Wall Street's obscure middle class
The "crème de la crème" of Wall Street will be on display when Goldman Sachs announces its 2012 partner class.
These are the "Masters of the Universe", though that universe is smaller and less wealthy than in the pre-crisis era. It also includes a lot of middle-class strivers who seem to be losing ground.
As Breakingviews describes them, "Tens of thousands of aspiring bankers and traders who flocked to securities firms like Goldman Sachs and Morgan Stanley over the past decade are coming to realize that the big bonanzas they toiled toward may never come their way. Compensation is down – and will stay there – at the same time as their bosses aren't going anywhere. Share a tear – if only just one – for the middle class of investment banking."
The essay looks at a hypothetical employee who joined Goldman Sachs in 2000.
"At the end of that year, Goldman employed 22,627 workers and paid out compensation and benefits of $7.8 billion. Do the crude arithmetic, and that works out to around $343,000 of average pay for each employee."
In 2007, Goldman Sachs employed 30,522 people, who collectively received $20.2 billion in compensation, an average of $661,000 over seven years. As for his year, the firm has 32,600 employees, and it "can be reasonably expected to pay out compensation and benefits in the order of $14.6 billion, or $449,000 a head. That's down a third from the 2007 boom year."
In the end, the fervent hope is that the glory days return, and compensation picks back up. That's what sustains the middle class.
- here's the article