Many investment banking and support roles in California pay 20 - 30 percent less in total compensation than do similar jobs in the New York area.
On the other hand, the Golden State outpaces Chicago and most other U.S. cities when it comes to finance pay.
The California vs. New York pay differential is evident for both sell-side and buy-side positions where compensation isn't figured on an individual's direct contribution to revenue or profit, says Chad Dean, of financial-derivatives recruiter Integrated Management Resources in Tempe, Ariz. Such roles include analysts, risk managers and various quantitative and trading systems jobs.
Integrated recently placed a front-office analytics product developer from an associate-level job in California to a comparable role in New York. The candidate's total compensation rose from $130,000 to $170,000, says Dean.
A similar picture emerges from PayScale, an online compensation data firm. Its charts indicate the median salary plus bonus among all California positions within investment banking were 21 percent below the median for New York. However, median pay in California was 9 percent above Illinois.
On the buy side, the CFA Institute's 2007 compensation survey found research analysts with less than five years' experience earned a median of $161,000 in total compensation in Los Angeles, and $170,000 in San Francisco. In New York, the median was $205,000. Portfolio managers with between five and 10 years of experience earned a median of $204,000 in San Francisco and $224,000 in Los Angeles, compared to $248,000 in New York.
Front Office Performance
Dean notes that compensation for some highly visible front-office roles - such as portfolio manager - tends to be closely tied to an individual's measured performance in areas like sales, fees or trading profits generated. That makes comparison across regions difficult, especially for more-senior positions. "I have people in San Francisco making the same money as New York, because they're commissioned institutional sales people," says Dean. "If you are an actual revenue or P&L producer, then you get paid a percentage of your production, and the percentage is the same whether it's in California or New York."
Dean says pay needs to be higher in New York to compensate for longer average commute times as well as a higher cost of living. "Taxes in the tri-state (N.Y./N.J./Conn.) area are through the roof," he says. And while a 60- to 90-minute commute is standard for the New York area, Dean says people in California can usually find available, affordable homes within 30 minutes of their office. All in all, he says, "If you take a California guy and bring him to New York, he's going to want a significant amount more money."