NEW YORK -- Wall Street is being hit by the biggest round of job cuts since the burst of the tech bubble.
Zapped by the home mortgage market meltdown, the economy's slump and the stock market's gyrations, big banks and other financial institutions in New York already have handed out as many as 34,000 pink slips. Yesterday, New York City's Independent Budget Office (IBO) predicted the city could see at least another 20,000 financial services job losses over the next two years.
That estimate doesn't factor in Bear Stearns Cos.' near collapse 10 days ago. The beleaguered investment bank's 14,000 workforce could be chopped in half after it's acquired by JPMorgan Chase & Co.
"Basically, banks can't afford to keep people in place if they're not producing anything," said Mr. Bove. "As business slows down, [banks] will fire some and then fire more later...I can remember working at firms where every Friday for something like a year people were fired."
The loss of such high-paying jobs spells bad news for the rest of New York.
The IBO calculates that for every Wall Street job cut, another three or four jobs will be lost in the city.
"It is clear that when you lose [Wall Street] jobs it just reverberates throughout the economy," said IBO spokesman Doug Turetsky. "The high-income earners are the ones buying condos and eating out at restaurants and shopping. They have a fair amount of disposable income. When that buying power goes away, you feel it in a lot of other sectors."
In the past nine months, big banks including Morgan Stanley, Citigroup Inc. and Lehman Brothers Holdings Inc. have chopped as many as 34,000 jobs, according to data collected by Bloomberg LP. In the aftermath of the 2000 tech wreck, 39,800 positions were trimmed in the same period. During the next two years, which included a further economic and stock-market slump in the wake of the Sept. 11 terrorist attacks, the number of Wall Street job losses surged to 90,000, according to data from the Securities Industry and Financial Markets Association.
For New York, the IBO projects this year will see the steepest cuts, with 12,600 losses projected, followed by 7,600 next year.
Banks and brokerages account for nearly 35% of all salaries and wages in New York.
