Bloomberg.com: Worldwide
New York May Lose 225,000 Jobs, Comptroller Says (Update1)
By Henry Goldman
Nov. 24 (Bloomberg) -- New York may lose as many as 225,000 jobs and $6.5 billion in securities industry-related tax revenue over the two-year period ending in October 2009, state Comptroller Thomas P. DiNapoli said.
In a report published today, he predicted financial- industry job losses may total 38,000 by October, with 10,000 more jobs lost in banking, insurance and real estate. Those losses could spread throughout the private sector, taking out as many as 225,000 positions statewide, he said.
“Wall Street is the engine that drives the economies of New York state and New York City, but the global credit crunch has slowed that engine down,” DiNapoli said in a news release. “This year is on pace to be one of the worst years ever on Wall Street.”
Finance industry-related activities account for 12 percent of New York City tax revenue and up to 20 percent of state revenue, the comptroller’s office said. Before the crisis, the securities industry accounted for 5 percent of the city’s employment but almost 25 percent of wages, the office said.
Wall Street’s importance to the economy is so great that for each financial sector job lost, two positions will vanish in other industries in New York City and 1.3 jobs will disappear elsewhere in the state, DiNapoli’s report stated.
Less Employment Disruption
The comptroller’s prediction would involve less overall employment disruption than during the 2001-2003 recession when New York state lost 329,600 private sector jobs, with Wall Street contributing 173,500 positions, or more than half of the decline. New York City lost 232,100 private sector positions in that recession, the report said.
After New York Stock Exchange member firms enjoyed almost record profits of $20.9 billion in 2006, they sustained a record loss of $11.3 billion in 2007 and shortfalls of $20.7 billion in the first half of 2008, the comptroller reported. The report warned total losses could exceed $25.5 billion for the year -- more than the New York City budget office has predicted.
Securities industry revenue fell to $32 billion in the second half of 2007 from $70.3 billion in the first half of the year. Total compensation averaged “an unsustainable 97.4 percent of net revenues for the first half of 2008,” compared with an average ratio of 53 percent from 1990-2006, the report stated.
The six largest securities firms based in New York City experienced revenue decreases of 63 percent in the second half of 2007 and 48 percent during the first three quarters of 2008. They reported more than $140 billion in write-offs during this period, the report said.
