Wednesday, May 14, 2008

Trickle Down Layoffs

“Thank goodness I don’t work on Wall Street” is what many people, not employed by investment banks, brokerages and private equity firms might be thinking

But if you live in the NY tri-state area or work in an industry servicing Wall Street – think again.

According to the New York City Comptroller’s Office, the NY area economy is more dependent than ever on skyrocketing Wall Street incomes which have jumped by more than 50% since 2001 to an average annual rate of $387,000.

The financial services industry is responsible for nearly a third of all wages earned in the city and each Wall Street job supports three workers in other sectors.

So who gets the flu when Wall Street gets pneumonia?

First and foremost are the firms that generate much of their revenue from Wall Street companies. The law firms and large consultancies, the advertising and PR firms, and the thousands of men and women who established niche-based consulting operations in everything from Information Technology to Organizational Development to service the industry – during the last round of layoffs

Heidrick & Struggles International is but one example. One of the world’s largest executive recruiters, the firm generates approximately one third of its business from financial services and has seen its share price drop 32% over the last 12 months. (

And then there are the ripples felt throughout the corporate suites of the retail and luxury goods companies; the travel, leisure and lodging sectors or the myriad of smaller firms who really take a hit when the big firms contract. The couriers and limo drivers; the food, service, security and maintenance sectors; and the back-end support operations.

Plus, the housing and construction industry is now experiencing a double whammy as credit tightens, values fall and big ticket purchases are put on hold. From the upscale suburban properties in New Jersey, Connecticut and Westchester County to the residential and commercial units in Manhattan – all aspects of that sector are retreating.

Talk about trickle down, the Wall Street stream of layoffs is capable of drowning many careers.

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