There is an interesting piece in New York Mag from this weekend. It talks about the hole left in 2008 in the economy. The first movie in the Dark Knight trilogy aptly has a scene where Rachel Dawes takes Bruce Wayne underneath the highway, to the road in the dark, where poverty littered the sidewalks and crime reigned, similar to a picture of today's infamous Skid Row. She describes the scene as being a place that proves that the depression had never actually left, even though on the surface things might seem better than that. From NYMag:
When that tide pulled back in 2008 to reveal the ruins underneath, the country got an indelible picture of just how much inequality had been banked by the top one percent over decades, how many false promises to the other 99 percent had been broken, and how many central American institutions, whether governmental, financial, or corporate, had betrayed the trust the public had placed in them. And when we went down, we took much of the West with us.
The main problem I keep seeing is that, the median salary is somewhere between $40-$60k, depending on where you live. So, if an entry level analyst in IB makes $85K, it looks like he's making a lot more than your average person, on the way to riches and wealth. Inflation has been about +205% since 1980. So that salary, in 1980s dollars is actually just below $30K/annum. That just doesn't sound like the riches people are supposed to be gunning for when they go to Wall St.
In other words, most people should, on average, make around what bankers are making today. The only reason they're not is because wages/salaries have been held down; if you're a banker, your pay is good in an illusory form.
Of course, it's all relative. If you can make $100K versus $50K, you should definitely take the $100K job. The only issue is that people are expecting that you will do something different, sacrificing a lot, for a career that doesn't give you the riches you so desire. This could explain why so many bankers and other professionals are deciding that it isn't worth it. It's not because the jobs are bad or times have changed. On the other hand, they have changed, but the shifting tide is in economics.
I once heard a senior banker (MD level, running his own team) talk about the money not making the industry worth it anymore. But, he was only hanging on because of his getting accustom to the lifestyle, he could not afford if he left. (Presumably, his savings weren't high enough because he isn't becoming rich off his career).
What do you all think about pay and the deterioration of the American Dream, for all workers, including high achieving bankers or other professionals?
Stop being greedy.
It’s not about greed. There’s a such thing as people want more money out of envy and another as some just want the economy to work right.
A broken economy fuels all of the issues we’re seeing from drug abuse to mass shootings. The problem with the ‘establishment’ the one the Trump crowd points at, is that they’re too blind to understand there is a difference.
Banking pay is good, just not on a per hour basis (at least at the analyst level). If you live outside of NY/ LA/ DC/ SF banking pay is outstanding.
You didn't read anything.
I did. My response stands as is bro. If you want to do an analysis of purchasing power then do so, your initial post isn't that.
I lose you a bunch of times throughout your write-up. A vast majority of your points can be very easily counter-argued too. What is the take-home message here?
Banking comp, taken at the median across the entire range of seniority levels, will place you solidly in the top 1% of all incomes. As you become more tenured, the income scales start more aggressively and disproportionately tipping in your favor. Surviving to become a career banker, assuming hitting an arbitrary 20 year mark, can and should mean a conservative career earnings of $10 mm. That is the 0.1% kind of earnings.
If you randomly walk up to 100 people on the street, 99 of them will never sniff that kind of money. By and large, a career in banking (operative word here is "career", not a stint), if you don't flame out or get fired, is a pretty set pathway to wealth. Banking is a marathon, not a sprint.
Where you're practicing should also be taken into account. Certain cities have pretty absurd costs of living comparatively to others, if all else is equal this will significantly hurt your money earned over time.
I also agree that this write up is hard to follow. Points are brought up and begin to be rationalized only to lead into another point half way through the initial thought.
What you state is actually false. Costs of living and the income one earns are two different things. Higher costs of living do not translate to reduced W-2 wages, as the two are not causally related. While where you live obviously does have a bearing on your costs, there is actually a positive correlation between higher cost-of-living cities and higher incomes, on average. This obviously is not universally true, and won't hold true for certain professions such as medicine where for example compensation is driven by scarcity value of physicians in certain geographies. Nonetheless, in the biggest urban metropolises with the highest costs of living throughout the world, where there is fierce competition for talented skilled service professionals in fields like big-law and high-finance, individuals will obtain a premium for their professional services.
In 1980 dollars, the 85K translates to slightly lower than $30K (roughly $27K). The average wage earner made $12K, so a junior banker today would've made about 2.25x the average wage earner.
Right now, college graduates are making 50k right out of school. Comparing that to the 85k on average a junior banker is paid, it's only ~1.7x. Pay is definitely lower.
Of course there are more college graduates today, but that's been fueled by debt. If you add in costs to the model, the picture comes more bleak as costs pegged to inflation exaggerates the drag on earnings growth.
Why wouldn't you compare vs. 1st year all-in, which is easily $150K+ for reputable shops?
Let's just set aside inflation arguments and macro wage growth arguments because those are utterly retarded points. Inflation affects every wage earner. It will affect lower wage earners more acutely as the loss in purchasing power is more sharply felt if you aren't making much to begin with. As for wage growth since the 1980s, that is obviously industry specific. These arguments are dumb.
As for today: there is a HUGE lifestyle gap between the "average" college graduates that are making 50k right out of school and first year analysts that are making 85k. Bankers are not "just" making 1.7x other graduates out of school. Below a certain income, as you make incrementally less, your lifestyle gets disproportionately worse. How is this not plain-as-fucking-day obvious?
I still don't understand what you're trying to say here.
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