NEW YORK – Banks aren’t the big jobs machines they used to be.

One after another, major financial firms are trimming their payrolls. In first-quarter earnings announcements this month, Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Morgan Stanley revealed that they have slashed more than 31,000 jobs, or 3.5 percent of their combined work force, in the past year. For three of those banks, it was the second straight year of cutbacks. And the pattern is being repeated at banks around the world.

Layoffs in the depths of the financial crisis were to be expected. But four years later, and at a time when many banks are reporting higher or even record earnings, the cuts are unsettling to an entire industry.

The losses are an unwelcome reminder of the meltdown and its lingering effects. A slow, halting recovery has kept loan demand in check. Low interest rates are crimping profits from lending. New regulations have extinguished old sources of revenue, and compliance is expensive. The cuts also reflect advances in technology that have made bank tellers more expendable.

Steven Mann, chairman of the finance department at the University of South Carolina’s Moore School of Business, says many of his students have given up on banking jobs.

“In 2005, 2006, 2007, I’d ask, ‘Do you want to go work at a bank?’ and the answer was always yes,” he says. “Now the answer is no one. They want to be in the treasury department of General Electric.”

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The industry’s rhythm now veers more toward cost cutting than freewheeling. Those higher earnings? They’re not because business is gangbusters. They’re because banks have been forced to make do with less.

What makes the situation especially harsh is that there were signs in 2010 and 2011 that banks would start hiring more people. Banks added about 45,600 positions in the U.S. in 2010 and 2011 combined, according to federal data. In the previous two years, they shed more than three times that many jobs.

Then last year, job growth was essentially flat. Some observers worry that the turnaround won’t ever happen. The industry’s total U.S. work force of 2.1 million is 105,000 less than it was at its peak in 2007.

Banks have always cut and added jobs to navigate the varying fortunes of the economy. So it’s difficult to discern whether the industry is permanently shrinking, or if this is just a temporary downward move in a cycle that will turn around again.

“It’s just hard to know how things will shake out,” said Phillip Swagel, a former Treasury official who now teaches economics at the University of Maryland.

 


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