The folks on Wall Street appear to be tightening the purse strings.
A new report finds that year-end bonuses for Wall Street workers are expected to fall by an average of 20 to 30 percent this year, as compared to last year.
Blame the sluggish economy and the topsy-turvy markets. The report from Johnson Associates, a compensation consulting firm, said recent economic uncertainty and roiling world markets are driving many financial services firms to reduce the pot of money they allocate toward bonuses.
“This year started with great promise for a banner year on Wall Street, but hopes for larger bonuses faded over the summer and continue to dim as we approach year end,” Alan Johnson, managing director of Johnson Associates, said in a release announcing the results.
Wall Street bonuses also fell sharply in 2008, in the wake of the financial crisis. But they rebounded in 2009 and 2010 even as many other sectors of the economy continued to struggle.
This year, however, financial services firms also have been dragged down by the difficult economy. Some banks reported disappointing earnings in the most recent quarter, and there also have been other signs of belt tightening.
Bank of America, for example, has announced plans to lay off 30,000 workers.
The Johnson Associates report said traders and senior management are expected to see the biggest hits to their bonuses. Some Wall Street workers, such as those dealing with very wealthy clients, could still see a slight bump in bonuses.
The company bases its estimates on public data and its own analysis of financial institutions.
The outlook for 2012 isn't so cheery for U.S. bankers, either. Johnson Associates said it expected firms to continue to cut jobs in the U.S. but add staff in emerging markets. Still, some financial services employees may see their bonuses improve.
Of course, Wall Street workers probably won't be too pinched. Even with a smaller bonus, most take home handsome salaries — something that hasn't gone unnoticed by the Occupy Wall Street movement.
In an interview with The New York Times’ DealBook, Johnson said he expects people to continue to focus heavily on how much money Wall Street workers make, especially in light of the Occupy Wall Street movement.
Johnson told The New York Times that Wall Street executives “haven’t gotten the memo at all.”