Following public peer pressure, Goldman Sachs has joined other Wall Street banks and increased salaries for first year analysts. The analysts are seeing a 30% increase in their salaries, rising to $110k annually.
The decision follows fellow investment banks, including JPMorgan and Morgan Stanley, increasing their analysts salaries. In March 2021, an internal survey taken by Goldman analysts revealed that they worked 100-hour weeks in extremely high pressure environments. Furthermore, many complaints were raised by analysts who were experiencing burnout amid new deal making during the pandemic.
Goldman’s salary increases are their answer to first year analysts deteriorating mental health and threats of leaving the company after only six months. In addition, the firm has made changes in an attempt to improve overall working conditions. David Solomon, CEO, announced that the bank would hire more analysts and automate work where possible. In return, this would allow the bank to enforce a no-work-on-Saturday rule.
However, top executives are arguing that boosting junior salaries, which are fixed, may set a “dangerous precedent” and attract “mercenaries”, according to a Financial Times reporter. The salary will also rise to $125,000 in the second year and $150,000 at a more senior level. This is not inclusive of annual bonuses, which will increase the salaries further. Formal announcements regarding the increases, which will apply to bankers globally, are expected this week.
Goldman is still facing some negativity as their junior bankers were one of the last to receive some form of increase in benefits or compensation following complaints. Credit Suisse initially offered one-off bonuses of $20,000 and Jefferies offered free Peloton bikes worth over $2,000.
Investment banking employee’s working hours have seen increases during a boom in merger and acquisition (M&A) activity during the pandemic. Goldman have since reported profits of $5.5bn in the second quarter following the surge in M&A deals.
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