Largest banks in America have collectively cut 20K JOBS so far this year

The largest banks in America have collectively laid off approximately 20,000 employees since the beginning of 2023 due to rising interest rates in the mortgage industry, Wall Street deal-making fluctuations and increasing funding costs.

According to company filings, five of the largest banks in America are quietly cutting thousands of employees after a two-year hiring boom during the Wuhan coronavirus (COVID-19) pandemic. This hiring spree was abruptly curtailed as the Federal Reserve initiated interest rate hikes in 2022 to temper an overheated economy. As a result, banks became overstaffed, with fewer people getting mortgages and companies offering debt deals and mergers.

Wells Fargo and Goldman Sachs had the most layoffs, with both banks downsizing by approximately five percent this year. Wells Fargo had cut 50,000 jobs over the past three years, while Goldman Sachs had large-scale layoffs in January. Both banks are still expected to reduce their staff due to changes in their business focus, but unlike Wells Fargo, Goldman Sachs would only have a few layoffs.

“Banks are cutting costs where they can because things are really uncertain next year,” noted Chris Marinac, research director at Janney Montgomery Scott. Marinac warned that job cuts in finance could impact the overall U.S. job market in 2024 because more companies and people are struggling to pay their loans. (Related: Layoff saga continues as 12 more companies announce mass employment terminations.)

“They need to find levers to keep earnings from falling further and to free up money for provisions as more loans go bad,” Marinac explained. “By the time we roll into January, you’ll hear a lot of companies talking about this.”

“All these companies expanded year after year,” Marinac explained. “You can easily see several more quarters where they go backward because there’s room to cut, and they have to find a way to survive.”