Analysis: Wall Street’s hiring frenzy eases as concerns mount over economy and market slump By Reuters
©Reuters. FILE PHOTO: People ride the escalators at the JP Morgan & Chase Co. building in New York, October 24, 2013. REUTERS/Eric Thayer/File Photo
By Sinead Carew and Saeed Azhar
(Reuters) – As uncertainty mounts over the US economic outlook and the resulting slump in financial markets, Wall Street is shedding hiring opportunities after a recruitment frenzy last year.
Wall Street companies including banks like Citigroup Inc (NYSE:), JPMorgan Chase & Co (NYSE:) and Wells Fargo (NYSE:) & Co have faced brutal hiring competition and have been forced to pay more to recruit and retain talent in 2021 and earlier this year. Bonuses jumped to their highest level in 15 years.
However, recruitment consultants, executives and recent data show that the hiring frenzy is on the wane.
“By the end of 2021 it was white hot with unprecedented demand for hiring and pay,” said Alan Johnson, chief executive of compensation consulting firm Johnson Associates. “It’s rapidly evolving from white-hot to normal and maybe turning cold by the end of this year. We are certainly in a transition.”
The latest data from the US Bureau of Labor Statistics shows that while employers in securities, commodity contracts, investments, funds and trusts were still hiring, the pace picked up in May, with 1,200 jobs added compared to 4,600 in April severely slowed down. This compares to a monthly average of 3,400 in 2021, when the sector saw its largest annual headcount increase since 2000.
Alberto Mirabal, senior vice president of investment banking at recruitment firm GQR Global Markets, said some clients have taken a pause on some talent searches while waiting “to see how things pan out” before joining their already large teams expanding in collapsing global markets.
“We’re seeing a slight slowdown,” he said.
Soaring inflation, exacerbated by Russia’s invasion of Ukraine and the resulting rate hikes, is making some Wall Street companies nervous about the risk of a recession.
Layoffs are already happening in some areas of the financial industry, particularly in the mortgage segment, which is particularly vulnerable to rate hikes hurting home sales.
JPMorgan Chase & Co is laying off hundreds of employees at its homebuilder business and hiring hundreds more this week, according to Bloomberg.
But overall, recruiters said the industry is yet to see a broad hiring freeze or layoffs. And some smaller players, like boutique investment bank Lazard (NYSE:), are trying to take advantage of the changing climate to attract talent.
Kenneth Jacobs, Lazard’s chief executive, said slowing hiring will help his firm attract new talent after 2021, which he says will be the toughest for employee retention and pay in a decade.
“The competition for talent is decreasing,” said Jacobs a MorganStanley (NYSE:) conference last week. “I think we’ll try to take advantage of that.”
Gloria Mirrione, a wealth management client search consultant at Korn Ferry (NYSE:), said she saw a “moderated hiring pace” toward the end of March and into April after a “hiring frenzy” in the second half of last year.
Hiring in the areas of environmental, social and governance (ESG) and impact investing, a hot area for global investors in recent years, has been particularly busy, she added.
“The level of work is more manageable, with perhaps a little more uncertainty as to how the rest of this year will play out,” she said.
However, recruitment trends vary on Wall Street.
Investment banks in particular are facing a rough patch, with year-to-date revenue down nearly 38% from the year-ago period as business slumps on market volatility.
“The largest single drop in activity has been in equity capital markets,” said Julian Bell, managing director and head of Americas at talent consultancy Sheffield Haworth. “This means that broker-dealers, unlike full-service banks, will suffer disproportionately.”
Brokers in health/biotechnology and technology, two of the largest stock market sectors, will suffer the most, he said.
But while hiring is slowing and salary expectations are lower after unusually high compensation in 2021, investment bankers are not worried about upcoming layoffs.
“They still think they’re relatively understaffed for the transaction volume that they have,” said Anthony Keizner, managing partner at Odyssey Search Partners, whose clients include private equity, hedge funds and mutual funds. Some clients still have big appetites for talent, he said.
“Maybe the foot is a bit off the gas, but the car is not about to crash,” said Keizner.