Trade in Groups

At the beginning of 2007, the notion of impending doom caused by a credit crunch would have been ludicrous; Wall Street was revelling in an era of unequalled prosperity, record deals were being struck and profits were soaring, and for workers this meant a bulging pay check. However, fast forward one year and the scene changes to one of financial devastation, with major banks having lost nigh on half of the profits reaped during those prosperous days.

The reasons behind the economic collapse have been well documented: the collapse of the US-sub prime market; the drying up of corporate debt buyouts, the collapse of Bear Stearns and near-collapse of the UK’s Northern Rock have all been party to the sorry tale. However, the impact of the credit crunch hasn’t just hit the banks and corporations, for whom Wall Street is their playground; the Wall Street employees are facing decimation amongst their own ranks in the aftermath.

It has been reported that as many as 20,000 people could lose their jobs on Wall Street as the credit crunch continues to bite into business across financial institutions over the next two years, in the wake of an estimated 80% drop in profits to $3.2bn – the lowest level since 1994. In detailing the potential job cuts, New York’s Independent Budget Office said in a report issued in late March that around 12,600 jobs would be lost this year, with a further 7,600 to go in 2009. The figures were based on an analysis of the mayor of New York’s preliminary budget for 2009 and financial plan up to 2012 and include jobs in the securities industry, numbering around 5,300.

However, the quoted figures don’t tell the whole story as they didn’t include the likely forced redundancies brought about by the collapse of Bear Stearns which, at the time of the report, had not yet ran into difficulties; data compiled by Bloomberg News further intimated that 34,000 jobs has already been cut prior to the report being issued as many leading financial institutions made deep and savage cuts in an attempt to stave off ever-decreasing profits as they battened down the hatches in hope of riding out the storm and surviving intact.

But, where does all this leave the workers? For many, working in the financial industry has to date been perhaps the sum of their parts, entering the industry at a young age and possessing little or no experience of other industries; these people might struggle to find alternative work, especially if their specialities are tied very much into Wall Street operations, such as market analysts. Others meanwhile who may have transferable skills, such as accountants, salespeople or administrative staff, will be better placed to find work elsewhere, while IT staff will always be in demand and for them, at least, the future is slightly less bleak.

But even within the confines of Wall Street, the effects of the credit crunch can be felt elsewhere; each highly paid Wall Street job that is lost carries the potential to ripple across other industries, such as the leisure and retail industries, creating more uncertainty for workers in these sectors also. As such, it is not just those whose daily lives have been spent in the line-of-fire within the financial sector that has – or will – endure suffering as a result of the credit crunch; it’s tendrils are far-reaching and are affecting many more people from all walks of life.