Wall Street, slammed by protests, may soon feel job-loss pain
When the Occupy Wall Street movement began last month, protesters excoriated the 1% who live at the top of the nation's economic pyramid -- saying they had prospered at the expense of the other 99% of Americans. And now, some lesser players on Wall Street may be joining Main Street in feeling the nation’s economic pain, according to data released Tuesday.
And despite what many might think, that might not be for the greater good.
According to a report by New York State Comptroller Thomas P. DiNapoli, 10,000 people who now work on Wall Street can expect to lose their jobs by the end of the year. At that point, when combined with the 4,000 laid off in the securities sector between April and August, about 32,000 Wall Street workers since 2008 will have found themselves on the unemployment line -- with the expected consequences on taxes and state city finances.
The report comes as the Occupy Wall Street movement continues to grow, with demonstrations and arrests of the disenchanted increasing across the nation. Dozens of protesters were arrested in Boston Monday night, and hundreds were charged recently in New York City. Cities across the country, including Los Angeles, Washington and Seattle, have played host to similar demonstrations.
Perhaps more important than the arrests is that the Occupy Wall Street movement has become a catch phrase in national presidential politics.
Democrats, led by President Obama, have said they feel the frustration and pain of the demonstrators, while Republicans have derided the demonstrations as another example of how Democrats continue to exploit fissures in society as part of an electoral campaign strategy to heighten “class war.” Democrats reject the class-war tag but say they are proud to be warriors for a middle class spurned by the GOP.
Of course, those who have lost their jobs, or are expected to do so, aren't necessarily part of the disliked 1%. That 1% was the target of a march Tuesday in New York, where protesters -- some affiliated with Occupy Wall Street and some not -- visited the homes of the super-rich to point out the lifestyles of the rich and, to them, infamous.
Job losses on Wall Street isn't the only issue, however. DiNapoli also said that the member firms of the New York Stock Exchange earned $9.3 billion in the first quarter of 2011, but profits declined sharply in the second quarter.
"The Office of the State Comptroller forecasts that profits are unlikely to reach $18 billion for all of 2011, which is one-third less than in 2010," he said in a statement
"The securities industry had a strong start to 2011, but its prospects have cooled considerably for the second half of this year," DiNapoli said. "It now seems likely that profits will fall sharply, job losses will continue, and bonuses will be smaller than last year. These developments will have a rippling effect through the economy and adversely impact State and City tax collections. As we know, when Wall Street slows, New York City and New York State's budgets feel the impact and that is a concern."
According to state financial officials, the securities sector accounted for about 14% of New York's tax revenues and up to 7% of the city's. One of eight jobs in the city are tied to Wall Street in some form.
Meanwhile, the average salary in the securities industry in 2010 grew by 16.1%, to $361,330, about 5.5 times higher than the average salary in the private sector, $66,120, the comptroller's office found.
The Occupy movement’s central argument is that corporate greed has damaged the nation’s economy while rewarding the rich, thus making income inequality in the country sharper.
"Excessive risk-taking on Wall Street was a major factor leading to the financial crisis and the recession," DiNapoli said. "Regulatory changes that reduce risk and focus attention on long-term profitability rather than short-term gains will enhance stability."
-- Michael Muskal
Photo: New York City police officers monitor demonstrators affiliated with the Occupy Wall Street protests as they march through the Financial District in New York on Monday. Credit: Andrew Burton / Associated Press