One of the biggest questions of the New Year covers how big Wall Street Bonuses will be and what will be their impact on the New York City real estate market.
Last week the official bonus word came down from the Office of the New York State Comptroller’s Office. Here’s an attempt to parse out the relevant info:
- Average Wall Street bonuses in 2007 declined 4.7% from record levels in the prior year to $180,420.
- The securities industry wages to New York City employees totaled $33.2 billion, 2 percent less than the record $33.9 billion in 2006.
- Wall Street added 9,600 jobs during the first 11 months of 2007, a 5.4 percent increase.
I see more restricted stock as part of total compensation on the bonus horizon.
- Bonuses in 2007 will be dramatically lower for workers in mortgage-related businesses, but higher in areas such as mergers and acquisitions, equity underwriting and trading.
- Employee compensation, which includes bonuses, consumed 61 percent of the firms’ revenues in 2007, up from 45 percent 2006, reflecting the firms’ efforts to retain high-performing employees.
Bonus compensation has been hovering in the low 40 percentile of total compensation for several years. The sharp increase in the percentage indicates weakness, not strength in the financial condition of the financial services sector (the denominator got smaller).
Will this compensation make its way into the real estate economy? I don’t see how it can’t.
Will real estate see the same level of activity as last year’s record with this near record compensation level? I don’t see how it can.
Tags: Wall Street Bonus