It shows that the average salary in the industry in 2010 was $361,330 — five and a half times the average salary in the rest of the private sector in the city ($66,120). By contrast, 30 years ago such salaries were only twice as high as in the rest of the private sector.
Financial professional income fell from the previous year, as a result of the financial crisis, in 2008 and 2009, but never below 2005 levels. There is a big increase in financial professional income from 2009 to 2010, bringing their compensation to above 2006 levels. The peak was in 2007.
The financial sector in New York City took more of a hit in employment than in pay:
The overall financial services sector was disproportionately hit by the financial crisis. The sector employs just 12 percent of the city’s work force, but accounted for one out of every three jobs lost in the recession. Some (not all) of those jobs were regained, but the comptroller’s office says the industry “is likely to experience significant job losses over the course of the next year.” In particular, the securities sub-sector of financial services “could lose an additional 10,000 jobs by the end of 2012, which would bring total job losses in the industry to 32,000 since January 2008,” the report said.
The bottom line question is what economic fundamentals, if any, justify this surge in banker pay? Or, is the surge a product of market failure?