Wall Street Bonuses Drop in 2023, But 2024 Could Bring a Rebound

If your 2023 bonus left you feeling disappointed, you’re not alone. A recent report by the New York State Comptroller confirmed that the average Wall Street pay dropped by 5.2% last year, with bonuses taking the hardest hit. Securities industry workers, who are accustomed to hefty year-end payouts, saw their total compensation—including bonuses—fall to $471,370, a noticeable dip from previous years.

Bonuses Take a Dive
While salaries on Wall Street remained relatively stable, the steep decline in bonuses was the primary driver behind the lower compensation. The average bonus in 2023 was $176,500, down from the over $200,000 figures that were common during the pandemic-fueled boom. Those pandemic-era bonuses had set a high bar, making last year’s payouts feel particularly underwhelming in comparison. Adjusted for inflation, total compensation was down 8.7%, adding another layer of frustration for workers whose take-home pay didn’t go as far as it once did.
The New York State Comptroller’s annual compensation report is closely watched, not just by Wall Street workers, but also by city and state governments. Wall Street bonuses are a significant source of tax revenue for New York, and the dip in pay has broader implications for budgeting and fiscal planning. It also likely explains why bonuses tend to feel smaller than anticipated, as they are often subject to high levels of taxation.

A Silver Lining for 2024?
Despite the downturn in 2023, there’s reason for optimism going into 2024. While the pandemic years set an unusually high bar for profits and compensation, Wall Street’s performance has rebounded to pre-pandemic levels, suggesting a return to more normal growth. In fact, pretax profits for broker-dealer operations of New York Stock Exchange members surged by nearly 80% in the first half of 2024, reaching $23.2 billion.
This resurgence in profitability is expected to have a direct impact on bonuses for the coming year. The report forecasts a 7.4% increase in bonuses for 2024, offering hope for a more rewarding year-end payout. With a revival in key sectors like initial public offerings (IPOs) and mergers and acquisitions (M&A), Wall Street could see a significant upswing in business activity, further boosting compensation.

Wall Street Still Tops the Charts
Even with last year’s decline, Wall Street’s pay remains among the highest in the country. The average compensation of $471,370 in 2023 was the third highest on record, far outpacing the private sector’s average of $98,700 in New York City. While the dip in bonuses may have stung in the short term, it’s clear that Wall Street workers are still earning considerably more than their counterparts in other industries.
With the possibility of larger bonuses in 2024, workers may once again have the means to splurge on high-end luxuries, whether that’s a summer rental in the Hamptons or even a new boat. If the recovery continues and market conditions remain favorable, Wall Street professionals could find themselves celebrating a return to the more lucrative days of the past.
In conclusion, while 2023 may have been a disappointing year for Wall Street pay, the outlook for 2024 is brighter. With strong profit growth and rising activity in the financial markets, there’s a good chance that the coming year’s bonuses will restore some of the luster that was lost in the post-pandemic slowdown.