Bank layoffs: Bad for you and the economy
Banks are shedding jobs like autumn leaves these days and at the same time budding new fees to replace the ones outlawed by financial reform.
What does it all mean for us?
Simple: In the new world of consumer banking, expect less for more.
Last month, Bank of America became the latest of the bigs to announce layoffs, trimming its team by 3,500 positions nationwide.
The job cut amounts to about 1% of the bank's 288,000 employees but follows on the heels of several recent layoffs, including a 2,500-person cut earlier this year.
Now the Charlotte, N.C.-based bank is discussing a more draconian cutback that would eliminate another 40,000 jobs, or 14% of its workforce, according to the Wall Street Journal.
BofA is just one of a number of major financial institutions to scale back recently. Others include Goldman Sachs, Bank of New York Mellon Group and State Street, a major Boston holding company.
Unlike 2008 and 2009, this round of job cuts comes at a time when banks are actually posting profits.
Analysts say that's a sign these cuts might be permanent indicators of leaner banking to come rather than mere adjustments to the sluggish economy.
Their trimming couldn't come at a worse time in light of our persistent unemployment figures and sluggish economic growth.
The average annual salary in the financial and insurance sector is roughly $85,000, compared to about $46,000 in the private sector.
Communities all over the country depend on those higher salaries to jump-start their local economies and keep restaurants, professional services and charities afloat.
Banking salaries are on the decline, too.
On average, salaries in finance and insurance dropped $436 from 2007 to 2010, while the average wage in the private sector rose $2,089 during that same period.
How will all of this "right-sizing" affect our future banking experience?
Hard to say.
The optimist in me would like to see banks take off the bespoke suits and return to the core functions of being a bank.
But the pessimist in me says that ship has already sailed.
After spending a decade converting the banking industry into the retail face of the Wall Street casino, I'm not sure banks remember how to please their customers.
And judging by their recent behavior, I'm not convinced they care.