Job Losses Continue to Plague the Financial Services Sector
May 31, 2008 - New York alone has lost over 10,000 jobs in the financial services sector since last summer and it appears more job losses are still to come. The tally of job losses to date may not tell the complete story as those employees who have been let go, and yet are still receiving severance pay, continue to be reflected on many company payrolls. The job cut totals, by just under 30 New York based financial firms, equates to a little over 3.5% of the workforce. This is far less severe a cut back than what was experienced as a result of the dot-com bust and the 9/11 attacks at the beginning of the decade when an astounding 17% of jobs were lost. Employee compensation, in the way of wages, bonuses and benefits, is the greatest expense of most any Wall Street firm and during the period preceding the dot-com bust the pace of hiring to handle the wave of high tech IPO’s (Initial Public Offering) was brisk. After the burst of the dot-com bubble, many of the jobs that were cut both domestically and internationally were eliminated permanently. It is expected that when this downturn reaches an end approximately 45,000 jobs will have been lost in New York, or slightly less than 8%, as compared to the aftermath of the 9/11 attacks when job losses totaled almost 10%. However most analysts agree that given the dramatic impact of over $380 billion in write-downs and losses incurred in the wake of the sub-prime mortgage mess, that banks and brokers have not yet finished the process of shedding jobs. In fact even venerable market guru Warren Buffett recently shared his opinion that the recession in the U.S., which was sparked by the meltdown in mortgage-backed securities, will be more prolonged and more deeply felt than many currently believe.
