Working on Wall Street always meant great pay, fabulous perks and year-end bonuses that would make you feel as if you'd won the lottery. But that was before the Great Recession. Now, unemployed traders and bankers are finding out that high-paying jobs are nearly impossible to come by, as layoffs and slow economic growth continue in the finance sector.
Karen, a New York-based fixed income trader, knows this firsthand. She recently spent six months searching for a job in the finance sector and ended up accepting a position that pays 40 percent less than what she was making.
"You don't have the upper hand anymore," she says. As a vice president at her former firm, she says she was accustomed to base salaries ranging from $110,000 to $150,000.
Heidi Shierholz, labor economist with the Economic Policy Institute, says after holding up pretty well in the first year of the recession, there's a very clear trend that growth in nominal wages -- those wages that are not adjusted for inflation -- has slowed dramatically in the last few years.
"That's the scary part. Employers don't need have to pay a wage premium to get and keep the workers that they need, when there's dozens of workers waiting to get jobs," she says.
In Karen's case, the layoff meant lifestyle changes. After upgrading to a one-bedroom apartment, she was forced to downsize to a studio and has cut back significantly on expenditures like going out to dinner and traveling. But it was the lack of job prospects that was particularly jarring. "I did have a lot of sleepless nights, especially on Sunday, knowing that it was another week," she says.
And the ranks of the sector's unemployed are expected to grow. Meredith Whitney, chief executive officer of Meredith Whitney Advisory Group, recently told Bloomberg Radio that her firm sees 80,000 layoffs coming in the sector over the next 18 months.
The Labor Department reported Friday that U.S. jobless claims rose by 95,000, with the unemployment rate holding steady at 9.6 percent. Most of the losses were in government, but that's little comfort to people elsewhere: A mere 64,000 private sector jobs were created.
"It's bad," says Heidi Shierholz, labor economist with the Economic Policy Institute, noting that September was the fifth straight month of meager private sector jobs growth. According to outplacement firm Challenger, Grey & Christmas' September job cuts report, plans for only 125 financial jobs were announced during the month.
Even though she had solid industry contacts, Karen says even landing a lower paying job was difficult. "[Jobs] were very scarce. "You'd apply for jobs and not hear back for a while. It was a very lengthy process," she says -- was markedly different than just two years ago, when she was laid off by an investment bank and hired by a competitor in one month.
"I didn't even file for unemployment," says Karen, who was let go the week before Thanksgiving in 2008 and was working by Christmas.
Christopher J. Shea, founder of Cross Hill Partners, a New York-based recruiting firm, says after a pickup earlier in the year, he's seen a pullback in hiring, and more employers focusing on performance-based compensation. "We're going to give you a lower base and put more on your performance," Shea says firms are telling those they do hire.