DiNapoli: Weakness On Wall Street Could Hurt State Economies, Cost Jobs
NEW YORK (CBSNewYork/AP) -- Wall Street is again losing jobs because of global economic woes, threatening tax revenue for a city and state heavily reliant on the financial industry, New York Comptroller Thomas DiNapoli said Tuesday.
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DiNapoli said that after adding 9,900 jobs between January 2010 and this April, the industry shed 4,100 jobs through August and could lose nearly 10,000 more by the end of 2012. That would bring the total industry loss to 32,000 positions since the economic crisis of 2008.
He said profits at New York Stock Exchange firms earned $9.3 billion in the first quarter of this year, but declined sharply in the second quarter and are likely to reach $18 billion for the year, a third less than in 2010. Cash bonuses also declined last year.
DiNapoli told 1010 WINS that a less-profitable Wall Street could mean trouble for the city and state's economies, which rely on strong revenue from the financial sector.
"A combination of cutting back on jobs, bonus pools being lower, profits being lower, all of that will translate into less revenue for the city and for the state making our budget balance challenge a very real one as we move through the rest of the state's fiscal year," DiNapoli said.
He also said that declining employment in the financial industry could have a ripple effect in the larger workforce, saying that when one job is lost on Wall Street, two jobs are lost in other industries in the city.
"When Wall Street adds a job, it creates another two jobs in the boroughs of New York City and another job outside of the city and the reverse is also true," DiNapoli said. "If you're losing a job, you're going to see less money being spent in terms of these being high earners, whether it's on restaurants or the neighborhood stores where they live, you're going to see a negative impact."
Securities activities drove 14 percent of state tax revenue and 7 percent of New York City's last year. DiNapoli warned that current and future collections are likely to fall short because of the weakness.
DiNapoli said in light of this prediction, the state needs to watch how they spend money.
"At this point, our budget is certainly in better shape than budgets we've had in recent years, but this is certainly a warning sign," he said. "As we move through the rest of the fiscal year, if this forecast holds true, it's going to be even more important to look at how we're spending money and what our revenues are for the state."
So far, Wall Street has lost 22,000 jobs since the economic crisis of 2008.
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