Morgan Stanley Chief Financial Officer Ruth Porat proclaimed over the weekend that the government definitely needs to raise taxes on the rich to address its budget deficit.
But if you ask recruiter Jo Bennett, a partner with executive search firm Amrop Battalia Winston in New York City who focuses on financial and professional services, tax changes are not going to do much to impact Wall Street employment.
“I don’t think higher tax rates on ‘the one percent’ would have much impact,” she told eFinancialCareers. “You can’t raise enough [by taxing the rich] to solve all the problems.
“Even if the government gives them a tax break for hiring, I don’t think businesses hire until there’s demand for their services or products,” she continued. “That’s just not gonna happen.”
What’s key is the supply-and-demand equation, she says: Several years ago, there was an incredible demand for exotic products on Wall Street, and pay was at a premium for those able to deliver the goods.
Today, on the other hand, there are plenty of folks available, often in-house, to meet the needs of banking clients, so there’s no need to scramble for talent.
Clearly, “supply and demand does apply to bankers,” she concludes.
Bennett was reacting to comments made by Porat, who told an Economist "World 2012" summit that "the wealthiest can afford to pay more in taxes. That's a part of the deal. I don't know anyone that doesn't agree with that," Porat said. "The wealth disparity between the lowest and the highest continues to expand, and that's inappropriate. We cannot cut our way to greatness," she added, in comments quoted by the Huffington Post.
Where Hiring Opportunities Do Exist
The holiday season is a particularly tricky time for bankers to find jobs, says Bennett.
“This is typically not a time when financial firms hire,” since “they don’t want to buy someone out of their bonus.”
A few areas where Bennett is seeing pockets of opportunity among banks seeking hires—while not the highest paid sectors—include:
- Emerging markets,
- Risk and compliance,
- Wealth management, and
“There’s a lot of demand in financial houses to upgrade some systems,” says Bennett, noting at the same time that none of the areas listed above are revenue centers except for wealth management, which also does not pay on the same scale as investment banking, for instance.
“IT, risk and compliance are all drains on the bank,” says Bennett, so similarly, here, employees cannot expect a windfall.
One possible saving grace: severely depressed bank stock prices mean that bonuses which have been increasingly paid in bank stock or options may eventually work to employees’ advantage, according to the Huffington Post.
”Not all banks may do well in the long run, but most will,” Jonathan R. Macey, a professor of corporate law and finance at Yale, told the New York Times.
One senior bank executive says he comes in every day “praying” the stock price of his firm doesn’t go up before bonuses are handed out early next year, the Times reports.