According to the NY Times, it's hardly surprising that Wall Street is bracing for layoffs. The European debt crisis is rocking the markets. New regulations are crimping bank profit centers. And smaller bonuses are sending other compensation costs soaring.
Scratching your head about that last one?
In a nod to the fury and outrage from the financial crisis, Wall Street firms tempered their annual bonuses to employees last year, seemingly as a way to rein in pay. And the bonuses were largely paid in stock, aligning compensation more closely with the company’s performance.
But Wall Street did not necessarily cut the overall pay packages. The dirty little secret is that to make up for the lower bonuses, many firms simply raised the base salaries. The move has been described by some government officials as a “sleight of hand.” The new pay structure is now having an unintended consequence: It is perverting Wall Street’s calculus during periods of weakness.
In the past, banks could cut variable costs like bonuses when profits slipped, rather than handing out pink slips en masse. Now, fixed costs like salaries make up a higher portion of their expenses. So layoffs are starting to look more attractive….
Find out more at:
http://www.cnbc.com/id/43479491
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