Goldman Sachs has finally given way.
The one investment bank that was holding out on raising pay for its junior bankers has finally given in to the pressure of other banks raising their junior employees’ pay (and the pressure of a potential PR crisis).
First year analysts at the bank will now make $110,000 per year in their first year and $125,000 their second year, FT reported this morning. Senior associate ranks will see their pay bumped to $150,000.
The move puts Goldman Sachs at the top of the heap in terms of starting pay package terms. The base salary amounts do not include annual bonuses, which FT notes “can be multiples of salaries” during good years.
As we reported weeks ago, there had been significant discussion at Goldman about whether or not boosting junior banker salaries could be counterintuitive. But the rising tide of all banks lifting their pay finally caused Goldman to give in.
There had been pushback from Senior Executives, who argued that bumping up salaries mid-year could set a “dangerous precedent” and break from the company’s long-held “pay for performance” compensation structure.
Goldman is now following steps taken by banks like Citigroup, which offered an increase of up to $25,000 last month to move its fixed salaries to $100,000 per year. JP Morgan and Barclay’s also lifted salaries to $100,000, from $85,000 at the end of June, FT noted. Bank of America and Wells Fargo increased salaries by $10,000 each, as well.
Finally, as of this week, Credit Suisse is also reported to be bumping their first year analyst pay to $100,000, according to Bloomberg.
Recall, just weeks ago, we noted that Cantor Fitzgerald’s CEO, Howard Lutnick, was pushing back on junior bankers that think they have life too tough. Lutnick said that junior bankers complaining about long hours and stressful demands should “rethink their career choice”.
Lutnick’s comments followed 13 junior bankers at Goldman complaining about their workload earlier this year in a slide deck that was released to the public. They claimed to be working 100 hour weeks and experiencing declining physical and mental health. The public scrutiny caused other banks to offer bonuses and rewards to retain their younger talent..
But when interviewed last week, Lutnick broke from the crowd, stating: “Young bankers who decide they’re working too hard — choose another living is my view. These are hard jobs.”
