Comptroller Says Crisis Could Cost NY 225,000 Jobs

By Valerie Bauman

ALBANY, N.Y. -- New York Comptroller Thomas DiNapoli said Monday the financial crisis gripping Wall Street and the world economy could cost the state and New York City 225,000 private sector jobs over the next two years.

DiNapoli said instability in the financial sector could also cost the state and city $6.5 billion in tax revenue from the securities industry during that same period.

In a report issued Monday, he suggested the city and state may need a federal bailout despite the efforts of Gov. David Paterson and New York City Mayor Michael Bloomberg to close budget deficits.

In the first half of this year, New York Stock Exchange member firms alone lost nearly $21 billion, DiNapoli said.

"These numbers are translating into job losses," he said.

The securities industry in New York City has already lost more than 16,000 jobs and could shed a total of 38,000 jobs by next October.

Another 10,000 jobs could be lost in banking, insurance and real estate. DiNapoli estimates total private-sector job losses could reach 175,000 or more in New York City, depending on the severity of the downturn. Altogether, the state could lose 225,000 jobs before seeing the end of the crisis, he said.

Part of the problem for the state is a drop in tax revenue as bonuses paid out on Wall Street dry up this year.

"Top Wall Street executives ought to forgo bonuses during this difficult time; it's inappropriate to reward poor performance," DiNapoli said. "But the public must keep in mind that bonuses paid to lower level employees are often used to purchase goods and services in other industries, which benefits the overall economy. New York will feel a lot pain from a shrunken bonus pool."

New York City's financial plan projects losses of $25.5 billion in the securities industry for the full year, but the comptroller's report warns that losses could be even greater.

During the 2001-2003 recession, New York state lost 329,600 private sector jobs, with 173,500 of those directly or indirectly related to Wall Street. New York City lost a total of 232,100 private sector jobs during that period.

Before the current crisis, the securities industry accounted for 5% of New York City's employment, but nearly 25% of the wages.

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