On a conference call Tuesday morning, New York comptroller Tom DiNapoli — the guy responsible for keeping tabs on the state's budget — tried to cheer Wall Street up about its historically low bonuses.
"We’re seeing a return to profitability," DiNapoli said, while laying out his office's key statistic: that cash bonuses in the New York securities industry for all of 2012 are expected to rise 8 percent over the previous year, to a grand total of $20 billion.
But $20 billion won't be enough to bring smiles to the faces of bankers and traders on Wall Street, who have spent the past month dealing with the fact that five years after the start of the financial crisis, their bonuses don't appear to be recovering as quickly as they expected.
"It’s just hard," one bank executive told Daily Intelligencer. "People feel like if they didn't get paid last year, and their business did well this year, they should get paid for both years. It doesn't work like that anymore."
As they move through the Kubler-Ross stages of grief to acceptance, bankers have some slightly heartening data to lean on. According to DiNapoli, Wall Street's post-crisis practice of giving out deferred stock in lieu of big cash bonuses is finally paying out, as lots of stock handed out in 2009, 2010, and 2011 became convertible into cash in 2012. The average bonus last year was roughly $121,000, and average salaries are up, to more than $360,000 in 2011, the last year numbers were available. (The rise of fixed salaries mirrors the decline of cash bonuses, as I explained here.) But there is less money flowing through Wall Street payrolls overall, even with higher salaries.
There are also fewer mouths to feed. DiNapoli says that of the 28,300 jobs the New York securities industry lost during the crisis, only about 8,000 have been added back. So while bonus numbers may be up, they're only up for bankers who still have jobs.
Thanks to the rise of tech and other industries, New York's economy is less dependent than it has historically been on Wall Street pay. Comptroller DiNapoli said today that only 7 percent of the city's tax revenue now comes from the securities industry, whereas before the crisis it accounted for roughly 12 percent. Still, that's a large enough chunk to matter.
"Wall Street is very, very important to New York’s economy," DiNapoli said. "When Wall Street is strong, all of New York benefits."
Banks have been trying to manage employees' expectations for their bonus numbers, which are given out in January and February but often take several weeks to be deposited into accounts. At several banks, employees said they "saw it coming," meaning that management had deliberately telegraphed — either internally or in talks with analysts and the press — that this year's numbers would be nearly flat compared to last year.
"It wasn't a shock," another bank executive said of his firm's flat compensation trend.
But preparedness is small comfort to many bankers who still pine for the large, all-cash bonuses of yore. And while the rest of the country is breaking out the small violins, knowing that even a small Wall Street bonus can be many times larger than the U.S. median income, Wall Street is still finding it hard to move on.
"Bonus day used to be this incredible celebration," one mid-level banker told us, on the day his figure arrived. "Now it's just depressing."