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Bonuses May Be Up This Year, But Layoffs Planned For '03
12/15/02
By: Jeremy Quittner, NYPOST.com
New York City's economy may be in the dumps, but those who've managed to hold on to their jobs will see larger bonuses than their counterparts nationwide.
Local executives will see annual bonuses of nearly 4.5 percent this year, compared to a national average of 3.9 percent, according to Compensation Resources Inc., a human resources and compensation consulting firm in Upper Saddle River, N.J.
Management-level employees can expect a 4.4 percent payout, versus 3.8 percent nationwide.
Even hourly workers are sharing in the good fortune, with an average bonus of 3.8 percent, compared to 3.6 percent elsewhere in the country, Compensation Resources found.
"The employment outlook in New York is worse than the rest of country, but merit increases are better," said Dan Moynihan, principal for the company.
The city's famously high prices probably deserves most of the credit, Moynihan added.
"There may be a perceived higher cost of living than in the rest of the country, and the need to pay a little better than average," he said.
But the comparatively high bonuses were about the only good news Compensation Resources uncovered.
According to the November survey of 852 companies, nearly 45 percent of New York area companies laid off employees in 2002, compared to 39 percent in the rest of the country.
Similarly, about 38 percent of New York firms instituted hiring freezes, compared to only one third of companies nationally.
And in 2003, New York companies expected the lean times to continue.
The survey found that nearly 28 percent of New York companies plan more layoffs in 2003, and 31 percent will continue with hiring freezes.
The bonus increases come as a surprise to some New York City workers who lost their jobs recently.
"This is not true, especially in financial services," insisted Thomas Foster, a New York City resident who was recently laid off from a middle management position at one of Manhattan's top investment banks.
"I know that bonuses will be smaller than they were last year, and smaller than in 2000."
Foster added that because revenues are down, "the bonus pool that they are drawing from is smaller."
An official at the same bank, who asked not to be named because the bank does not typically comment on bonuses, dismissed the survey.
He said bonuses were "not something you could make blanket statements about," and added bonuses this year are "all over the map based on the individual business unit performance and individual performance."
Industry experts were similarly perplexed.
"Given the position of the equity markets and corporate finance activity, it is not surprising there were more layoffs, but it is surprising that bonuses would be up," said Robert McMillan, a financial services industry analyst for Standard & Poor's in New York.
McMillan's theory: The city's employee bloodletting may have gone a little overboard and companies may have found themselves with more revenues than they expected.
Incentives probably also played a role.
"The people who are left are probably more productive and they have taken on work of former colleagues," he said. "You want to make sure the people are motivated to keep producing."
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