New York, NY – The general employment outlook in the US remains weak as hiring has not been able to keep pace with new entrants into the labor force and an increasing number of layoffs. However, the employment outlook on Wall Street does not appear to be any better as weak financial market conditions and increasing government regulation has put a damper on profits and led to a sharp pickup in job losses throughout the summer.
Employment Outlook in First Half
According to Challenger, Gray & Christmas, a Chicago-headquartered employment consulting firm, from January through June, 2011, banks, insurance firms and brokers had planned to eliminate 11,734 jobs. During this same period, Wall Street firms had announced hiring 4,531 positions, for a net loss of 7,203 jobs during the first half of the year.
It is interesting to note that in two months during the first half of the year – March and June – the number of announced hirings actually exceeded the number of announced layoffs made during those months.
Layoffs Accelerate in 3rd Quarter
However, layoffs at large investment and commercial banks have accelerated as the summer has progressed due to continued deterioration in the financial markets. In fact, over the past six weeks, global investment banks have announced layoffs totaling more than 40,000 jobs – most of which are expected to take place before the end of the year.
|Number of Employees
|Bank of America Corp.
|Aug. 19, 2011
|3,500 to 10,000
|Bank of New York Mellon Corp
|Aug. 12, 2011
|August 2, 2011
|July 19, 2011
|30,000 by 2013
|August 9, 2011
|August 8, 2011
|State Street Corp.
|July 19, 2011
|July 13, 2011
|47,350 to 53,850
As you can see from the table above, some of the firms expecting to reduce their payrolls most aggressively include HSBC, UBS, Bank of America, and Barclays. Another firm that is expected to announce significant layoffs in the coming weeks, but has yet to do so is Morgan Stanley.
In fact, some recruiters suggest that the number of layoffs in the financial services sector in 2011 could actually eclipse the total job losses seen in past two years. For example, in 2010 Wall Street experienced 23,996 layoffs following 51,505 job reductions in 2009.
Potential Bright Spot?
One problem for many financial services firms in 2011 has been the drop in equity trading volumes and equity commissions seen so far this year. As mentioned in previous blogs, trading volume on the major US stock exchanges has fallen over 20% in the first half of the year.
However, market volatility in the past few weeks has had a huge positive impact on many brokers’ commission revenues. The real question is will this continue, and will it be enough to ward off even more Wall Street layoffs.