It’s Hard Out There for the One Percent
God help us / help us lose our minds / these slippery people / help us understand —Byrne/Weymouth/Franz/Harrison
The New York Times's Catherine Rampell notes, in a post that's otherwise about the increasing salaries of New York's financial sector (emphasis mine):
That’s not to say that bankers have job security.
The overall financial services sector was disproportionately hit by the financial crisis. The sector employs just 12 percent of the city’s work force, but accounted for one out of every three jobs lost in the recession. Some (not all) of those jobs were regained, but the comptroller’s office says the industry “is likely to experience significant job losses over the course of the next year.”
In Chicago, which is less dependent on the financial industry, the numbers aren't as stark: according to this handy PDF of Chicago layoffs by industry during the last decade, "financial activities" accounted for about eight percent of layoffs from 2007-2010: less than construction and leisure/hospitality, about the same as manufacturing.
Eat the rich? They're eating themselves. The scene in London:
James Bennett, a managing director of the group, said: "External observers may be shocked by the confidence being expressed by bankers ahead of the bonus season. However, the pay-for-performance culture is very much ingrained in the financial psyche, and even in times of market turmoil, financial institutions need to take care of their best talent in order to retain them."
So where does this dog-eat-dog attitude come from? It comes from the likelihood of being eaten. Economists Ulf Axelson (London School of Economics, formerly of the University of Chicago) and Philip Bond (University of Minnesota, formerly of Northwestern) wrote a paper entitled "Investment Banking (and Other High Profile) Careers" (PDF) in 2010 that goes a long way towards explaining it:
Investment banking provides perhaps the quintessential example of a high-profile industry (at least until recently), and throughout the paper we use it as our leading example of a high-profile job. Investment bankers are (in)famously highly paid. For example, Oyer (2008) [PDF] shows that MBA students from Stanford who entered investment banking had salaries that were around three times higher than other students after six to ten years. However, the high compensation comes at a price: the risk of getting fired is very high, and work hours are notoriously long. In the beginning of an investment banking career at a top firm it is not uncommon to work 100 hour weeks, and much of this time is spent on rather menial tasks such as gathering data and preparing power point presentations.
100 hours a week trapped in PowerPoint?1 We're lucky the near-collapse of the American economy was the worst of it. I'd be leading #occupymicrosoft marches through Redmond with Edward Tufte.
Axelson and Bond's paper is pretty wonky. If you want a more narrative approach, anthropologist Joris Luyendjk has a fascinating blog at the Guardian about the lives of financial industry professionals. Here's a primary research fund manager talking about the improved work-life balance of his new job (emphasis mine):
I read my email as soon as I get up, see what has happened in the time I was asleep – I don't like to be caught unawares. At 7am I'm at the gym, 9am in the office. A typical day … I have lots of meetings, essentially. Some are in person, others by phone or on Skype. Meetings can be one on one, or conference calls. We've got offices in the US and in Asia, and a working day involves a good deal of co-ordination – making sure people know what others are doing. Mine is a people job, working with people all the time, mostly the account managers who deal with our clients. By 7pm I am out of the office – that is one huge advantage over my previous job in mergers and acquisitions (M&A) for a 'bulge bracket' [huge] investment bank: the work-life balance.
That M&A job?
Don't get me wrong. M&A was a really useful first job. It steels you, like the army. Much of it is drudge work. Really monotonous, quite simple tasks: compiling figures from open sources, fidgeting with spread sheets and columns and so on.
Here's a managing director in corporate finance—in his early 40s—describing his work-life balance:
There have been periods when I made do with two hours of sleep a night. I would come home from work just when my wife's morning alarm would go off....
Those days are over but I work late every evening, that's standard practice. I get to see my kids in the morning but never in the evenings. And I see them on weekends.
And that's someone who's established. Here's an intern talking about his future:
I am told that around two-thirds of fresh banking graduate trainees will get fired or quit within their first three years....
In return, I guess that you invest some of the best years of your life, and almost all of your waking hours to work.
It's no more fun for significant others, as a banker's ex attests:
There was the year when his bonus was really quite low; the bank had had a tough year. He was almost physically hurting, you could tell, as if somebody had punched him in the chest. I do know for a fact that he is actually terrified of losing his job in a new crisis.
Fear leads to anger... anger leads to hate... hate leads to the dark side. Someone wise said that, maybe Paul Krugman.
OK, hate is a stretch. It's more like ambivalence, or not even ambivalence but a tragic misunderstanding, as Karen Ho writes in her outstanding book—seriously, it's the most illuminating one I've read about Wall Street—Liquidated: An Ethnography of Wall Street. As the anthropologist (see, Rick Scott, we do need anthropologists!) told Time:
What a lot of folks don't realize is there are tons of layoffs on Wall Street even during a boom. What they value is not worker stability but constant market simultaneity. If mortgages aren't the best thing, it's, "Let's get rid of the mortgage desk and we'll hire them back in a year." People were working a hundred hours a week, but constantly talking about job insecurity. Wall Street bankers understand that they are liquid people.
The kind of worker [financial professionals] imagine is a worker like themselves. A worker who is constantly retraining, a worker who is constantly networked, a worker whose skill set is very interchangeable, a worker who thinks of downsizing as a challenge — a worker who thrives on this.
Ho argues that, far from being a bunch of destructive nihilists, bankers think that being liquid people and making other people liquid—I love that phrase—is good. They're trained that way; it's part of the institutional culture, and part of their daily lives. Like the 99 Percent, and the 53 Percent, and most everyone in between, they make the personal universal.
The Occupy Wall Street movement, in part, has highlighted a disconnect between the "one percent," variously described, and everyone else. Those of us in the 99 percent often have as dim an understanding of them as they have of us, and the system that Occupy Wall Street stands to critique is as much cultural and personal as it is political, perhaps primarily so. That disconnect cuts both ways, at our peril.
1. "Yet slideware—computer programs for presentations—is everywhere: in corporate America, in government bureaucracies, even in our schools. Several hundred million copies of Microsoft PowerPoint are churning out trillions of slides each year. Slideware may help speakers outline their talks, but convenience for the speaker can be punishing to both content and audience. The standard PowerPoint presentation elevates format over content, betraying an attitude of commercialism that turns everything into a sales pitch." —Edward Tufte
Photograph: JeraSue (CC by 2.0)