Editing by Leslie Adler, Lisa Von Ahn and Diane Craft