Wall Street Employment: Worst Market Ever?

Depends on how you count it

Yup. It’s bad out there. The securities industry has lost a record number of jobs, according to a recent report from the Securities Industry Association. But as a percentage of total jobs, the 1973-1974 bloodletting was worse.

Overall securities industry employment fell to 705,700 in February 2003, a 10 percent drop from the all-time high of 786,100 recorded in April of 2001. The job losses far exceed cuts recorded in the years following other historical market declines, according to the report. The 1987 market crash resulted in nearly 40,000 net job losses as compared to 80,400 lost since April 2001. In the years following the 1973-74 bear market, the industry shed 34,400 jobs.

But, as a percentage of total employees, the recent bear market job cuts haven’t bit as deeply as the 1973-1974 bear market, in which the Dow dropped by 45 percent in 23 months. During that debacle, the securities industry shed 17 percent of its employees.

That total includes back-office personnel, investment bankers and everyone in-between. As you might expect, the current bear market has culled the ranks of registered reps, too. According to a preliminary figure from the U.S. Department of Labor (from which the SIA gathers its data), the number of reps continued to fall–to 488,800 in March 2003. This is a 14.7 percent drop from the all-time high broker employment figure of 573,200 in 2000.

George R. Monahan, director of industry studies at the SIA, expects continued losses during the second quarter of this year to be "concentrated among retail firms and retail activities at all firms domestically." He also believes U.S. firms will need to make additional cuts in foreign operations.

Not surprisingly, the state of New York and New York City have been hit hard by the downturn, experiencing record declines in securities-related jobs of 18 percent and 19 percent respectively over the past two years.

Monahan points out that New York firms tend to have high overhead, which could cause them to lose even more employees in the coming months. The overhead issue is even more pronounced when the industry’s increased use of lower-cost electronic communications networks (ECNs) and alternative trading systems (ATSs) are considered.

In the report, Monahan also warns that New York "must always remain mindful, even in times of state and city budget crises, of the sensitivity of the securities industry to cost reduction."

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