Sorry, Wall Street. Paying Young Bankers More Won’t Make You Cool Again.

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This guy just got a raise, but he still would rather be playing air hockey in San Jose. Photo: lofilolo/Getty Images

In news that is sure to stir hearts across the country, Goldman Sachs has decided to give a $15,000 annual raise to next year's class of analysts (junior bankers typically just out of college, usually about 22 to 24 years old) as part of an effort to retain and attract top-level talent.

It's an overdue move, and not all that surprising. Life as a young banker on Wall Street is a fairly miserable experience, and many young bankers are understandably fleeing the cramped bullpens of Manhattan for the free snacks and treadmill desks of San Francisco. Paying bankers more is one way to fight that attrition. But it's not going to solve the biggest problem Goldman has.

To understand why not, you should know that there is a junior Goldman Sachs analyst archetype — call that type the Renaissance Kid. This kid worked hard in high school, got into Harvard/Yale/Princeton/Wharton, excelled in class while racking up a slate of impressive extracurriculars, majored in a social science or a hard humanity, and interned at a bank during the summer after sophomore or junior year.

The Renaissance Kids typically have their pick of investment banks, and what makes them so attractive to Wall Street — aside from their credentials, which look good on a pitch book — is that they're interesting. They're not carbon-copy Alex P. Keatons. They read books, can wax eloquent on nonfinancial matters, and are good at male small-talk (which female Renaissance Kids also excel at). Executives look them over and imagine them schmoozing clients, passing the airport test, and eventually taking over for them at the top of the firm.

Goldman Sachs is especially desirous of Renaissance Kids, because it's always fancied itself the thinking man's investment bank. ("I think you also have to be a complete person. You have to be interesting," Lloyd Blankfein told the bank's interns last year.) But because Goldman wants them, everyone else does, too.

The problem, for Goldman and the rest of Wall Street, is that banks aren't pulling nearly the number of Renaissance Kids they once did. These firms are having no problems drawing applicants out of college, but what I've heard from senior Wall Street hiring managers is that they're not the right kind of applicants. They're second-stringers, as far as the banks are concerned. The students these firms want to attract — badly — are increasingly going to Google or Facebook instead of Goldman and J.P. Morgan. (Or, almost worse, going to Goldman and J.P. Morgan, working for a year or two, and then quitting to go to Google or Facebook.) And that kills the banks' sense of supremacy.

Pay the analysts more, then! Won't that make Wall Street impossible to resist?

Well, no. Because although an extra $15,000 might keep current analysts from jumping ship — assuming the firm doesn't just take that amount out of their year-end bonuses to compensate — it won't do anything to bring the next generation of Renaissance Kids back to Wall Street.

Hyperdriven, multitalented young people aren't picking tech over finance because it pays more. They're picking it because the lifestyle is better, because it's just as competitive to get into (if not more so), and because being on Facebook's mobile ad team allows them to feel better about themselves than making DCF models for Fortune 500 companies all day. In their eyes, going into tech is a way to remain among the cultural elite without selling your soul.

Even if it widens the pay disparity between finance and tech by upping junior banker salaries to $100,000 or $120,000, Wall Street can't compete on the terms that really matter. Not after 2008. But the important thing is that it shouldn't really need to.

Despite its fears, Goldman Sachs won't collapse if it stocks its ranks with students from the UMass econ department rather than the Harvard political-science department. In fact, it might be better off. After all, the Renaissance Kids, at heart, never really wanted to be bankers. They read the Vault Guides, feigned interest, aced their interviews, and went into finance for the same reasons kids go to Silicon Valley now — because it's where the cool, smart kids were — rather than out of any genuine interest in the subject matter. But the kids with less snooty credentials are hungry. They'll work 100-hour weeks without needing "protected weekend" policies. They won't need to be coddled, or coaxed back to their desks, or enticed with favors and perks. They're just happy to be on Wall Street. You could cut their pay by $15,000, in fact, and they'd probably stay.

But to the Renaissance Kids, money is only a minor motivator — prestige and the ability to keep a clear conscience are much more important. Although it may be true, as the Times reports, that "the promises of higher pay are circulating through Wall Street’s junior ranks like a late summer breeze," that breeze isn't carrying where the banks really need it to go — to the handfuls of ultra-elite college students who they believe represent their future, and whose eyes are still fixed on employers that offer them social nourishment and a feeling of moral superiority as well as piles of cash. Wall Street's fading reputation as the preemininent status-conferring institution for the young and talented is one problem a raise can't fix.