Liquidity Crisis Could Lead to High Turnover on Wall Street

Job cuts on Wall Street could be more than 100,000 in a few years, said Jo Bennett, a New York-based executive search firm specialist. According to USA Today, New York City alone could suffer the loss of more than 20,000 financial sector jobs over the next two years leaving thousands of employees at Wall Street firms with no income in the coming months as the subprime crisis and related credit crunch persists.

The job cuts signify the troubles faced by many firms and could affect investments in the long-term. In an effort to control costs, many Wall Street firms already drastically reduced their workforce. More than 34,000 financial sector employees lost their jobs in the last nine months because of the subprime crisis and credit crunch, reports Bloomberg.com. At least 11 firms cut over 1,500 jobs. Citigroup, Lehman Brothers, Bank of America, Morgan Stanley, and Merrill Lynch have been hardest hit by job cuts to date.

For instance, JPMorgan’s recent agreement to buy out Bear Stearns could lead to the elimination of thousands of jobs. Going forward, the likelihood of further consolidation within the securities industry puts more jobs at risk. While the subprime crisis and credit crunch linger, investors should keep a wary eye on the viability and strength of the firms that invest their money.