One theme of a recent NYT article is that Wall Street layoffs may soon propagate to other areas: “Last year, the finance industry was responsible for nearly a third of all wages earned in the city, the highest in modern times. And each Wall Street job supports three workers in other sectors.” Mark Zandi, chief economist of Economy.com, is quoted: “[I]n ’01 or ’91, it was a much larger share of the back-office jobs. But in terms of compensation, the impact [now] could be just as significant. One hedge fund job lost today is worth 10 back-office jobs in the last downturn.”
And there is this: “Adam Zoia, managing partner at Glocap, another New York recruiter, said employers using his firm listed the same number of job openings in the first two months of this year as in the period a year earlier. But, he said, they filled 20 to 30 percent fewer of those positions because of uncertainty about the economy.” That’s from a major recruiter with a strong hedge fund practice.
Fund collapses are well-reported every week. Nevertheless, according to Jane Buchan, CEO of a $10 billion hedge fund of funds, although financing is tight and it won’t be easy, “[y]ou will see a large number of people with big names and reputations trying to start up hedge funds” (from a Reuters article; comments delivered at the Reuters Hedge Fund and Private Equity Summit). And while it’s no surprise that a launch doesn’t garner as much attention as a spectacular collapse, there does indeed seem to be a small but steady parade of new funds opening doors.