How far will Wall Street job losses go?

Iit’s easy Here, I would like to point out a phenomenon that is characteristic of the zero interest rate era.monkey jpegsIt sells for millions of dollars. Home pricing and buying algorithms. A tech worker in his 20s creating a “day in the life” TikTok that consists only of making snacks. The record profits of investment banks also seem to be remnants of a golden age. Workers hired to meet the high demand continue to suffer. Now they are ushered in the door.

Wall Street firms are cutting jobs ahead of the release of second-quarter earnings. Goldman Sachs killed 3,200 people in the first quarter. The bank plans to let go another 250 people, this time mostly in senior positions, according to reports on May 30. Morgan Stanley laid off about 3,000 people in the second quarter. Bank of America cut 4,000 jobs and Citigroup cut 5,000. Job cuts are also plaguing less attractive financial institutions.Accenture and kpmg Both swung axes.

This is as important to New York City as it is to the poor people who were handed over their belongings in cardboard boxes. Job cuts in the financial sector will hit the Big Apple in the same way tech job cuts hit San Francisco. According to Enrico Moretti, an economist at the University of California, Berkeley, each of the “knowledge jobs” that make cities like New York and San Francisco successful underpins five different service roles. Not so much (like a barista). Even if no additional layoffs were made, the shrinking of Wall Street would be very damaging. The average bonus pool fell by a fifth last fiscal year, the biggest drop since the 2007-2009 global financial crisis, according to the New York State Comptroller.

Banks didn’t swell as much as tech companies during the COVID-19 pandemic, but when online activity soared and there were signs that work patterns were about to change forever, the ax was almost as deep in some places. cutting in. The size of Meta’s workforce has almost doubled from 2019 to 2022. The company has since let go of about half of its newly added employees. Goldman’s workforce grew by more than a quarter, from about 38,000 to just over 48,000 from the end of 2019 to the end of 2022. The company reversed a third of this increase by laying off about 3,450 people.

Other banks have been a little slower to scale down. At Morgan Stanley, jobs surged by a third during the same period, but only one-eighth of the increase was eliminated. Citigroup has a similar story. Wall Street kingpin JPMorgan Chase has yet to make any major layoffs. Overall, job losses may slow New York’s economy a bit, perhaps cooling Tribeca’s loft market, but are unlikely to be fatal to a city of its size and vibrancy. .

But perhaps there is more to this story. Job cuts in the tech industry will begin in earnest in 2022, with about 165,000 jobs lost. They are coming in thick and fast now. More than 210,000 jobs have been cut since the beginning of the year. History suggests that the fire season will gain momentum. It took many years for banks to downsize in the wake of the global financial crisis. Like tech companies, financial firms will need to cut jobs several times as much to get them back to pre-pandemic size. Banks is losing fat but still doesn’t look skinny.

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