Working on Wall Street once conferred a certain prestige, a path to riches and an oh-so-important swagger. The big-name investment banks had top candidates lining up at their recruiting tables and thousands of applicants for the few coveted spots.
But that image has been clouded in recent years by horror stories of weekends spent at the office, frequent all-nighters and seemingly unsympathetic bosses.
Wall Street now finds itself with the public relations challenge of having to woo and retain young talent. As part of the effort, many new hires found out this week that they could be paid roughly 20 percent more than their counterparts were offered last year.
The reason: The top banks, after decades of easily attracting the best and brightest from Ivy League campuses, are now worried about losing their favored status, especially as companies like Google and Facebook can offer similarly high pay combined with luxurious benefits. A rash of cuts, regulatory issues and other problems after the 2008 financial crisis has not helped.
At Goldman Sachs, many interns who got offers this month for jobs when they graduate discovered that their salaries would be $85,000 a year, significantly more than the $70,000 that the current first-year analysts make, according to a person briefed on the matter who was not authorized to speak publicly. The current class of analysts, as the entry-level bankers are called, who started in July, could get raises too, pending a review at the end of this year.
Larger salaries are not the only thing being dangled in front of the fresh-faced hires. In what amounts to a radical shift in policy, almost all the major banks have instructed analysts to take a few days off a month, on the weekends. In the past, analysts would treat Saturday and Sunday almost like weekdays, working perhaps eight-hour days instead of the 18- or even 20-hour shifts that are common during the week.
Many have put up with the grueling schedules and lack of a social life for the chance at advancement to Wall Street jobs paying seven figures. And many in the current intern class are acutely aware that the weak economic recovery has meant that many college graduates are unemployed, working part-time or taking jobs that do not require a degree.
Yet, for those who have the skills and intelligence to make it into Wall Street’s internship programs, other choices are tempting. Among the working graduates of Harvard this year, 31 percent went to finance or consulting jobs, flat from 2013 and a significant drop from the 47 percent of students who did so in 2007, before the financial crisis, according to surveys by The Harvard Crimson newspaper.
The investment banks “were focusing on their senior ranks” after the crisis, said James N. Baron, a professor at the Yale School of Management. “And so they’re kind of in a catch-up game at the moment.”
The promises of higher pay are circulating through Wall Street’s junior ranks like a late summer breeze. Morgan Stanley announced internally in July that salaries for midlevel bankers, those with a few years of experience, would increase by as much as 25 percent. Barclays, too, plans to increase salaries for midlevel bankers in the United States, by about 20 percent, starting next year. JPMorgan Chase is now considering raising salaries for entry-level bankers by the same amount next year. Bank of America Merrill Lynch and Citigroup are considering similar moves.
Some analysts also said that their bonuses, which they received this month, were higher than they had expected based on past years. At Citigroup, for example, the top-performing analysts received bonuses of roughly $65,000 after completing their first year, far exceeding their expectations of around $50,000, according to Vettery, a start-up recruiting company that collects data about compensation.
“The lifestyle programs, and all that stuff, they definitely help,” said Philip Piro, a junior banker who left Deutsche Bank this month after two years. “But there’s a really easy way to keep people happy, and that’s just to pay them.”
But it remains to be seen whether these changes indicate an overall increase in compensation for the young employees. Alan Johnson, a compensation consultant who works with Wall Street banks, cautioned that analysts getting higher salaries could end up receiving commensurately lower bonuses. Still, he said that higher salaries, paid every couple of weeks rather than once a year, do offer tangible benefits.
“It’s one of those things the participants will appreciate a lot, because you get the money sooner,” he said. “But it really doesn’t cost the firm that much.”
Now that Goldman has made a move, analysts at other banks are wondering if their employers will follow suit. One analyst at JPMorgan, which has not officially announced any raises, said, “The hope here is obviously that there would not be much of a gap in timing” between Goldman adopting the higher pay and JPMorgan taking a similar step. “Presumably they wouldn’t want to leave a major pay gap like that for very long,” the analyst said.
On Thursday, analysts at Bank of America talked openly at their desks about whether they, too, would get a raise.
“In terms of what we heard internally, we haven’t heard anything,” said one investment banking analyst, speaking on the condition of anonymity because he risked his job by talking to a reporter. “We’re just completely out of the loop on this.”
Mr. Piro, 25, the former Deutsche Bank analyst, said a higher bonus this month made it harder to leave. But after collecting his final paycheck, Mr. Piro took the route of many other young financial workers who decide to take their chances as an entrepreneur rather than remain in a high-paying job. He now works full time at Captains Neck & Co., a start-up he co-founded with his sister and a college roommate in Southampton, N.Y., that sells healthful sodas.
His experience illustrates a more fundamental problem facing banks as they seek to retain workers: Money is not everything.
“It doesn’t strike me that higher pay is a sustainable strategy for attracting and retaining the best and brightest,” said Mr. Baron, the Yale professor. “If you look at the Googles and the other highly envied high-tech companies, they do a lot to give employees lots of other rationales to attribute their desire to be part of the company, other than ‘I’m going to be the richest person in the world if I come to work for Google.’ ”