Downsized Wall Street licks its wounds
ReutersA former employee of Lehman Brothers walks out carrying a box of his belongings after the firm filed for bankruptcy in September 2008.
NEW YORK (MarketWatch) -- When it comes to careers, Wall Street has gone from a shining temple of opportunity to a bunker.
Behind the transformation lie years of risk-bundling, synthetic investment vehicles and other byzantine, unsustainable profit schemes. When they ultimately blew up, they threw the economy into recession and, like a financial Frankenstein, destroyed many of their own creators' livelihoods.
Between January 2008 and January 2010, the finance sector in New York lost 46,500 jobs, the bulk of them in the securities industry.
Despite the carnage, there are still those seeking a career on Wall Street.
Kevin Fernandez is one of them.
The 22-year-old Villanova University graduate interned at Jefferies & Co. last summer and hopes to land an investment-banking job in New York.
But it's an uphill struggle. New York, one of the world's great financial hubs, has recovered less than half the finance jobs it lost during the recession.
"I have had interviews since last summer all through now, but I haven't been able to secure any of them," said Fernandez, who double majored in finance and international business. He's been interviewed for various positions in investment banking, private equity and consulting.
"The opportunities are there, but in more limited quantities," he said. "Given current market conditions, it's becoming much more difficult."
New York's finance sector has seen only modest job growth over the past few months, adding a paltry 2,800 jobs since October 2011, according to seasonally adjusted data from the Office of the New York State Comptroller.
The euro-zone debt crisis, troubled U.S. mortgage market, and looming regulatory reforms are among many reasons weighing heavily on financial institutions, making them reluctant to hire new staff.
Meanwhile, none of these major concerns is resolved, depressing the volume of shares traded on the Dow Jones Industrial Average (DJIA) and raising fears Wall Street could be in for another round of layoffs. Read about energy sector attracting more entrepreneurs.
Painful losses
The recession took a terrible toll on the Big Apple. And though finance-sector jobs have come back, the pace has been frustratingly slow: only 21,700 jobs added from January 2010 through April 2012.
"We are maybe past the severe shocks. I am not sure we are through the crisis," said Jeffrey Joerres, chairman and chief executive of recruitment firm Manpower Group.
"We see a lot less of broad mandates," he said. "What we had seen in the go-go times is 'get me the smartest and we will find them a place.' They were looking for pure athletes. Now they have much more of a narrower search."
For those laid off during the recession, finding work can take a long time.
One 47-year-old professional, who spoke to MarketWatch on condition of anonymity, said he was unemployed for more than two years. He'd been working in New York for a specialist broker dealer, owned by a European bank, until January 2009, just two months before the U.S. stock market hit a 12-year low. He didn't land another job until April 2011.
At the time, he said he wondered whether he'd ever work again, adding that it's still hard to find a job. Making matters worse, many positions that are available are not advertised, so networking is crucial to success. He found his current job through a contact he met at a networking event.
New York is certainly not the only financial center to suffer steep job losses. London lost 99,000 of its finance-sector jobs during the recession, according to estimates from the Center for Economic and Business Research.
Last month, CEBR projected the number of city jobs is likely to average 255,000 this year, 33,000 fewer than it estimated six months earlier and down a whopping 28% from a peak of 354,000 in 2007.
"The combination of weak demand, aggressive regulation, high taxation and the rising competitiveness of financial centers in the Far East mean that London's position is weaker than before," said CEBR Chief Executive Douglas McWilliams in a statement.
Finance jobs bubble?
Adam Zoia, chief executive of New York-based Glocap Search, a recruiting firm for hedge funds, private-equity funds and investment banks, said the level of employment in financial services before the 2008 credit crisis was unnaturally high. "We were in a bubble," he said. "We are an advanced economy, but the levels were just excessive."
"Within finance, investment management is going to be a rosier picture than investment banking," Zoia said, noting that the increasing amount of wealth in emerging markets will lead to higher demand for investment-management services and, therefore, investment managers.
By contrast, investment banking remains in a tough spot given pending regulatory changes that, if approved, would require banks to hold more capital and ban big institutions from trading stocks and derivatives with their own money.
"Banking is where we really see the most volatility and uncertainty at this time," said Manpower's Joerres. He said banks are likely to see more jobs lost than gained over the next six to 12 months as they grapple with new regulations.
New York's banking industry lost 9,900 jobs between January 2008 and January 2010, according to data from the state comptroller's office. Through April 2012, the industry has added 5,600 jobs, or 56% of what it lost during the recession.
Despite fewer employment opportunities, finance remains a desirable profession for many young people. The compensation is much higher than in other industries, even as cash bonuses have declined and a bigger portion of compensation is deferred.
At the same time, the allure of the technology industry continues to grow. Tech behemoths
Nevertheless, banking giants J.P. Morgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) , as well as the Big Four accounting firms also made the survey's top 10.
"Finance still attracts a large number of analytical talent, but it's less appealing than it was five years ago," Glocap's Zoia said. "There was a lot of negative publicity around financial services, so it causes graduates to think more carefully. There is less interest, but it's still desirable for many."
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