Wall Street prepares for pay cut

Published:  11 Jan at 3 PM

A terribly dismal year means that Wall Street and its workers are set to be hit in their wallets, as alleged by a Wall Street Journal report. With banks preparing to report worrying fourth-quarter results while making final bonus decisions, total compensation appears likely to be its lowest since 2008 – the year the financial crisis destroyed many firms and left others surviving on a government-fuelled life support machine.

Although still lofty when compared to elsewhere in the US, salaries for Wall Street workers are probably going to be their lowest in years during a time when critics have been lashing out at excessive finance-industry compensation.

For example, at Goldman Sachs Group, many of the 400 partners should see their pay cut in half when measured against 2010. Salaries for some employees will shrink by 60 per cent, with many getting no bonus at all. Morgan Stanley could shrink bonuses for many of its investment bankers and traders from anything between 30 per and 40 per cent when compared with 2010.

Pay worries have continued to mount up and down on Wall Street for months in the midst of lower trading revenue, anxiety about the economy, languid deal-making and new regulations. Other pressures, such as weak company stock prices, loom too in addition to sour public sentiment cultivated through the ever-vocal Occupy Wall Street movement in Manhattan.

For the majority of 2011, Wall Street executives provided few specifics with regards to how the year would affect compensation, with the large portion of bonuses bonus paid out over the coming weeks.