“There are going to be a lot of people who are down 50%,” Alan Johnson, managing director of the namesake firm, said in an interview. “What’s unusual about this is that it comes so soon after a terrific year last year. That, plus you have high inflation eating into people’s compensation.”

“We will have layoffs in some parts of Wall Street,” Johnson said, adding that job cuts may amount to 5% to 10% of staff. “I think many firms will want their headcount to be lower by February than it was this year.”

The news hasn’t been uniformly bad, however. Firms will have to boost workers’ base salary by roughly 5% because of wage inflation and retention needs, Johnson said.

What’s more, there have been sections of Wall Street that have thrived in the current environment. High volatility and choppy markets may dissuade corporations from issuing debt, but it’s a good setup for fixed income traders.

Bond traders and sales personnel will see bonuses rise by 15% to 20%, while equities trading staff could see increases of 5% to 10%, according to the report. Traders at hedge funds with a macro or quantitative strategy could see bonuses rise by 10% to 20%.

“My clients realize it will be a very difficult year,” Johnson said. “The challenge is how you communicate this and make sure the right people get paid.”

CNBC / August 4, 2022