Morning Coffee: The $100k entry-level job where you “drink water and sweat,” and a big pay day for top accountants
With “protected weekends” programmes and “Saturday rules” having shunted work to mid-week and working conditions still being pretty tough for junior bankers, they might be forgiven for looking at other high-paying career options. Where else could an inexperienced and enthusiastic young person earn into six figures?
One possibility might be the Permian Basin, where the shale oil boom has seen salaries for even dishwashers and support workers top $60k, with truck drivers earning well over $100k and ex-military explosives specialists over $150k, or $300k after a few years (like an associate). The money is ballpark similar (particularly when one takes into account the cost of living in New York or London), but the work/life balance and challenges are ... somewhat different.
Starting with the positives, the hours for shale oil roughnecks seem benign compared to those of junior investment bankers. A drill rig is staffed by around twelve workers, split into two teams each working 12 hour shifts on a two weeks on / two weeks off basis. Imagine that – you start work at 7am, and by seven in the evening, your time is your own! And at least fourteen protected days off every month, with comparatively little risk of having them interrupted to take a conference call. (If you’re called in on your day off, it’s likely to be for a genuinely important reason, like possibly the rig is on fire).
The lunch options and social scene aren’t quite so good, though. Although people often bemoan the lack of cultural actitivies and fashionable restaurants in most financial centres, the Permian Basin is in an actual desert – the Chihuahua, in northern Mexico and the southwestern USA. Workers on the rigs stay in mobile homes which are dragged from site to site along with the drilling equipment, or in motorhome parks off the highways. The fact that the accommodation is referred to as “man camps” suggests that diversity and gender balance is probably better in investment banking too. But like junior bankers, according to drilling manager Raymond King, the oil workers are basically happy as long as they have “good food, a good bed and good wifi” and a memory foam mattress.
And the actual work? Tastes differ, but you would be trading the frustration of endlessly redrafting Powerpoint slides and preparing meeting notes for a life of heavy physical work in which, according to one experienced roughneck “it’s non-stop busy, you’re always on your toes” and are drinking "water and sweat" in sweltering heat. Also (and the brevity and non-specificity of this comment somehow makes it even more frightening), “people die”. The Permian Basin camps attract a considerable proportion of military veterans, many of whom note their strong resemblance to Middle Eastern war zones.
But some things are universal, when you combine youth, hard work and spare cash. A worker is quoted as saying:
“On the downside, I’ve seen some people, younger people, take all that money home and get into drinking, drugs, gambling. Problem is, if they bring that back with them here, they’re gonna get fired. Then they think about how stupid they were for throwing away a $150k job”.
The two worlds have hardly anything else in common, but that paragraph could usefully be included in the introductory handbook for every September analyst programme on the Street.
Elsewhere, the Big Four accountancy firms have traditionally been regarded as the slightly poorer cousins of the investment banks, putting in similar workloads on deals for considerably less money. That’s not necessarily the case any more, though; in a generally poor environment for banking compensation, Deloitte has kicked off the reporting season declaring a ten year record profit share, with the 669 equity partners of the UK practice taking an average of £882,000, which is still (just) over a million dollars. It’s partly driven by some one-off gains on investments, but there’s also 11% revenue growth. And the gains on investments are real money; across the Q2 reporting season it was noticeable how Tradeweb profits seemed not to make it into the bonus pool. If this is the “new normal” state of affairs, it looks like the accountants might be the new masters of the universe.
Elsewhere in the world, elite university graduates are genuinely opting for physical labour instead of corporate jobs – a graduate of the Indian Institute of Technology has become a railway track maintenance worker rather than joining a tech startup because he feels it offers “more stability” (Quartz)
And India is one of the few places in the world where Deutsche is still hiring (Bloomberg)
Why not move to a cafe with a laptop for a while to boost your creativity? Apparently the main benefit is that you’re able to listen in on strangers’ conversations and business meetings, so maybe don’t do this if you’re working on an M&A deal (FT)
“The irony about loneliness is that we all feel it at the same time”. How to reorganise your social media use to feel less lonely (Crunchbase News)
A slightly odd hire for Deutsche Bank as they put Matt Zames’ plans into practice to improve returns for their group treasury and surplus liquidity (something that’s doubly important in a world of negative interest rates). They have hired Francois Jourdain from Barclays to head the new team; although he has treasury experience his most recent job was chief compliance officer for Barclays international unit. (FT)
Stories from Camp Kotok, a get-together of Fed-watcher economists that doesn’t like to be called “a shadow Jackson Hole conference” even though it really looks like that’s what it is (Bloomberg)
Barclays has got an approved brokerage licence for the ASX once more – it has no current plans to develop an institutional Australian equities business (the exchange membership is to execute trades for Asian clients), but clearly now has an option to do so in the future. (AFR)
Although the legal battle as to whether it should hand them over to the House Ways and Means Committee is still rumbling on, Deutsche Bank has confirmed that it does actually have a number of Donald Trump’s tax records. (Reuters)
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