Wall Street a safer career haven than you’d think

February 24, 2010

The recent financial crisis was the worst in a generation — unless you were an American investment banker. Wall Street certainly took its lumps: some banks failed and the survivors slashed thousands of jobs. Even with the collapses of Bear Stearns and Lehman Brothers, though, the finance industry laid off fewer people than it did after the dotcom crash. Moreover, the pay’s still enviably high, even after changes in bonus structures.

Employment in the U.S. securities industry fell by just under 79,000 positions between the peak in June 2008 and last month, according to the U.S. Bureau of Labor Statistics. That’s no small sum. But it is actually 14,000 shy of the number of jobs lost between March 2001 and October 2003, the rout that followed the dotcom bubble bursting.

In New York City alone, industry employment fell by around 30,000 between August 2007 and November last year. But in the 28 months after the top of Wall Street’s previous boom in December 2000, a third more were handed their pink slips.

There are a few explanations for Wall Street’s surprising resistance this time around. For one, fewer of the industry’s businesses hit the skids as hard and for as long.

In the dotcom era, for example, underwriting was staffed to cope with dozens of IPOs and other share sales a week. The crash ended that in a heartbeat. In the more recent boom, markets rarely got that frenetic. And last year’s bank capital-raising bonanza kept Wall Street underwriters busy — even if they were frequently selling their own employers’ stocks and bonds.

What’s more, trading operations have been kept vibrant by all the emergency programs the government and the regulators put in place. These are also far larger businesses than they were 10 years ago — not least because there are thousands more hedge funds incentivized to put something like five times as many assets to work.

Those who kept their jobs might not be as flush with cash as in the past. While bonuses are high relative to other professions, they have come down. Moreover, a larger portion comes as deferred stock, cash, or both — indeed bankers joke that the earnings statements issued by their employers are so complicated they read like regulatory filings.

Of course, more jobs could still disappear, particularly if draconian regulatory reforms, such as the Volcker rule, are enacted. And at 16 percent, it’s fair to say finance jobs lost in New York since the peak are running well above the U.S. unemployment rate of around 10 percent. But that may offer scant consolation to those on Main Street convinced that Wall Street has gotten off lightly.

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