A worsening economic environment and stalled deal markets weighed on banks' profits last year, following a blockbuster 2021.
"A 26% decline brings the average bonus closer to what financial employees received prior to the pandemic," DiNapoli said.
The total 2022 bonus pool for New York City securities industry workers shrank by 21% to $33.7 billion during the bonus season that traditionally spans December to March, much lower than the previous year's record of $42.7 billion -- the largest drop since the Great Recession.
Sector employment in 2022 was 5.1% lower than in 2020, which represented the peak for securities employment in the city. DiNapoli estimates that 1 in 11 jobs in the city are either directly or indirectly associated with the securities industry.
Employment in the city's securities industry came in at about 190,800 people in 2022, the highest level in more than two decades.
DiNapoli expects the 2022 bonuses in New York City's securities industry will likely generate $457 million less in state income tax revenue and $208 million less for the city when compared to the previous year.
In 2022, pretax profits for Wall Street decreased 56% compared with the previous year due to a slump in investment banking fees that was driven by hefty interest rate hikes by the U.S. Federal Reserve, inflation and geopolitical turmoil stemming from Russia's invasion of Ukraine.
The securities industry accounted for 22%, or $22.9 billion, of state tax collections in the 2022 fiscal year and 8%, or $5.4 billion, of city tax collections.
In 2021, profits surged as hot markets for initial public offerings, mergers and acquisitions brought in record fees.
(Reporting by Tatiana Bautzer in New York and Manya Saini in Bengaluru; Editing by Lananh Nguyen and Saumyadeb Chakrabarty)
By Tatiana Bautzer
