THE ESCAPED ANALYST: Junior investment bankers are not on the minimum wage, but they're close
Back in the days when I was on an analyst programme in an investment bank, a favourite topic for late night conversation in the canteen was whether junior investment banking analysts are worked so hard that they're effectively paid the minimum wage?
Now that I am no longer a junior analyst and have time to contemplate such things, I can safely proclaim that this is just about not the case.
Flexing the numbers
Flexing the numbers conservatively from a 5-50% bonus (adjusted for the 'New Normal'), weekly working hours of 65-130 (about the difference between the most overstaffed and laid back teams [typically corporate finance and ECM,] through to the most overstretched [Industrials, TMT and CEEMEA coverage]), and assuming that a new grunt works a 52-week year and takes home a 41k basic salary [(adjusted upwards for 2009's newly lowered bonus expectations)]...a worst case scenario gives a gross per hour wage of 6.37. The most optimistic outcome pays 18.20.
By comparison, the UK minimum wage is 5.80 per hour for workers aged 22 years and older (which presumably most grads are). In London, the Living Wage (an unofficial figure) currently stands at 7.60 per hour to reflect the higher costs of living in the capital. Almost half (47%) all part-time staff working in London and 15% of full-time workers are still paid below the London living wage. One in seven London employees is paid less than 6.65 per hour.
Of course this analysis is simplistic. It doesn't take into account the fact that banks offer few other employee benefits (pensions, health insurance etc) compared to, for example, corporates or other less glamorous financial services companies. However there's money saved on meals eaten in the canteen, weekend meal allowances, transport costs paid (the taxi home at 1AM) and so on.
McDonalds vs Goldman
The real question is obviously whether it's valid to compare the skillset and educational background of a McDonald's employee with that of someone who's CV passes muster at a bulge bracket investment bank.
I remember, for example, when the cleaners who worked at Goldman Sachs protested about their own low wages outside their offices in Fleet Street, televised live on national TV. These were the same cleaners I watched every night, pretending to work, but actually just pushing a duster around some desks and talking loudly to each other as I sat at my desk in the early hours of the morning, poring over an 80 page presentation.
Why do top shelf graduates submit themselves to this regime, especially given the often much more lucrative roles of the trading floors? Unfortunately, that's a huge question, and one I'll address in my next piece.
