The New York City Economy Tracker is a joint project bꦉetween Investopedia and , using publicly availabl𝔍e data to evaluate the economic health of the city across a variety of metrics.

For the week of February 12, 2024, we’re looking at how bonuses and real wages have declined since last year for workers in New York City.

Bonuses Are Declining for NYC Workers

Workers in New York City are seeing a decline in bonuses for the second year in a row, as data from the New York State Department of Taxation and Finance analyzed by the NYC Comptroller show that payments in 2024 are down about 4.1% from last year as of the first week of February. However, this decline is considerably smaller than the year-over-year decline from the 2022 to the 2023 bonus season which was about 18%.

The decline in bonus payments from last year is now more closely aligned with the drop in real wages for workers in the city. According to data from the Bureau of Labor Statistics, average earnings for private-sector employees in NYC fell about 3.4% from January 2023 to 2024, when taking inflation into account.

The months between December and March are typically when many workers across the country, including in New York City, receive performance-based compensation bonuses from the previous year. In NYC, bonuses often account for around 10% of all the personal income taxes the city collects in a given year. Given that substantial proportion, trends in bonuses are significant not only for the financial situation of the city’s consumers, but also the city and state government’s fiscal balance sheets.

Wall Street Bonuses Have Also Taken A Hit

Incentive-based annual bonuses are an even larger component of wages for financial firms in New York City. In the past five years, winter bonuses in the city’s securities industry made up between 39% and 45% of total earnings. Due to Wall Street employees’ high earnings and the outsized influence t🀅he industry has on the city’s overall economy, bonus payments are an important economic indicator.

According to the compensation firm Johnson Associates, bonus payments across the financial services industry are projected to be flat or declining year-over-year. Bonuses for private equity an💃d hedge funds are projected to stay flat, while asset꧂ management looks to decline between 5% and 10%, with only wealth management predicted to increase around 5%.

The decline in bonuses will be a trend to watch out for in the future as the latest data from NYC’s financial plan shows that personal income taxes as a whole make up about 22% of the city’s total tax revenue. Additionally, bonuses are often drivers of consumer demand, especially in the t﷽ime period directly after the holiday season, both of which are important to the general economic wel♈l-being of the city.