This Bonus Season on Wall Street, Many See Zeros

So, for a year they may have to live like everyone else? What a sad story. Oh wait... even with their base salaries, they still make more than almost everyone else in New York. My heart bleeds.

So this is about feeling good about other people being pulled down?

Old new, irrelevant, move on.

Buy now or be priced out forever.

"Even though employees will receive roughly the same amount of money, the psychological blow of not getting a bonus is substantial, especially in a Wall Street culture that has long equated success and prestige with bonus size. So there are sure to be plenty of long faces on employees across the financial sector who have come to expect a bonus on top of their base pay. Wall Streeters typically find out what their bonuses will be in January, with the payout coming in February.

One executive, whose firm prohibited discussing the topic with the news media, said the bump in base salaries had confused people, even though their overall compensation was the same. “People expect a big bonus,” this person said. “It is as if they don’t even see their base doubled last year.”

Did you forget to read the part where it said total comp will be the same? Are you getting excited about allocation? Makes perfect sense to me, banks want to pay their people the same but don't want the public bonus scrutiny, so they increase base salaries and when bonuses come out, the newspapers can say bonuses are down. Everyone is happy. Brilliant.

Leave it to a wall street trader to not figure out the difference between a $1 of bonus and a $1 of salary.

Whizkid... I mean, Juiceman. Do you really live in NY? Have you ever met anyone whp works on Wall St. Let me dumb it down for you:

Higher salaries are now $300-400K at the high end. That means... listen carefully... if you don't get a bonus you get all-in comp of... you still with me?... $300-400K!!!! I can assure you that that is NOWHERE near all-in comp for such level professionals in any other year.

In other words, you are mistaken that all-in comp is the same. If you actually ever talked to someone on Wall St you'd know that.

A salary of 300K-400K is barely enough to buy a decent one bedroom apartment today.

Buy now or be priced out forever!

bullish!

Whizkid, I mean, beatyerputz...just read the article.

"Even though employees will receive roughly the same amount of money"

What does that mean? Zero bonus but made whole on base?

JM...the spin/ignorance is ridiculous. Don't even waste your time.

beatyrputz....thx for the plug and I'm sure they realize they will be paying about 50k more for it than last year.

Juiceman, they're wrong, and anybody who has even a child's understanding of wall st pay knows that. No banker's salary is as high as their all-in comp was in any recent year. Period.

Let me ask you, do you really believe that senior bankers (MDs/EDs) at investment banks have been making $300-400K all-in? I can assure you it's been multiples of that.

But believe what you want, my friend, if it makes you feel better.

Oh - and by the way, junior bankers are NOT the beneficiaries of $300-400K base pay.

beatyerputz, no one is saying sr bankers are getting zero bonus or that they are making 300-400K total.

Read this from the article you posted:
"While Zeros are turning up in the ranks of back-office employees and midtier bankers and traders who typically earn $250,000 to $500,000, their bosses way up the compensation ladder are still expected to notch handsome paydays in the millions."

beatyerputz, if you have an opinion that is different than the article, that's perfectly fine. However, the article posted does not support your claims. That's all I'm saying. All you need to do is read the article.

Whether you should lend any of these puff pieces credence is another discussion all together.

"One executive, whose firm prohibited discussing the topic with the news media, said the bump in base salaries had confused people, even though their overall compensation was the same."

That's REALLY FUNNY. People who make $500,000 base salary are "confused" when their salaries double.

How do you spell G.E.D.?

Do you guys really think you can live in new York city and have 2 kids and a wife on 400,000? That's 200k after tax. Public schools arent safe...it costs 20,000 to send your kid to preschool. Cheapest rent for a 3 bedroom that isn't a dump will run minimum 5,000 a month (and that's prob a small apt). So that right there is 60,000 in rent....30-40k for both kids to go to school. That leaves 110k for the rest of the year. Food, non-exorbitant vacations, and clothes likely eat most of that up.

Anyone who knows anyone who works on wall street knows that 90 percent of the salaries are between 150-250 for mid level and senior guys. Only the small handful of mds make the higher salaries quoted.

Bottom line: hamptons real estate Is going to take another leg down. Impossible to affordva second home unless you are making way more than numbers quoted in this article

Give bobf a cigar. That dude understands the math of bankers and nyc lifestyles. It points to crap on 2nd homes in hamptons and by extension nyc re. Goodz luckz twiddle dee and twiddle dumb, Fsteve and juicy, our resident se bubble deniers. And riversider, who by the fact of his incessant posting of the bubble, must accept the bubble existed but can't marry that to his coop being down.

Me thinks, I hate riversider more BC I hate hypocrites more than just ignorant foolz. So in summary merry Xmas ignorant foolz, Fsteve and juicy.

BobF, you seem to be living in some sort of reality distortion field. People in and outside of NYC somehow make do on pre-tax salaries of less than $110K, and you're suggesting that the poor, helpless bankers can't survive on that much *after taxes, rent and school*?!? That is just stupid.

Speaking of stupid, I agree that people who complain that they get the same amount of total cash but less of it paid as a bonus are, at the very least, not so good at math. You'd think that would be a requirement for these jobs. Moreover, for most people having all of your comp paid reliably rather than hoping for it to show up as a bonus at the end of the year would be a huge plus--it would be much easier to qualify for a mortgage, for example.

No, the idea that many people are really "confused" about not getting a bonus because of a higher base salary is stupid. Do people really believe everything they read?

jordyn, sure families can live on $400K or even $110K in the city. BobF's point is that a salary of $400K in this ridiculous market is not going to fund a family of 4 with a lavish lifestyle with cars, second homes and nannies. In fact, it would probably be quite mundane, especially if they are trying to buy a condo. A 3BR below-average condo resale in a decent area is 1.5 million. The monthly maintenance and taxes are $2000. The monthly PITI payments are $78,000/year, which leaves about $10K/month after taxes for everything else. Food, tuition, utilities, daycare, health insurance, memberships, etc. Sure, it's enough to live on. But it still means clipping coupons, bargain shopping and being mindful about spending habits.

Crazy but I want my neighbors to get rich and dump money in my hood

hejiranyc - being mindful about spending habits? Heaven forbid!

> JM...the spin/ignorance is ridiculous. Don't even waste your time

That coming from SteveF... now THAT is precious.

Uhhhh, bob...move to fricking Riverdale, Forest Hills, or Westester, Bergan, or Hudson counties. And Shut the F*** up. THe MEDIAN household income in MANHATTAN (not New York, MANHATTAN) is $68k per year. Making SIX TIMES THE MEDIAN...which puts you in the top 10% of households, BTW, makes you well-off even by Manhattan standards.

And NO ONE says you HAVE to live in Manhattan. Or that your wife cannot get a fricking job. I hope the communists JuliaG always rants about burn your condo down first. People like you disgust me - and I am in your fricking tax bracket!!!

If you have to clip coupons because of where you live, I'd argue that you should move. I (over)pay to live in Manhattan, but realize that's a tradeoff I'm making because it's a part of my lifestyle I enjoy. If I found that I couldn't do the other things that I wanted because of how much my apartment cost, I'd move to Brooklyn. There's no sane reason why a family can't live reasonably well on $400,000 in this city, though.

But yeah, you can't live the life of someone who makes four million dollars a year if you only earn $400,000. Hopefully this isn't news to anyone; folks will have to survive on being only moderately rich instead of rich indeed or extravagantly rich.

'There's no sane reason why a family can't live reasonably well on $400,000 in this city, though.'

Pretty close to the minimum figure with two kids in Manhattan and low expectations wrt to housing, school, camp, braces, travel, entertainment, tranportation, healthcare, childcare etc.

Now if I lived in a different country with two children engaged in full time factory work and the cost of living significantly reduced I could see your point.

They did the budget on $500k in the times once, and none of those expectations are "low" in in the reasonable book. That might be low by manhattan standards, but they are not actually low.

falcogold--As jason pointed out, the *vast majority* of people in Manhattan manage to live on *much less* than $400K. If you can't manage to do it, the problem is with you and your expectations, not with your salary.

Most people even in the good old U.S. of A don't eat out at fancy restaurants once a week or go on vacations to the Carribean every year. Those are nice things to do, but they're luxuries, not necessities.

I just found out my bonus number (525k all in, 175k base), and I know this sounds bad but I feel poor. It's very expensive to raise a family here in nyc. We have 1 kid with another on the way, and my wife doesn't work. I'd much rather have my wife raising my kid than hiring a full time nanny (which may have been more than my wife's salary as a teacher anyway). I will continue to rent here, and build assets outside of NYC. I was originally planning on moving downtown to buy a place but am not doing that now, as I was thinking I was going to pull in a 750k number.

Originally, I was pissed about my number, but talking to some close friends on the street, people are not really getting talked down ahead of bonuses. Yes, their base salaries were all hiked over the past year, but lets face it, lots of people on wall street are bad with money. It will be a shock to a lot of people when they get a shit bonus and cant' afford to pay their expenses accumulated over the past year. I don't see this real estate market going anywhere, in fact, I probably see it continuing to peter off as people need to continue to lever down, especially with rates going up.

St. Barts is like, prescribed by his non-working wife's doctor for stress. Stress over having to GASP buy at the Bergdorf's after-Christmas sale. Oh, the shame if the women from her Sports Club LA palates class see her! The SHAME!!!!!!!!!!!!!!!!!!

Meanwhile, in America: "Number of Americans living in poverty 'increases by 4m"

"In 2009, one in seven Americans was living in poverty, with the level of working-age poor the highest since the 1960s, the US Census Bureau says."

http://www.bbc.co.uk/news/world-11336781

Strangely enough, adjusted for inflation, the minimum wage is coincidentally at its lowest point since the 60's.

I thought inflation was zero?

err, i kinda agree with Bob D (I believe Rhino has made this argument before as well). It's not that people making $400k can't afford to live in manhattan, it's the type of lifestyle that someone with such earning potential would likely want for themselves and their family. nothing wrong with wanting to be comfortable (or very comfortable) after pushing hard through grad school and work. We're starting to feel the squeeze with just one in preschool and another less than 2 years away. As falco pointed out, all that stuff adds up fast in this city!

over the last 50 years we have seen some inflation. "since the 60's"

hey jason, its really a shame that youre headhunting job give you enough ammo to sound somewhat informed an apparently quite envious. frick you.

btw, lets ungrey w67th in homage to his prognosis on deflating nyc re estate, quite prescient in my book.

"hey jason, its really a shame that youre headhunting job give you enough ammo to sound somewhat informed an apparently quite envious."

I am not, for the 118th time, a headhunter, but even if I were (or a janitor) it would not change the underlying facts: the median household income in Manhattan is $68k per year. The average is about $112k. $400k per year is almost 7X the median, and over 3.5X the average, and puts one in the top 10% for MANHATTAN, and the top 1 % for AMERICA.

Complaining about "only" making $400k in Manhattan is the same as "only" making that much in Malibu, Jupiter Island, or any other wealthy community in the country. If you feel so poor, move to the boroughs or the burbs.

By the way, these facts come not from some Manpower or Kelly database, but from the US census's website. Its fascinating what a Google search can dig up, even for us janitors!

Maybe more people should do community service. Then you'd get a chance to interact with non-rich people. This would help gain perspective while actually helping people out rather than pushing money around.* At the end of the process, at the very least you'd have seen some people who you are really and truly better off than, so you'd probably feel richer...

* One thing that I find odd about these discussions is it's almost always people in the financial industry that feel "poor" despite earning large amounts of money. People that I know in other fields and make good six-figure livings are all pretty happy with their compensation. Why is this? Maybe it's that there's less disparity between the moderately rich and the super rich in other professions? Or that they're selecting their job based on some characteristic other than how much it pays in the first place? I'm not sure, but it's an interesting trend.

What Jordyn said. In my case, I am reminded every year when I head home for X-mas, and see my REALLY not well-off relatives (Try going to a "nice" restaurant in modesto Ca.)

BTW, here are the richest counties in America - notice that New York County (Manhattan), is not even in the top 10, and in fact has a median income 30-40% LESS than those in ACTUALLy "wealthy" counties:

http://abcnews.go.com/Business/census-bureau-data-richest-counties-richer-poorest-poorer/story?id=12415751&tqkw=&tqshow=&page=1

Perspective, people.

Hell, you don't need to do community service. Just go to dinner, "Babbit" style, with some secrataries or mail room people at your firm. Eye opening to say the least. Jackson Heights...yeah.

bet jason is 1) not married 2) has no offspring (thanks be lordy) 3) recently got out of a roomshare with one of his headhunter bretheren 4) has a bit of sizzle in his step given his compunction on telling peeps how to live their lives. 5) is a few paychecks away from the janitorial job he so identifies with.

point is, bobf is probably feeling a bit hosed given his expectations of what it means to strive to be a bit upwardly mobile and looks like the view up there aint all that different in nyc. 400k and all. duecescracked deserves zero sympathy, bob is now smelling the nyc cookin. welcome to thunderdome.

Manhattan is the second richest in terms of average per-capita income...but our friend still makes 3.3X the average:

http://en.wikipedia.org/wiki/Highest-income_counties_in_the_United_States#20_highest-income_counties_by_average_per_capita_income_.282009.29

thunderdome indeed!
two men enter, one man leaves. which one are you gonna be? isn't that the question.

To be honest, I think a lot of the differential in saying "$x00 isn't enough" and saying a lot also comes down to debt. I get that a lot of folks just started making this kind of money, and are aspiring to million dollar lifestyles.

I think there is a big difference in someone who has been making money for a while, and putting some of it away and having a decent nest egg, with those always spending above their means and living off credit.

Maybe the key is who had a few years of good salary in between the "blow it all on coke" and the "3 kids in private schools" time periods. Timing is everything.

Interesting to note, I was born in the tenth richest county per the above list, raised in the 8th, and now live in 2nd.

And London in the UK to boot, I might add!

Pretty good for a part time Janitor, part time headhunter!

uwsmom. i am still here, baby! and i say that with all due respect and affection.

*yawn*

that was for you, jason. oh, i meant frickin *yawn*

FWIW, it's definitely the case that $400K doesn't result in the same lifestyle in Manhattan as it does in other parts of the world. Housing is a huge component of this (you'd live in a mansion with that sort of income in most parts of the country), and there's a lot of stuff ranging from eating out to school costs that are more expensive than elsewhere.

Having acknowledged that:

- Even though Manhattanites may end up with a smaller portion of their income disposable than in other cities (or even other boroughs), $400K incomes still yield plenty of money in absolute terms that goes just as far on luxuries as they do anywhere else. Your vacation costs the same as for someone from Houston; same goes for most consumer goods.

- As mentioned previously, people control where they live. If you're house poor and are unhappy as a result, why on Earth wouldn't you move to the burbs? Some of them even have pretty good public schools so you could eliminate those private school bills at the same time as decreasing housing costs.

^^^ what s/he said. Move to NJ. Great public schools in some cities. Or move to Riverdale, and have money left over for private school.

a family favorite:

'Cause I was thinkin', it really don't matter if I lose this fight. It really don't matter if this guy opens my head, either. 'Cause all I wanna do is go the distance. and if I can go that distance, you see, and that bell rings and I'm still standin', I'm gonna know for the first time in my life, see, that I weren't just another bum from the neighborhood.

that was in response to swe.

And rangersfan joins Columbia and UWS as my only three ignores. If all you have is personal attacks, I will ignore your person.

YAY FOR YOU! I came to the defense of bobf after you attacked him, his wife, his choices and gave an unsolicited advice which amounted to "frick you" and "tell your wife to get a frickin job". Well, f*ck YOU buddy and am happy to be on your ingore list. I love your comment on personal attacks given your initial post above. HEEEHAWWWW!!!

oh, and lets notforget the last line in your post, hope all the communists burn down your condo - lets move beyond personal attacks and wish and advocate anarchy. Nice touch. btw, did downey street shut down your office because you were unable to handle garden leave issues. oofah!

Nyctrader is right. For those of you who think investment bankers are overpaid (which some are); how many people out there are working 80 hour weeks to support their families? It's not like bankers work 8-5 and get a lunch break....they work 7am-12pm. If we want to turn this city and surrounding area into a socialistic nation...that's fine...I'll quit my measley 400k job bc it takes away 90percent of my family time and instead I'll be a teAcher with summers off making 70 grand. Now that sounds like a good trade

And for the record; I don't even work in the industry any more- but most of my friends are still there. None of them make anywhere near 2million bucks. In fact; some of them who are getting paid 300k a year are prob making the same hourly wage as a store manager at Best Buy.

Who the hell are the people still buying 5-7mm apartments in new York city? How can we still claim it's the Russians. It sure in hell isn't the Europeans at this stage

And furthermore...anyone who makes personal attacks wishes someones death is just a weirdo. Why do people care if other people make money??? Boo hoo the bailout...umm...govt made money on the banks. Govt lost money on gm but nobody seems to care. I'm not rich at all; I got out of wall street when I was younger; I just don't see why people care so much.

BobF, you're not exactly building sympathy for your cause.

First, there are lots of hard-working people that earn hourly wages and have to bust their asses for 80 hours or more to get by. The notion that bankers are well paid because they work harder than anyone else is truly absurd. In fact, if you only earn $10 an hour you really do have to work more than 40 hours to make ends meet, and the ideas of private schools or entertainment budgets aren't even in the discussion.

And now for some math lessons:

First, let's look at what that teacher makes. Assuming they only work 40 hours a week and get 3 months off and earn $70K a year (none of which are actually good assumptions, by the way), this still translates to an annual wage of $186K per year if they were able to get paid more by working your 80 hours per week with no breaks. So, that's still half of what we're talking about here. But if you think that's a good trade, TAKE IT. Don't whine about how you're one of the best paid people in the country and can barely get buy. Somehow all of the teachers earning actual teacher salaries are surviving.

And the $300K a year guy earning the same wage as a Best Buy manager? Even if you worked every hour of every day of the year, that $300K translates to $34 an hour, which is probably at least 50% more than what a Best Buy manager makes.

One reason we care is because that money came from us: the bankers' money was made by skimming productive enterprise, teaching corporations how to pay their employees and the government less so there'd be more for the investors, creating increased volatility and profiting from the rises while demanding the government cover the losses, and bailouts -- the largest of which was the simple gift of low interest rate loans from the Fed to allow the banks to make slightly higher interest rate loans to the Treasury. If the financial industry were taking only 10% of profits instead of 30%, we might not live in a country in which the bottom 40% makes LESS than they did a generation ago, and all the productivity gains of the last two decades have gone to the top 5% -- and mostly to the very top of that top. Or where populism means taking from school teachers and retirees to fund the repeal of the estate tax and cutting income taxes for the "buck" a year guys.

The other reason is that overpaid bankers make it impossible for the rest of us to live in NYC. A generation ago, a family at the median income could live comfortably in Manhattan even with private school and private universities; today, families making five times the median feel sorry for themselves -- and legitimately, so long as you ignore how much worse it is for everyone else, because $400k salary isn't enough to pay the mortgage and maintenance on a market rate apartment with 2 kids' bedrooms in Manhattan. The main reason for that absurdity is that the overpaid -- and the real estate bubble-flippers the bankers made possible -- have bid up housing to levels far beyond the reach of most Americans. If bankers made only double median income and hadn't financed the bubble, teachers and police officers and programmers and whatever other middle income people are left in this city would still be able to afford middle income housing.

Bob,

You ask "who the hell are the people still buying 5-7M apts in NYC" but then follow it up with "Why do people care if other people make money"? I think the fact that you are asking the first question pretty much answers why people care why other people "make money" - I put that in quotes b/c those that are purchasing these 5M+ apts are essentially doing it with government money - b/c with the gov't bailout and Fed easy interest rate policy we wouldn't be talking about $5M apts being sold.

People care b/c the same bankers who made millions during the bubble they helped create are making millions after the bubble collapsed and they were bailed out. Instead of facing real consequences - like most of the rest of the nation - they are the ones buying $5M+ apartments...

"400,000? That's 200k after tax."
Seems to me a big problem is that taxes are too high. Even if you made more, 50% still goes to taxes. Solution: make less or leave the NY metro area?
I post this notwithstanding all the other arguments raised, which are very valid.

Guess it is time to leave NYC....

I just hope the rich still have enough left over to be able to still flip a gold coin to the parents of any children they hit in the streets...

Salespeople & Traders do NOT work 80 or even 50'hours a week, Bob, and this I know first hand. As for bankers versus Best Buy - my sister is a mgr at target, and was at best buy, and makes 1/4 you hourly wage while living in the very expensive SF area. So boo fucking hoo.

If you add up the time salespeople spend at client events after work (instead of hanging with families) it adds up to 65-75 hours. Also sales is the outlier on time at the desk.

If I were so concerned about what a certain profession gets paid-- I would simply get a job doing it. If I was bitching bc managers at target made way too much for what the do as a daily profession; I would become a manager at target

I'm just trying to sympathize with bankers. I'm just telling you how it is...as is the guy above (nyctrader) who said he has a kid, wife, kid and kid on way. Don't forget bankers at the main shops have always had their comp paid over 4 years. So if he gets a 300k bonus, less than 100k of that is in feb. That's taxed at 50percent! So he has 50k cash in the door and he has to live with the yearly stress of no bonus next year. Zero bonuses go out every year, the press never focused on it bc it doesn't get the public riled up (per this chat, it's not very tough to do an I wasn't even trying).

while i agree with falco, uwsmom, and even bobf that $400k doesn't go as far as one would think in manhattan, $400k is not taxed at anywhere near 50%.

BobF, did you miss the part where people getting zero bonuses are getting paid double their previous salaries? As I pointed out earlier, this makes their pay much more predictable and easy to budget around, which seems to address your complaint.

I don't particularly care how much bankers get paid. I do care that they're able to privatize gains and socialize losses and that their compensation plans seem to encourage this sort of behavior. To the extent that's less likely as a result of moving more comp into salary, that's great. It's also the case that this seems to be part of a clear trend of income stratification (which is bad for society) without providing much benefit to society, so there's a general social concern, but I don't think that debate is particularly interesting here.

On the other hand, it's really annoying to hear exceptionally well compensated people complaining about the fact that they're "poor". Such people have no grip on reality. (Note that this is a very different point from "the money doesn't go as far as you think". You can be rich and still be less rich than you might have hoped or expected.)

In the niche market of greatest interest to me (if you haven't figured it out, 3br+ & THs on UWS), the majority of people buying 2m+ properties are not IB folk. If they are, they come from wealthy families. The much-maligned 200k-300k-400k+? bankers are not the buyers of C7s on the UWS.

Also, if you look at other cities with the greatest price increases in RE and private schools over the last 15 years, they don't have banking incomes to count on. It's a mystery to me, but I am guessing that the increases have to do with:

1) Low interest rates & fiscal policy
2) Inter-generational transfer of wealth on a larger scale than previously
3) The ascent of the urban family lifestyle as desirable among my generation+10years.

And yes, in Manhattan, you can add banking incomes to that, but by no means is that (IMO) the only or the largest factor.

Ny23. I ain't buying that. If you don't think that a huge portion of the bubble wasn't related to 'momied' families competing against an ibanker pushing c5 to $2mm, I've got a bridge to sell you. The $5mm TH is as much a function of the $1mm studio as the $500 haircut or the $50k week vaca to maui.

In the 80's you could've bought a TH for $600k. Pls, just keep looking at the interest rates and bank comps, it'll all settle out sooner or later.

"It's not like bankers work 8-5 and get a lunch break....they work 7am-12pm"

I'll also add that banker hours - as in what you do in those hours - are often much easier than other jobs. I remember a whole host of waiting around for edits/comments for the model or research. Tons of screw-around time. And sitting in meetings where you don't have to do anything. And the research itself, sitting at a computer is much easier than being on the phone all day.

W67: you can buy it or not. I don't watch the studio market or 1br or 2br so much. But ever since ACRIS has made the names of coop buyers & sellers & prices public (since '05), I have seen few (maybe 20%) of sales directly attributable to bonus/banker comp ONLY. Many people have some family wealth. Now, whether or not Mummy and Daddy actually contribute or it's just a "backup', who knows?

In addition, can you explain to me the 300ish % increase in my hometown RE price (inner city only) or the 400ish% increase in private school tuition? No huge banker bonuses there.

Btw the trophy mkt is off 2/3 from the peak. Your c7 and TH market is being squeezed from both sides. -shrug- whogivesaflyingroundhousefk? I just need to score one C7. Yes my expectations have gone up. And it'll come as surely as my son's xmas with lots of $200 Lego sets.

I agree that ibanker competition pushes prices some but I don't agree that it's 100% or even 50% attributable to that alone (again, at least in my niche market).

As to TH sale, you couldn't finance that TH for 500k and usually would have to do all-cash or some weird user-financing thing. Where that's true today, you can pick up a TH for under 2m.

W67: I don't know or understand the trophy market AT ALL. Here's to your C7 for 700k.

Salespeople do NOT spend 75 hours working. ESPECIALLY not traders. Or PMs. But who cares if they do? I am not quibbling over what anyone makes or a partucluar job - YOU are the one telling a BALD FACED LIE that retail managers make the same hourly wages as wall streeters! Its ABSURD. They work the SAME hours as what you decsribe for under $100k.

As for the delayed bonus - what are you retarded? They got a partially stock based bonus or otherwise defered bonus last year, and the year before, and the year before - and generally, its all cash right out of undergrad or B-school, so as the years go by and they sell shares they (I should say I, me, because this just happened with me) get more CASH in my/our pockets every year.

And we only get taxed when the stock or cash VESTS, so why you mention taxation in relation to restricted comp is beyond me. You know what happens with the 40-50% marginal tax rate on the stock when it vests? THe company SELLS half your stock to pay the tax bill. You don't pay anything out of pocket. The only additional tax you pay is if the stock appreciated after this point (which is 15% captial gains.)

And all of this does not even get into PE and hedge fund guys who get the caried interest tax treatment, and thus pay LOWER taxes than the lower-paid Best Buy manager.

Did I mention it would take five of my sisters to make as much money as you?

Pathetic you try and gain sympathy for being so highly compensated.

I make a lot of money too - but I certainly don't say "woe unto me! I gots it so hard!!!!"

23 - re: ACRIS and the habit of Googling buyers of properties of interest, I am also in that habit. I haven't kept a list, so my comments are impressionistic, but my impression is that finance broadly is well above your 20% figure. 20% sounds right to a bit on the high side for purchases funded with straight up banking income/wealth (i.e., not turbocharged by family wealth), but I find more where the online trail leads back to hedge funds (many) or private equity (some). I have not been at this since the dawn of ACRIS like you have, but my impression over 2-3 years would be that over half of the buyers I have looked up are banker+HF+PE. Admittedly I am watching a somewhat different market than yours - mostly 3br+ coops, 3br+ new dev condos and the occasional non-prime location TH, all on UES - so that might be some of it too.

The bubble was fueled mostly by the bubble -- that's how bubbles work. Prices go up, buyers see the investment as less risky, they bid higher, sellers sell for higher prices, they have more money to bid higher, banks see borrowers as less risky, they lend more readily larger amounts, the result is prices go up and the whole thing feeds on itself.

Low interest rates can speed up the process, but they aren't necessary or sufficient.

But bubbles end when one of two things happen: Either prices get so far above costs of production that producers increase supply to the point where prices stop rising. Or lenders can no longer find borrowers who can borrow even using bubble profits to repay, because prices get so high that no one can play except with bubble profits and there is no one left able to replace those who exit.

The bankers had two large impacts:

First, by securitizing loans, they made lending easier and seemingly safer all over the world, so the bubble was able to continue going on for longer, and in more places, then ever before all over the country and all over the world.

Second, by spending their own inflated pay on NYC real estate, they kept the bubble chain moving --
one banker buying with income allowed a whole series of others to sell and buy with bubble profits -- long after all the other new money was priced out of the game.

Without the first, the bubble would have been small and localized, not international and decade-long. Without the second, NYC prices would look like the rest of the country's: far too high and doomed to fall to reflect actual costs of production, but not so high as to make the top percentile of income earners whine about their poverty.

Private school tuition increases, by the way, largely reflect the fact that teachers need to compete with bankers for housing.

Pure handicraft industries, like education, have no productivity increases: you need at least the same number of teachers with at least the same level of skill to teach children as a generation or two ago. So as productivity increases elsewhere in the economy, either teachers and similar handicraft workers need to accept an ever lower standard of living, or if their wages keep up with the economy, their prices need to go up faster than than the economy-wide inflation rate. There is no third alternative.

In NYC, the rising pay of the uber-class has made it possible for private school teachers to continue charge handcraft prices rather than accept being pushed into ever lower standards of living. In the public school systems, as the benefits of economic growth have gone to fewer and fewer people, the rich have refused to pay their fair share of taxes, and prisons/security have eaten an ever larger chunk of governmental budgets, the more common solution has been to drug the children and use multiple choice tests to make larger class sizes more acceptable.

i love your posts financeguy!
raw but true...

'Private school tuition increases, by the way, largely reflect the fact that teachers need to compete with bankers for housing.'

compete with bankers for housing....

maybe compete with the people that bring bankers coffee.

They don't have to compete when we house them....

Case in point, Grand madison 225 fifth ave PHA
http://streeteasy.com/nyc/sale/560166-condo-225-fifth-avenue-flatiron-new-york

Was bought by CUNY in 2007 for $2,400,000. According to the broker the faculty member didn't take the job so we didnt even house this bum.
Here we are 3 years later listed for $2,195,000.

So we eat the loss as well, we of course meaning NYC taxpayers.

Assuming a high correlation between daycare costs and education costs I can see the inflation in NYC daycare vs. that just outside the city. I have my daughter in a high quality daycare near my place of work (a suburban county that borders on NYC) and it costs about 30% the cost (NOT 30% less) of a similar NY daycare. ($800/month, drop off 8-9am, pick up 4pm, 5 days a week). Great facility, lots of activities and I love the staff. In the city that would be $25,000-30,000/year I think.

And FYI, I work for a bank so its not like I care what this cry-baby does. If he made $400k as a baseball player, lawyer, car company exec, doctor, or spiritual guru I'd still sing the same tune. Boo-fucking-hoo.

Looking at this great NYT interactive map (go to the income maps), you can see median household income by individual census track and the change since 2000 in income. First, its fascinating because you can clearly see how gentrified some Harlem and BK neighbs have gotten - many have doubled income in ten years, on average, much faster than the overall city.

But more relevant to this discussion is the fact that $400k per year is basically 2-3X the median EVEN for most parts of "nice" Manhattan. Go to the median household income map and scroll over Lenox Hill, Tribeca, Meatpacking, Soho, Columbus Circle, along CPE & CPW....you get median HH incomes of like $80k to $150k...one or two just above $200k.

Which brings me back to BOO FUCKING HOO. Even in the wealthist parts of manhattan, this guy is upper-income.

http://projects.nytimes.com/census/2010/explorer?hp

Financeguy: I disagree that private school tuitions have risen because teachers need to compete with bankers for housing. Private school tuitions in MANY cities across N. America have risen 3-fold+ over the last 20 years. It's not all banking incomes. Don't be so-frigging-NYC-centric.

Ssitter: I can't speak to the UES market at all. It's easy to keep track of C7+ on the UWS, there are fewer of them. I stopped keeping track of postwar co-ops, but in general, 3br+ don't exist except for combos. We also have fewer new-build condos, the ones we have are outrageously (IMO) priced/sqft compared to prewar co-ops, so 3br+ not really domain of 400k+ bankers. N. of 96th (another market I don't track much), there are more of the borrow-90%-living-beyond-means-IBers in the few large developments up there (272W107 + 545W110 + Ariels) but I don't track resales much either in those bldgs.

nyc10023 - you wouldn't include 865/905 WEA in that coterie?

Jason, thanks. That map is more fun than I've had in a while.

What I mean is they seem the same price point/market, just different tastes.

That is an interesting map. The "wealthiest" census tracts in Manhattan (e.g., 5th, WV, Tribeca) range from 38% - 52% of HHs being >$200k. But go up to Scarsdale and Bronxville and it shoots up to 60 - 66%.

Av: No. They are not large developments compared to the above-mentioned. I don't track prewar conversions, because the numbers are relatively small (e.g. 610W110, 220W93) and it's not IMO the same quality as a prewar co-op as most of the larger, full-service UWS co-ops or the better-built condos.

10023 - The tuition processes are the identical all over the country (and in higher ed, too), even though the numbers are smaller without the bankers pulling up the top of the real estate market.

With or without bankers, tuition must go up faster than inflation unless class sizes grow or teachers move down in standard of living. And if you squeeze teachers too much, eventually the youngsters decide to become bankers or lawyers or IT entrepreneurs instead.

Financeguy: I discussed this issue with a headmaster of a private school (tuition - $12k-ish in 1990, closing in on 40k today). It hasn't all gone towards teacher salaries. Many private schools have way plusher facilities than 20 years ago. The number of non-teaching staff has exploded. Technology budgets have exploded. Salaries of top admin. people (e.g. principals) have exploded.

i may have just missed it. if so, my apologies. but what i haven't seen addressed here is the savings value of the bonus. sure, some people will overspend and extend credit and then pay it off with the yearly bonus. but many people spend what they have. having less during the year tends to mean having more at bonus time for large purchases, down payments.

and 10023, i disagree. also, many banking types certainly don't start out in your c7 or th market.

back in the day many different professions would allow one to buy and live in NYC. there are many people who make far less than $400k who bought property when their salaries were far less than $400k (adjusted for inflation) who live in properties they couldn't dream of buying at today's prices. the question is, at least as i see it, whether or not those people will be replaced by "overpaid" individuals when they need to sell. and there has been a ripple down effect. as those paid the $400k salaries have saved and bought the modest two bedrooms for triple what they cost 12 years ago, those paid $300k have settled for the junior fours which are really too small for their needs, etc., etc., etc.

the lincoln towers one bedroom that has a $1200 mtc?

AR: the problem is not isolated to NYC, which makes me think that banker bonuses is not the only factor at play.

"That is an interesting map. The "wealthiest" census tracts in Manhattan (e.g., 5th, WV, Tribeca) range from 38% - 52% of HHs being >$200k. But go up to Scarsdale and Bronxville and it shoots up to 60 - 66%."

Yes, but the AVERAGE incomes in Manhattan (not median, AVERAGE) are about double what the map shows. The super-rich in Manhattan are on average, far richer then the places you mention. The US has the largest rich-poor gap among developed nations. NYS is the worst state in the US in this regard. NYC has the biggest gap in NYS. Manhattan has the biggest gap in the 5 boroughs.

Which is why people who make $400k are so delusional as to not think they are upper-income.

Thank goodness the uber-rich choose to live in Manhattan and not Scarsdale. We will take all the income, cap-gains, estate tax we can get.

$400k is upper income, but after paying fed, state & local income tax, the net is around $200k. So, the $400 is really about $200.