The average annual Wall Street bonus dipped to $176,500 last year, a 2% decline from the previous year’s average of $180,000. Wall Street’s profits were up 1.8% in 2023, but firms have taken a more cautious approach to compensation and more employees have joined the securities industry, which accounts for the slight decline in the average bonus.

Wall Street’s 2023 first half profits of $13 billion were down 4.3% from the same period last year but tracked the industry’s return to pre-pandemic levels of revenue after record profits in 2020 and 2021. Financial firms’ interest expenses were seven times higher in 2022 than in 2021. Data for 2022 will likely show a decline in the industry’s economic contribution, back to pre-pandemic levels (14.5% in NYC in 2019), reflecting the drop in firms’ profitability.

Wall Street’s 2022 average bonus paid to securities employees dropped to $176,700, a 26% decline from the previous year’s $240,400. Rising interest rates and fear of a recession led to significantly less profits on Wall Street after a record year in 2021.

Following near-record profitability in 2020, securities industry pretax profits rose even further in 2021. As federal stimulus actions have wound down, profits in 2022 are returning to pre-pandemic levels. New York State and City are reliant on tax revenues from the industry and must be cautious in managing their budgets given continued uncertainty in the financial markets. Though national sector employment has grown recently, the City’s share of national sector employment continued to decline slightly.

The average bonus paid to employees in New York City’s securities industry for 2021 grew to $257,500, a 20% jump over the previous year’s record high. The estimated bonuses paid out on Wall Street are higher than the city’s most recent 15.7% growth projection, and should help the city exceed its expected revenue from income taxes.

Wall Street’s run of prosperity extended into the first half of 2021 with $31 billion in pre-tax earnings, beating 2020’s outsized first half profits of $27.6 billion. Despite continued strong profitability, employment in the industry in New York City has sagged, even as it has ticked upward in the rest of the nation. Average salary, including bonuses, reached $438,000, the highest of any industry and nearly five times higher than the average in the rest of the private sector.

The average bonus paid to employees in New York City’s securities industry grew by 10 percent in 2020 to $184,000, in line with the city’s most recent 9.9 percent projection, likely allowing the city to meet or exceed its income tax revenue projections in FY2021.

Wall Street and the nation have been pounded by the fallout from the subprime credit crisis that reached a critical point in July 2007.

The global financial crisis was rooted in excessive risk-taking, which exposed the financial industry to historic losses when underlying assumptions proved faulty.

The recent financial crisis, which was precipitated by excessive risk-taking, began in the United States but quickly spread across the globe and caused the worst recession since the Great Depression.