Wall Street Firms Might Freeze Pay for Young Workers

By
Wall Street analysts soon to trust God less. Photo: Ricardo Reitmeyer/Copyright Ricardo Reitmeyer, All rights reserved

Wall Street workers at large are not only going to have very disappointing bonuses this year, but the fresher-faced among them might have to deal with a more moderate compensation trajectory. Bloomberg reports that Credit Suisse will be tamping down pay bumps for analysts and associates. They won't do away with annual raises, but will lower bonuses so that pay for that cohort remains, effectively, flat.  First-year investment bankers usually bring in about $200,000, all told, and, until this year, could reasonably expect a 20 percent increase after the first year. Deutsche Bank is considering either cutting or freezing salaries for the top-tier vice-presidents, who, in their third year at the position, typically make somewhere in the $600,000–$700,000 range.

Goldman and JPMorgan are said to be at least considering similar moves; if they go that route,  it is more likely that other competitors will follow. After all, as Bloomberg points out, "Cutting pay can be perilous if your rivals don’t because it’s easier for junior bankers to defect, draining a future generation of talent. Wall Street firms may make the change en masse only if one or more of their biggest rivals act first."

Younger workers are more likely to compare themselves to their peers, if only because pay hews closer to a knowable scale than it does for more senior employees, and so there's a drawback to being the first mover.  (Plus, 23-year-olds making shit-tons of money tend to get really drunk and talk about it with each other, science tells us.) But — much like getting a divorce or choosing Subway over McDonald's at a highway rest stop on a family trip— risking disappointed, angry kids seems like the best unattractive option: It's preferable to cutting jobs in an already-contracting sector, where overall pay at some banks could be down as much as 60 percent.