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Out on the Street – N.Y. expects 10K lost jobs as financial industry retrenches

THE DAILY

By Kyle Stock

October 12, 2011

Surging pay and sagging results are expected to squeeze another wave of workers off of Wall Street.

Manhattan banks and brokerage firms may cut an additional 10,000 securities jobs by the end of next year, according to a report released yesterday by New York Comptroller Thomas DiNapoli. If layoffs reach those levels, the number of people who buy and sell financial products on Wall Street will have shrunk by 17 percent since early 2008.

Roy Cohen, a New York-based career coach and author of “The Wall Street Professional’s Survival Guide,” said morale among his clients has never been lower. Last week, he fielded calls from two Wall Street wives who suspected that their husbands would be laid off soon. Among other things, they wanted Cohen’s advice on negotiating higher severance payments.

“I’m busy because people are fearful and concerned,” Cohen said. “Wall Street thinks very short-term in its time frame and if revenues shrink, people get fired. That’s just a fact of life.”

Part of the problem is pay. While revenues grew by almost 13 percent at New York securities firms in the first half of the year, compensation at those companies surged by 19 percent, according to the comptroller’s report.

Last year, Manhattan securities workers earned just over $331,000 on average, in salary and bonuses, almost five times the amount garnered by workers in the city’s private sector at large.

Layoffs are one of the ways Wall Street is trying to control its spending. Virtually every major bank and brokerage firm has been trimming staff this year. Since April, 4,100 securities positions have been trimmed in Manhattan. Bank of America alone said it would ax about 30,000 worldwide.

Scott Rostan, founder of Training the Street LLC, said finance firms prefer to hand out pink slips rather than risk defections and low morale with pay cuts. “It’s like a free-agency market,” he said. “These people are very astute and they’re not loyal to the firm; they’re loyal to the paycheck.”

Rostan expects coming cuts to fall on underperformers, back-office workers and professionals working in an market that has been particularly unprofitable.

“If a company shuts down a five-person desk, that might be 15 jobs once you factor in the support team,” he explained.
Finance firms are also moving more workers out of pricey Manhattan offices. The share of New York state securities workers based outside of Manhattan is at an all-time high, roughly 12 percent, according to the report.

Though protesters continue to rally against Wall Street’s fattest cats, DiNapoli said Wall Street layoffs will have a ripple effect. Roughly 14 percent of state tax revenue comes from Wall Street workers and the companies that employ them.
One in eight jobs in the city and one in 13 jobs in New York state are linked to the the securities industry, the comptroller said.

Hedge fund mogul John Paulson echoed that point yesterday, as Occupy Wall Street mobs marched to his New York home and the homes of other Wall Street titans.

“Instead of vilifying our most successful businesses, we should be supporting them and encouraging them to remain in New York City and continue to grow,” he said.

Paulson, however, hasn’t been immune to the markets of late either. His two biggest funds are down more than 30 percent this year to date.