In an effort to cut costs, Merrill Lynch, Morgan Stanley and other Wall Street firms have slashed around 43,300 employees since the market tanked, marking the biggest employment cuts in more than a quarter-century.

And the firing spree is not over yet, attorneys and recruiters have told Registered Rep. The cuts have largely left the brokerage ranks unscathed, however. In fact, in comparison, the brokerage ranks remain relatively stable. Most of the cuts have come from non-brokerage departments, such as operations and investment banking departments. J.P. Morgan Chase, for example, is set to announce even more cutbacks.

"Every firm has a list for the next wave,'" says Henry Higdon, chairman of Higdon Group, a New York-based recruiting firm. The first-quarter performance hasn’t turned around much, with the equity markets and investment banking activity both still soft. According to Thomson Financial, global M&A deals are off 45 percent in the first quarter compared to the same period a year ago.

According to the Department of Labor, the job cuts in the year through February are the biggest in the industry since 1974. The cuts leave the total U.S. securities industry employment at 733,100.

The expense reduction efforts have been sizable. In last year’s fourth quarter, Wall Street firms took a $1.7 billion after-tax charge, much of it related to the reduction in employees. This is expected to yield $1.4 billion a year in savings to the firms, according to a research note by Keefe Bruyetter & Woods.

Merrill Lynch has cut more jobs than any firm, shedding about 9,000 positions in the fourth quarter. (Again, the Private Client Group has remained mostly intact; in fact, Merrill has said it intends on employing more brokers by year’s end that it does now.) Morgan Stanley has eliminated 3,800 jobs in the year ending in February. Just recently, Credit Suisse First Boston and Goldman Sachs fired hundreds of employees, including some managing directors who make an average of $1.3 million annually.

New York City had about 170,000 securities industry jobs at the end of February, 11 percent fewer than in September 2001. According to the Labor Department, New York’s share of securities industry jobs is at a record low 25 percent. Thousands of jobs have migrated to New Jersey, Westchester County or Connecticut after the terrorist attacks.

Will this trend change? Not likely very soon, according to attorneys, recruiters and even some brokers.

"We expect mergers and stock sales to rebound in the second half of the year," says a branch manager and producing broker for Merrill. But until there’s evidence that the rebound has arrived, firms expect to make further cuts, the Merrill executive says.