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Merrill, Lehman to pound already bloody job market

Merrill, Lehman to pound already bloody job market
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First Published: Mon, Sep 15 2008. 12 23 PM IST
Updated: Mon, Sep 15 2008. 12 23 PM IST
New York: The likely disappearance of investment banks Lehman Brothers and Merrill Lynch presents a double-barrelled hit to an already wounded job market, and will likely depress salaries on Wall Street.
With Lehman probably headed for bankruptcy and Merrill expected to head into the arms of buyer Bank of America, two of Wall Street’s four pillars could crumble overnight.
Headhunters and consultants said the US financial services sector, already suffering from a glut of unemployed talent after shedding more than 100,000 jobs this year, must now brace for up to 50,000 more.
“The resume flow will start on Monday like there’s no tomorrow,” said Michael Karp, chief executive at executive search and consulting firm Options Group in New York.
“This is seriously going to impact compensation this year, across the Street and all over the world as well,” he said.
“The golden years of compensation in the financial services industry are over, and it doesn’t help with the Bear Stearns people still looking for work.”
On Sunday, eleventh-hour talks to sell Lehman were set to fail, making bankruptcy a near certainty.
At the same time, Bank of America, the second-largest US bank, was wrapping up a surprise acquisition of Merrill, the world’s largest brokerage, in a deal that would save Merrill from Lehman’s fate.
The takeover would make Bank of America the top US bank, and was likely to put 40%, or about 24,000 of Merrill’s 60,000 non-broker employees, out of work, said Gustavo Dolfino, president at New York-based recruiting firm WhiteRock.
Beggars not choosers
That, combined with Lehman’s approximately 26,000 workers, will send shockwaves through the job market.
The two firms’ probable disappearance would also squeeze New York City, which relies heavily on the financial services industry.
Although Wall Street is not New York’s biggest employer, it is the city’s economic anchor. Each financial-sector worker is believed to create as many as four other New York jobs, due to their high salaries.
The year-long credit crunch has led to deficits in both the city and state budgets.
Democratic City Comptroller William Thompson said last week he was “very concerned” about the resolution of the Lehman saga, and warned it would impact New York’s economy and tax revenues.
Further tremors could hit that tax base in coming months, as Lehman’s undoing was expected to spark a drop in world stock markets that could push other wobbly financial companies to the brink.
The recruiters said the job losses would drive even more talent to the buy-side and to overseas countries, despite the global economic slowdown, which was spawned by the breakdown in the US subprime mortgage market last year.
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First Published: Mon, Sep 15 2008. 12 23 PM IST