City and State Brace for Drop in Wall Street Pay. (NY Times)

A review of the latest statements from the largest financial companies based in the city shows that they intend to hand out about $18 billion less in pay and benefits in 2008 than in 2007. The cutting of payrolls is well under way, but the full effect will not be felt until the year’s end, when bonuses for employees based in New York could shrink by $10 billion or more, according to city officials and compensation experts.
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“One of the things that highly compensated people do is they spend money,” Mr. Bleiwas said. “So when Wall Street suffers, the pain ripples through the rest of the economy.”

The impending decrease in the personal income of so many New York-area residents, Mr. Bleiwas said, “is a significant reduction which will affect not only state and city coffers but also have a direct impact on other sectors.” He said the jobs on Wall Street pay so well that on average, each one spawns two jobs in other fields in the city and a third in the surrounding region.