Given there has been c. 20% inflation since the last base salary rise (2021 I think? Please correct me if wrong), what is the likelihood of an imminent base salary increase across all levels? New to the industry, so not sure how often base salaries get reevaluated, but given real income has significantly decreased, as the job markets start to pick up again, will banks look at increasing base salaries to attract/retain talent?
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Tbh I don't think there will be any salary increases anytime soon. Right now in the labor market there is a large number of overqualified candidates and hundreds applying for a spot even at a MM firm. Due to the high rate of the Fed, M&A activity is down, especially from 2021, so there isn't really a reason to bump salaries. Unless the Fed lowers rates, which causes M&A activity to increase, and a larger demand for labor. Remember the last time there was a major salary increase was in 2020/2021 because hours were really high and there was a large burnout rate, combined with a really big demand for labor.
Yeah need rates to go down and the labor market to improve. Banks don’t care about doing the “right” thing ie raising base salaries to match inflation. They will only pay up if they have to, and they have no incentive to do so right now.
Highly unlikely if not impossible in next few years.
Basic economics. Surplus of available labour = lower wage costs.
If the demand for internships/graduate schemes from university students remains as high as it is now, and there are not many other viable high paying career paths, what would be the trigger for banks to raise salaries for entry level positions? Massive increase in deal activity?
Supply and demand. During 2020 and 2021, nearly every bank's analysts were working sweatshop hours to meet the massive deal flow, and to pitch all of the new business ideas that the COVID world and a 0.25% Fed Funds rate had created. Everyone knew more analysts and associates were needed to help meet the workload, leading to high demand on the hiring side.
Bankers were getting cooked, and burnout was high. An email and slideshow from a group of Goldman Sachs analysts was leaked, pretty much showing their demands for better work-life balance. That kicked off the most recent round of salary increases across Wall Street.
So if you can re-create these conditions, where demand for analysts is high yet their supply is low or declining, then you will see salary increases.
Right now any bank can post an analyst 1 opening in their Rare Sea Urchin investment banking group and get 500 qualified applicants within 2 days.
If I were you, I wouldn’t bake any expected pay raises into your budget for the near future.
Idk, if more of you compsci dorks would go into tech instead of finance maybe we could get somewhere
Why do you all think big law sees super consistent/regular base increases versus finance?
You're in the UK, right? We had our bonus cap scrapped and GS went out and said that they will scrap their own bonus cap making it very clear that they were doing so in conjunction with lower base salary.
I don't think there will be any base salary increases, even in better markets. Banks will just argue that you'll get higher bonuses - which was one of the reasons I was appalled by the scrapping of the cap in the first place.
TBH I like the idea of not raising base salaries, and instead raising bonuses when markets improve. We are seeing the issue of higher base salaries right now that the market is bad - it incentivizes shitty performers to stay, since they’re basically doing nothing and collecting a hefty paycheck relative to alternative careers in a down market. And the good performers get frustrated because they’re always the first choice to get put on the (very few) live deals, get cranked, and receive a lower bonus because bases are a larger % of total salary. Raising bonuses, while giving companies more discretion, would help to properly differentiate and compensate the competent employees.
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