“A shortcut to riches is to subtract from one’s desires.” — Plutarch

compensationIt’s that time of year when the media reports on Wall Street bonuses. Unless you live in NYC, most people are unaware what these bonuses do for the New York economy.

“Is business good for everyone when Goldman Sachs has a great year? You bet it is,” a Porsche salesman at Manhattan Motorcars, Manny Quinones, said in a New York Sun interview.

The article continues, “Of course, year-end bonuses at Wall Street’s largest investment banks are not distributed in equally divided parts ” much to the chagrin of first-year associates everywhere, who might or might not be driving new Porsches five months from now. Intergalactic sums surpassing $10 million are paid out to the privileged few: typically managing directors and star traders. But this year, even junior level analysts and newly minted MBAs stand to fetch $50,000 and up when the firm doles out its bonuses in February.”

I remember when I first learned how much money investment bankers make. I dated a woman in Connecticut and her Chase Manhattan-investment banker sister-in-law pulled in nearly half a million dollars at the spunky age of twenty-nine. At the time, I was the same age as the in-law and was struggling to find myself and a worthy career all while waiting tables as I tried to figure it out. I remember thinking that I worked just as hard as her and moaning to the girlfriend about the inequity of income. She said, “Well, stop complaining and go get your Wharton MBA. Then you can have fun and success on Wall Street.”

I didn’t get my MBA and actually we broke up soon after upon which I bolted to another part of the country. But that’s when it hit me: there is a great divide in America when it comes to compensation. Is it fair? No. Is there anything that I can do about it? Probably not but it certainly is an interesting topic to discuss when it comes to money.

The New York Times reported, “Three decades ago, compensation among occupations differed far less than it does today. That growing difference is diverting people from some critical fields, experts say.”

Case in point: “A decade into the practice of medicine, still striving to become ‘a well regarded physician-scientist,’ Robert H. Glassman concluded that he was not making enough money. So he answered an ad in the New England Journal of Medicine from a business consulting firm hiring doctors. And today, after moving on to Wall Street as an adviser on medical investments, he is a multimillionaire.”

It used to be that medicine was both a noble profession and one that would lead to wealth. Not so today. Another New York Times article mentions, “The average securities salary is now 5.1 times the average salary paid in other industries, up from 2.5 times in 1990 and 4.3 times in 2003, according to a recent report released by the New York state comptroller, Alan G. Hevesi. The securities industry accounted for only 4.7 percent of jobs in New York City in 2005, but 20.6 percent of the wages.”

“First-year associates, those just out of business school, can expect a range of $200,000 to $270,000 in total compensation ” base pay, bonus and long-term compensation ” while a first-year analyst, just out of college, can expect to make $105,000 to $145,000.”

And those are the wannabes. According to ABC News, the top tier investment bankers who advise corporations on their financial dealings are: “As a group set to do the cash-huge bonuses this year. Johnson Associates estimates that 1,000 top-tier investment bankers will earn in the neighborhood of $2 million to $3 million in bonuses. That’s more than 10 times their $100,000 to $250,000 salaries. The CEOs of premier investment banks will pull in the biggest money ” about $40 million plus bonuses to the premier companies, mostly in the form of stock.”

What’s the point? How can most of America compete with that? Clara Jeffery at Mother Jones gives A Look at the Numbers: How the Rich Get Richer. Check out these stats during a work break. For additional reading pleasure, catch this lengthy profile in the New York magazine called, Please Sir, I Want Some More and is about how Goldman Sachs carves up its money pie.

Now back to work, all you worker bees. Present company included!