A Blow to Pinstripe Aspirations
Earlier this fall, Steve Ferdman celebrated getting a job offer Credit Suisse in the usual Wall Street fashion. Over expensive oysters and dark rum cocktails at a trendy Manhattan restaurant with his parents, he toasted landing the full-time position after working six months as a consultant without benefits.
A week later, Mr. Ferdman, 28, sat alone at the same place and ordered a gin and tonic to lament getting laid off by the bank, for the second time since 2008. When he told the bartender about his misfortune, his next round was on the house.
“I did everything right. I came into work every day, I put in long hours, and I still got punched in the face,” Mr. Ferdman said. “People shouldn’t want to work in this industry anymore.”
Being young on Wall Street once meant having it all: style, smarts and too much money to spend wisely. Now, twenty-somethings in the finance industry are losing both cash and cachet.
Three years after the global financial crisis nearly brought Wall Street firms to the brink, the nation’s largest banks are again struggling. As profits wane, layoffs have claimed thousands of jobs and those still employed have watched their compensation shrink. These problems are set against the morale-crushing backdrop of the Occupy Wall Street movement, which has made a villain of a once-lionized industry.
Much of the burden of Wall Street’s latest retrenchment has fallen on young financiers. The number of investment bank and brokerage firm employees between the ages 20 and 34 fell by 25 percent from the third quarter of 2008 to the same period of 2011, a loss of 110,000 jobs from layoffs, attrition and voluntary departures.
By comparison, industry headcount dropped by 17 percent in the same period, according to an analysis by The New York Times of data for New York City provided by the Bureau of Labor Statistics. The number of staff members over the age of 55 decreased by only 11 percent.
Young financiers have experienced setbacks in the past. Bankers and traders who rushed wide-eyed to Wall Street in the halcyon days of the 1980s were waylaid by the stock market crash of Oct. 19, 1987, known as Black Monday. Then they got pummeled in 2000 by the dot-com collapse and the recession that followed.
But experts say that today’s doldrums, unlike previous downturns, are here to stay.
“A lot of the positions that are being cut right now aren’t coming back,” said Leslie K. Hild, a vice president with the recruiting firm Right Management. “It’s an emotional roller coaster for almost everyone.”
The industry’s woes have also affected the plans of undergraduate and graduate students at the nation’s top colleges.
At Harvard Business School, where a relatively high 39 percent of this year’s graduates went into finance, compared to 34 percent last year, there has been a “heck of a lot more anxiety” about next year’s hiring season, according to William A. Sahlman, a professor of business administration.
“People used to think of some of these organizations, like a Morgan Stanley or a Goldman Sachs , as safe career bets,” Professor Sahlman said. “Those firms are not going away, but they’re going to hire half the people they hired before.”
Several large firms are not recruiting new entry-level analysts for their investment banking divisions this fall, having filled their entire incoming class with last summer’s interns. At the University of Pennsylvania, whose Wharton School is the closest thing that exists to a Wall Street farm team, Goldman Sachs canceled its informational session.
"MOOD IS EVEN DARKER OUTSIDE THE IVY LEAGUE"
The mood is even darker outside the Ivy League. Matthew Slotnick, a senior economics major at Boston College, said that he had sent more than 100 résumés to contacts on Wall Street and received several interviews. But he has not gotten any offers. Mr. Slotnick, who has wanted to work at an investment bank since entering college, is now applying to smaller banks and firms outside of New York.
“People are saying it’s sort of a 2007, 2008-type hiring climate,” he said. “I haven’t given up, but it’s a bit depressing.”
Any sympathy for Wall Street’s huddled masses yearning to get rich should be tempered by the fact that financial sector recessions often deal a soft blow. Laid-off financial workers typically get large severance packages, including the use of outplacement services. During their job hunt, many can draw on substantial savings built off past bonuses, on top of collecting unemployment.
But for those laid-off Wall Street workers whose golden tickets have vanished, the disillusionment is real.
Sam Meek, 27, who was laid off in September when his Connecticut hedge fund decided to downsize, used to spend $500 on charity dinners and lavish golf outings. Now, it’s home-cooked meals and beer on the sofa. Recently, Mr. Meek and his roommate, another unemployed banker who spoke on the condition of anonymity because he did not want to jeopardize his job search, sat together in the kitchen filing for unemployment and drinking a bottle of Champagne.
“I’m scraping by right now,” he said.
Mr. Meek, a former Marine, says he is pursuing several job options, including an opportunity to help develop a social network for the military. But he remains reluctant to commit to a new company.
“I’m doing full due diligence,” he said.
Older financiers are having problems, too. Ian C. Horowitz, 40, a former equity researcher at Rafferty Capital Markets, was laid off in June when his firm decided to outsource its research division. Mr. Horowitz currently collects $400 a week in unemployment benefits and has been mowing lawns and doing odd jobs around his New Jersey town to support his wife and two children.
Mr. Horowitz, who lived through the downturn of 2001, said that the latest cuts felt different.
“There have been economic moments where things were bad, but you knew the pendulum would swing the other direction,” he said. “This is structural. The playing field has changed.”
Wall Street’s social scene has also changed, thanks to Occupy Wall Street and the fear of reproach from industry outsiders. Today’s young bankers no longer brag about their jobs, especially in public. One twenty-something Goldman Sachs employee, who spoke on the condition of anonymity because he was not allowed to speak on the record, said he now told new acquaintances he worked at a consulting firm.
The mood has darkened so much that even the young Wall Street workers who still have prestigious jobs are considering letting go of the brass ring.
“It’s lost its luster,” said a former Goldman analyst who left the financial sector this year. The former analyst, who spoke on the condition of anonymity because he signed a confidentiality agreement with the firm, said that in addition to losing some of the monetary benefits of their jobs, his friends who remained in finance were suffering from peer envy. “The new status jobs aren’t at Goldman Sachs. They’re at Google , Apple and Facebook.”
For many of the high-achieving, type-A young professionals who end up on Wall Street, being tossed around by an industry in tumult can amount to the first real failure of their lives. Even if the industry recovers, some may not stick around long enough to see their fortunes improve.
“I’m still scratching my head,” said a former employee of Nomura, the large Japanese bank, who was laid off on Oct. 1. “I went to the right schools, I know the right people and I’m very good at what I do. But when you have to cut costs, you have to cut costs.”
The ex-Nomura employee, who spoke on the condition of anonymity because a confidentiality clause is attached to her severance package, said she had recently come across a group of Occupy Wall Street protesters in Lower Manhattan. While she said she did not support all their ideals, she could now sympathize with their frustrations about high unemployment and a growing sense of economic hopelessness.
“I’m in the same boat as these guys,” she said of the protesters. “I just want to start working.”