Morning coffee: Goldman Sachs hires 5,000 cowboys for $90,000. Bankers get paid to stay home because there isn’t much to do

When it comes to investment banking careers, the city of Dallas has a somewhat unfair reputation as a career laggard full of back-office centers and regional wealth management managers who spend a lot of time in country clubs. Even for oil and gas coverage, Houston is often where the business happens. However, a look at the Goldman Sachs career portal shows that there is plenty of gold in the Texas dust; Vice President-level positions are being advertised, many of them in Marco Argenti’s “Engineering” team. Comparing the roles to the data Goldman reports to the US government under the H1B visa program shows that they pay decent six-digit numbers, with a VP position filed in March with a base salary of $270,000.

Goldman already has an office in Dallas, but will hire additional employees there. According to Bloomberg, the company is taking over the lease for 800,000 square feet of the downtown commercial tower. The old rule of thumb was that bankers needed between 100 and 125 square feet each, suggesting Goldman could fit up to 8,000 employees in that space, although 5,000 is the advertised number. Post-COVID, more space will likely be needed for ventilation and social distancing, but then again, Marco Argenti has said in the past that engineers are a “special case” when it comes to remote work guidelines.

In any case, as part of the package of local property tax breaks and investment incentives, Goldman has made a commitment to the city council to “create at least 5,000 high-rise jobs by 2028 with an average base salary of $90,000.” The company “cannot comment on our future expansion plans at this time,” but it seems unlikely that they would sign such an agreement if they felt the goals would be difficult to achieve.

That means there really could be a lot of good jobs at Goldman Dallas. For a six figure salary you can get a lot more house in the Dallas suburbs than in the Manhattan commuter belt. According to the H1B data panel, the lowest-paying analyst-level positions there last year (Goldman already has 4,000 employees in Dallas at another location) were $50,000 to $60,000. For every five jobs with that salary, you would have to add a $250,000 job to bring the average back to the agreed level.

The implication is that Goldman will recruit real bankers in Dallas, not auxiliaries; This is not a case where you can expect much of the recruitment to take place at a mall job fair. And where one bulge brace goes, others follow. Could it be that Manhattan’s bankers have finally priced themselves out of the market that it’s not just about Miami. The future of Goldman recruitment in America is a satellite office in Dallas.

Elsewhere, one of the big fears of investment banking management seems to be that if you allow employees to work from home, they might just sit at home and not do much. Obviously it takes a very enlightened manager like TD Corporate and Investment Banking’s Robbie Pryde to ask: If there are no deals coming up, why not take some time to recharge the batteries? That’s part of the rationale for TD allowing its bankers a relatively generous three-day in-office model.

If there is no business to be done, the bankers will not be doing business, that’s easy to understand. There are only a limited number of busy administrative tasks and speculative pitch books that can be used to fill the time. So the fact of the matter is that people in the quiet corners of the industry spend a lot of their time doing nothing, whether they’re in the office or not. Some of that time may be valuable — informal conversations, socializing, and building team spirit — but once you’re in the office for the fourth hour listening to the MD’s war tales or arguing about Bitcoin, you might think that the returns diminish that it makes sense is to spend some of that forced free time in a place where you can use it.

In the meantime …

Banker bonuses appear to still be an issue for populist politicians – the UK government is facing calls to clarify its intentions to remove the cap on variable pay (which was originally an EU rule and could therefore be abolished post-Brexit). However, it looks like there may have been cross-links between this and an unrelated cap on company directors’ pay. (Huffington Post)

Paul Brennan, Citi’s Head of UK Investor FX Sales, recalled for Pride Month the ten years of work before he came out to his peers, and the hugs and tears on the floor when he finally did. (financial news)

Former Morgan Stanley MD Alex Clavel takes over as CEO of Softbank International – Michel Combes has resigned to pursue other responsibilities just five months after his promotion. (Blumberg)

A major systems overhaul at Citi’s Institutional Clients Group means a robust hiring market for people able to get the job done. They plan to hire 4,000 technology people this year and Stuart Riley, global technology leader, says: “The last 12 months have been the most competitive [hiring] market I’ve seen in my career as a technologist”. (business insider)

In the wake of the pandemic and deal explosion, “there are a lot of people in the industry who aren’t so lucky,” according to finance firms. Some have decided the solution is to “bring your dog to work every day,” others have reached out to ex-special forces soldiers to explain to their co-workers how much worse things could be. Everyone has to pay more money. (financial news)

Finally some good news – one day a massive solar plasma bomb will destroy human civilization. Some scientists are trying to rob even this hope of relief by predicting “coronal mass ejections” and using capacitors to make the power grid robust. (WIRED)

Photo by Megan Bucknall on Unsplash

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