No one on Wall Street believes the official economic data anymore. Jobless number, spending numbers and job creation numbers are consistently revised in ways that show economic reality to be more gruesome than the original numbers showed. Inflation seems to be calculated according a formula that nets out anything with higher prices.
And now comes the new that from the U.S. Bureau of Labor Statistics that total headcount on Wall Street was flat over the past 12 months. That will be shocking news to the thousands of Wall Street workers who saw their jobs cut over the past year. Even data from private-sector analysts seems to undercount the bloodletting, showing that, on a seasonally adjusted basis, employment has declined by only 800 since the end of 2007.
So what happened to all those job losses? The answer after the jump, along with the real numbers.
Crain's Arron Elstein estimates that in the past year 22,000 New Yorkers who work on Wall Street have lost their jobs. And with IPO volume is down nearly 70% this year and M&A activity is off nearly 40%, more job losses are almost certainly on the way. The city's Independent Budget Office forecasts that 33,300 Wall Street jobs--17% of the Wall Street's workforce--will be cut by next year.
The official reporting on job losses is far lower, in part because the government doesn't count positions for which people are still receiving severance. The cuts at Bear Stearns, and other cuts recently announced, have also not hit the official numbers.
Here's Crain's estimates of job cuts at securities firms: total worldwide followed by estimated number in New York City
CITIGROUP 15,900; 3,000
BEAR STEARNS 9,200; 7,000
UBS 7,000; 1,000
LEHMAN BROTHERS 6,400; 2,000
MERRILL LYNCH 5,200; 2,000
MORGAN STANLEY 4,400; 2,000
J.P. MORGAN CHASE 4,100; 1,500
BANK OF AMERICA 3,700; 1,000
GOLDMAN SACHS 1,500; 500
WACHOVIA 1,400; 1,000
CREDIT SUISSE 1,300; 750
DEUTSCHE BANK 500; 250
Posted by guest , Jun 02, 2008 1:41PM
This makes no sense unless it's desk and immediate front-office support staff alone. I know for a fact JPMorgan has over 4,000 in technology alone, and more in middle office / operations.
Posted by guest , Jun 02, 2008 1:54PM
Does anyone know what happened at Citi last week? I heard CMBS was getting cut-the trading desk, structuring and the proprietary group that invests in distressed debt situations. Tell me what you know!
Posted by guest , Jun 02, 2008 1:55PM
Have a question re: unemployment numbers. I myself was laid off in October and my benefits have run out (not to mention a lot of leads and positions put on "hold" to weather out the financial storm).
I suspect that unemployment numbers only reflect people currently receiving benefits (vs. those still unable to find jobs).
To Carney's point, the reported unemployment numbers are probably less "gruesome" than some would be led to believe (within or outside of financial services).
I'm not at "will work for food" yet, but somethings got to give soon, right?
Posted by guest , Jun 02, 2008 2:05PM
I wonder why Barclays Capital has been left off every list of layoffs I've seen yet. I know they haven't announced official layoffs, but they've been cutting people (while still hiring on growing desks like commodities) for awhile now.
Cuts there started in November, and there has been at least one additional round since then (in late Feb/early Mar, after bonuses).
Posted by guest , Jun 02, 2008 2:11PM
Unemployment numbers are based on unemployment claims. Most people getting laid off are getting some pretty hefty severance and hence they are not eligible to file for unemployment benefits YET (and I am guessing that most laid off bankers are not going to make a trip to the employment folks either).
So yes, the Wall Street layoff numbers are not going to hit the overall numbers yet. It will be more of a trickle down unemployment number (less folks = less cafetaria hiring, fewer soe shine folks etc etc) which will start showing up in some time.
Posted by guest , Jun 02, 2008 2:32PM
A couple of points on unemployment (from someone who has actually FILED for it)
1) In most cases, you apply online. No need to haul your ass to the unemployment office.
2) No matter how much you were making, the cap is $405/week for 26 weeks, no extensions (thanks Bush, but most of us collecting made too much to qualify for your lousy $600 stimulus check either). Fyi, to collect this "max" $405, you need only be making about $60K/year.
3) Most people are eligible to collect right away (despite severance, unpaid vacation, etc.) Exception -- if you were fired for cause, in which case, benefits could be denied.
4) @2:11 - Before you "guess" that bankers (or anyone else in this predicament would turn up their nose at collecting benefits, try being out of work for 6+ months (without the BSC double pay or bonus, etc or other trappings). Along with escalating gas and food prices, you might want to use this payout as your "mad money".
Posted by guest , Jun 02, 2008 2:38PM
A couple of points on unemployment (from someone who has actually FILED for it)
1) In most cases, you apply online. No need to haul your ass to the unemployment office.
2) No matter how much you were making, the cap is $405/week for 26 weeks, no extensions (thanks Bush, but most of us collecting made too much to qualify for your lousy $600 stimulus check either). Fyi, to collect this "max" $405, you need only be making about $60K/year.
3) Most people are eligible to collect right away (despite severance, unpaid vacation, etc.) Exception -- if you were fired for cause, in which case, benefits could be denied.
4) @2:11 - Before you "guess" that bankers (or anyone else in this predicament would turn up their nose at collecting benefits, try being out of work for 6+ months (without the BSC double pay or bonus, etc or other trappings). Along with escalating gas and food prices, you might want to use this payout as your "mad money".
Posted by lift all the offers , Jun 02, 2008 3:12PM
Things I no longer believe in: Tooth Fairy, Santa Clause, Easter Bunny, and US govt employment, deficit, CPI, and GDP stats.
Also, don't believe that there is anyone in Florida who run an election correctly, but saving that for another blog.
Posted by guest , Jun 02, 2008 3:15PM
For heaven's sake, if you've been laid off, file for unemployment insurance. You actually paid for this benefit when you were working.
Posted by guest , Jun 02, 2008 3:23PM
Ps, Unemployment Benefits are technically "Insurance"...ie, you & employer paid premiums via payroll (check pay stub) all along and they pay you the "settlement" upon your "claim"
Anyone who turns their nose up is akin to refusing your home/auto/life insurance settlement after your 3 series cracks up, starter house burns, or mail order bride kicks the bucket....
:-)
Posted by guest , Jun 02, 2008 3:39PM
@3:15 + @3:23 -- Exactly. I don't know why anyone would be above collecting money they are entitled. Heck, if you are flush and don't need it, deposit it in an emergency fund for sometime when you will.
Posted by guest , Jun 02, 2008 3:56PM
https://ui.labor.state.ny.us/UBC/home.do?FF_LOCALE=1
plug in your SS#, $1620 bucks is electronically deposited in your acct for 6 mos.
Blow it drugs, hookers, and steaks
Posted by miami , Jun 02, 2008 3:57PM
1:55 [and others] are evidently clueless newbs, probably why they were fired:
'I suspect that unemployment numbers only reflect people currently receiving benefits (vs. those still unable to find jobs).'
Durrrrrrrrrrrr...tell me about the rabbits, George.
This trope gets brought up time & again by those ignorant of how the government measures the unemployment rate. It has nothing to do with 'collecting' or 'benefits' AT ALL WHATSOEVER.
This is really basic stuff, anyone who works on WallSt, should know it by now, and it's been mentioned 1000x of times.
"Where do the statistics come from?
Early each month, the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor announces the total number of employed and unemployed persons in the United States for the previous month...
Some people think that to get these figures on unemployment the Government uses the number of persons filing claims for unemployment insurance (UI) benefits under State or Federal Government programs.
But some people are still jobless when their benefits run out, and many more are not eligible at all or delay or never apply for benefits. So, quite clearly, UI information cannot be used as a source for complete information on the number of unemployed.
The unemployment rate is defined as the number of unemployed persons divided by the labor force, where the labor force is the number of unemployed persons plus the number of employed persons. The official definitions of these figures are as follows:
Employed persons (Current Population Survey).
Persons 16 years and over in the civilian non-institutional population who, during the reference week, (a) did any work at all as paid employees, worked in their own business, profession, or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family, and
(b) all those who were not working but who had jobs or businesses from which they were temporarily absent because of vacation, illness, bad weather, childcare problems, maternity or paternity leave, labor-management dispute, job training, or other family or personal reasons, whether or not they were paid for the time off or were seeking other jobs. Each employed person is counted only once, even if he or she holds more than one job.
Unemployed persons: Persons 16 years and over who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.
Actively looking for work may consist of any of the following activities:
* Contacting: An employer directly or having a job interview;
A public or private employment agency;
Friends or relatives;
A school or university employment center;
* Sending out resumes or filling out applications;
* Placing or answering advertisements;
* Checking union or professional registers; or
Some other means of active job search.
Labor force (Current Population Survey). The labor force includes all persons classified as employed or unemployed in accordance with the definitions contained in this glossary."
www.bls.gov
Posted by guest , Jun 02, 2008 5:09PM
yes, it's just a matter of time before we read the smarmy NY Times article about the "1620 Club" of ex-bankers who hang out at posh restaurants all day, living off their unemployment checks, just like five or six years ago. Ride it out, boys, the market will turn in 09.
Does anyone else remember the 420 club? Or was it 740? I forget what unemployment benefits were in 2002.
Posted by diablo , Jun 02, 2008 6:51PM
All I know is that soup kitchens and other charitable orgs in the trenches around the NY metro area are hurting. Costs have gone up thanks to oil and food inflation. Donations are more urgently needed because of the increased demand and higher costs. So if you still have a job, consider helping others. Governments are not going to do more.
Posted by guest , Jun 02, 2008 9:39PM
@3:57 / miami -- no need for your smarmy lesson; the poster(s) specifically questioned how the unemployment rate is calculated.
Perhaps everyone doesn't have the free time you clearly have on your hands to read the hundreds of postings on this site (nor post a 1000+ character diatribe showing off your knowledge). And if it was previously stated in recent months, here's a concept: Get Over It.
As we all do, I have many, many friends who have lost their jobs (finance and non-finance) over the past few months and the articles about rising oil prices, depleted food pantries, and soaring food costs are frightening. Not everyone in finance is/was pulling in high six figures.
I'm sure the unemployed would rather continue to be so than have to work for a jackass like you. I can only imagine your response when some peon or (god forbid, a peer or colleague) poses a question that you think they should know.
Posted by guest , Jun 03, 2008 12:29AM
for any hot Citi CMBS traders being laid off, or other former Citi traders,..I am happy to offer my support in your time of need. Even if you just need a chest to rest your head on, I am here for you.
I'm available, so call me!
B. Spears
Posted by guest , Jun 03, 2008 6:38AM
People lost jobs and replaced them with new ones. And banks that laid off, continue to hire.
Mystery solved.