Salary Pressure - Work From Anywhere?
Is anyone else seeing a lack of salary pressure upwards in major coastal expensive cities (SF/LA/NYC)?
I currently work at a large firm and it seems like there is hesitation to hire people at a "high cost of living area salary". The most recent hires at my firm have been people who live in lower cost of living cities where we don't even have offices at much lower salaries. Anyone worried this is eventually where this heads?
From a "cost perspective" there are only a handful of "deal maker" roles at the firm where you need to be in a core CBD (SF/LA/NYC) meeting people. I would argue most roles (analysts, associates, asset managers, portfolio managers, legal, accounting) could be comfortably done remotely.
It just seems so lucrative if I'm a CEO looking at my bottom line to just pay top SF/LA/NYC salaries only to those that have to be there, and just farm out the other roles to secondary cities. Lower salaries and smaller office footprints seems like a huge win.
We’re hiring in the NYC area, and my boss is throwing resumes in the trash if there’s a request to WFH
Yes, I've definitely witnessed a lack of pressure, but it's hard to compare with those top markets because I've also heard that NYC pay has a pretty big margin ahead of LA and SF. I've personally worked in SF and pay has not kept up with the COL there. I moved to LA where COL is slightly lower than SF, but will be making more than I did up there.
I do think headcount will be tight for some time. They really focus on who really needs to be in the office. However, I think many firms are realizing there is somewhat of a "drop" or delay in communication across the remote network because there is more intent required to pick up the phone or email someone. It's costing them more in some ways, or better stated, the underperformers are ruining it for others. There's more purpose needed in a call/email as opposed to an in-person conversation that could be more spontaneous and easily collaborate with more than two people.
Same at my firm.
I would say my firm's leadership is willing to "put up" with less "natural" communication if it means paying out a much lower total compensation package. In some cases, it's almost 30-50% cheaper to higher in a low cost of living area than in the core SF/NYC markets.
All else equal, communication is easier if everyone was in the office. But I can't deny it's so much nicer not having to slug through getting ready in the morning and commuting 1 to 2 hours round trip into the office every single day.
I think at the end of the day, money will talk and the BS will walk. Is it really worth it to pay NYC/SF salary to workers who come in 1-3 times a week? I don't think so. And I can't see 5x a week into the office anymore either.
I'm starting to think harder about threads like this and wonder if the heyday of cushy BB real estate and Megafund real estate gigs was pre-09 and still hasn't fully returned. Aren't other areas of wall street showing some similarities?
Doesn't mean it's a bad industry just makes me wonder if it's harder for those who just wanna waltz out of Trinity College and punch the clock at Morgan until they can afford a mcmansion in Rye.
not sure on this, I think it feels like the past was always the "heyday", fees were higher in the 90s and 80s, promotes bigger... I mean the industry gets more competitive, but capital gets cheaper/more plentiful. I started back in the pre-09 time, just in time to really watch the shit it the fan, it wasn't all a walk in the park, competition was way worse for jobs/deals then than in the 10s. So, personally, I'm not looking to roll back the clock!
Cheap capital definitely benefits certain people but the first beneficiary who comes to MY mind is the entrepreneur who takes advantage of it, not the young guys discussing compensation. I could be totally wrong, I just get the impression it's not as easy to collect a fat real estate paycheck at some posh office in Connecticut for being good at excel and having a BA from Amherst.
The flip side, to your point, could be that it's easier for an entrepreneur now than it was then. I could see that being true (I am told repeatedly it is absolutely 100% true in the tech/startup world lately)... I see some surprisingly successful (financially) young guys in RE who took a risk and/or got creative.
Those are good points! I would say, finance/i-banking/PE/HF/real estate, was the top tier place for MBAs and other grads. Today, or like last ten years (i.e. after the 08 GFC), that has much more been Big Tech and startups (pre-08 was post 1999 tech bubble for memory, and iphone didnt come out until 07..., so no "apps" or "crypto" for awhile).
Meaning, EVERYONE wanted to work in all the fields WSO covers (which started in 2006 likely due to this boom). So, trust me, the job market was worse back then....
Agree and disagree. It's definitely more competitive every year out there in the white collar high-salary job space. You can't just be a prep school kid from Greenwich and be put on a conveyor belt to an easy life anymore, you will have to hustle or work hard at some point.
On the other hand, institutional real estate has really just matured in the past decade or two and continues to be a growing space relative to other finance-y fields, so I would wager that the % of the aforementioned types of jobs that are real estate related has grown quite a bit. But at the end of the day, most of the money to be made in RE is still on the entrepreneurial side of things, IMO.
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