For some people, salaries are skyrocketing.
McDonald’s recently announced its plans to increase wages and offer childcare and tuition assistance to entice people to join the golden-arches fast-food chain. For an entry-level person, they would earn around $11 to $17 an hour. Shift managers will get about $15 to $20 an hour. On the other end of the spectrum, Wall Street is lavishing $100,000 salaries, plus plush bonuses to young investment bankers.
The workload for people in financial services has been intense due to the euphoric conditions on Wall Street. The stock market has been hitting new record highs. Investment banking, underwriting IPOs and SPACs, sales and trading, high-net-worth wealth client management and money management units have been performing phenomenally well.
The rapid increase in business has a downside. Top-tier investment bank Goldman Sachs found itself in the eye of a Twitter storm. About 13 junior bankers aired their dirty laundry on the social media platform, complaining that they were forced to work 100-hour weeks to keep up with the workload. To remedy the matter, Goldman offered some additional help and told the bankers that they could take some time off on Saturday, if they’d like.
According to Bloomberg and Wall Street Oasis, a site focused on finance professionals, major banks started offering their young bankers more money. The new salaries “range from $100,000 for first-year analysts to $225,000 for third-year associates.”
Billionaire CEO of the financial services firm Cantor Fitzgerald, Howard Lutnick, in an interview with Bloomberg, scoffed at the plight of the 13 bankers, saying they should “rethink their career choice” if they’re not happy. He pointed out, “Young bankers who decide they’re working too hard—choose another living is my view. These are hard jobs.”
A junior banker has a stressful, pressure-filled job that requires an inordinate amount of time and effort. However, the pay is great, especially compared to what most Americans earn, and the long-term upside is huge. The training and experience they receive now is leveraged to position themselves for senior-level executive roles at major banks, hedge funds, private equity funds, FinTechs and other high-end financial institutions down the road.
It’s a trade-off. The young bankers are delaying current gratification for future rewards. It’s a calculated decision to give up on a well-rounded current life, relationships and sitting on the couch watching Netflix, in exchange for the potential future earning power of millions of dollars.
Lutnick said about the trade-off, “There is a path to becoming an investment banker that requires an enormous amount of work, including late nights and weekends. Clients want their deals finished under tight deadlines. You should know that going in.” He compared this to the hours needed to become a doctor.
Most top banks, in light of the internal and public relations pressure, made overtures to their bankers to keep them happy and deter them from departing to a rival. Citigroup enhanced base compensation for junior bankers by about $25,000 to make salaries at $100,000 per year. JPMorgan, Guggenheim Partners, Barclays Bank of America and Wells Fargo increased base salaries too. In addition to the salary, they’ll receive bonuses of around $30,000 or more based upon their production. Bonuses on Wall Street for revenue-generating employees are generally considerably higher than their salaries.
Goldman Sachs, however, is holding out. The Financial Times reported, “Some senior executives have argued that boosting salaries mid-year would set a ‘dangerous precedent’ and mark a break with the bank’s ‘pay for performance’ mantra, according to people briefed on the discussions.”
Banks historically reward staff with bonuses, which will fluctuate year-to-year, based on the performance of the individuals and the company as a whole. If you perform well, and the bank has a good year, you could earn a substantial bonus that dwarfs the base salary. By keeping salaries low and offering the chance of large bonuses based on results, it pushes people to perform at their best, put in long hours and do what it takes to succeed and exceed expectations.
Sadly, it’s not the same for McDonald’s workers. There is still a chance, though, to achieve success. A person could work hard, become a staff leader and one day manage a restaurant or two. The salaries and bonuses can’t compare with Wall Street, but there are stories of people who started out flipping burgers and ended up owning a number of franchises. Business Insider profiled Doug Wright, who started working at McDonald’s as a cleaner at age 16 and he “now owns 20 of the chain’s restaurants—with plans to open more—and employs more than 2,000 staff.”
Source: Forbes
