Wall Street's Fight Over Rookie Pay

Business is hot, and young bankers are grumpy. Time to bring out the money cannon

- Sridhar Natarajan and Mary Biekert

At first, Goldman Sachs Group Inc. executives watched with puzzled detachment. One competitor after another was bumping up pay for junior bankers —the entry-level grunts who can churn out 100-plus-hour weeks trying to get their footing in the business. But as the raises kept spreading, Goldman managers grew agitated. One senior executive groused that rivals were using gimmicks to gain an edge in recruiting because they lacked the prestige of Wall Street’s premier investment banking franchise.

Gimmick or not, in the span of a few months, the sticker price for a freshly minted college graduate in top-level banking has quickly shot up, reaching and then surpassing $100,000—a guaranteed salary to be padded later with a chunky bonus. Ultimately even Goldman caved, an acknowledgment that its name alone wasn’t enough to ensure top candidates would welcome its lukewarm embrace.

Out in the real world, a six-figure entry-level salary is another example of extreme inequality and the way finance has come to dominate the economy. The raises put junior bankers on track to earn almost five times—or more—the median wage of young college graduates. By inflating paychecks right out of the gate, banks are likely exacerbating the pay gap with other industries for years to come.