Wall Street is hemorrhaging money, and it has nothing to do with the markets.
America’s heralded financial institutions are feeling the effects of The Great Resignation, and they’re padding year-end bonuses and salaries like never before in an attempt to get their workers to stay. The five biggest investment banks paid out $142 billion in compensation for 2021, that’s $18 billion more than in 2020. Pay rose twice as fast as revenue last year.
At JPMorgan Chase, compensation for investment bankers and traders rose 13% last year, about three times as much as the extra revenue they produced. Citigroup paid out $3 billion more to its employees than it did in 2020, and Goldman Sachs parceled out nearly half a billion dollars in special stock bonuses to its partners.
But as staffing shortages in finance persist and recruiters are getting nervous, they’re learning that money is no longer the be-all-end-all when it comes to retaining and hiring employees.
If there was a chart that mapped out when an employee’s quality of life became more important to them than pay, Alan Johnson, a consultant who helps financial firms design their pay programs, told Fortune, “we’re stretching the ends of it.” Mental health problems and fatigue are catching up to finance workers who have now worked grueling days from their couches for more than two pandemic-laced years.
“This is a unique situation,” said Johnson. “We’ve always had compensation go up and down based on the labor market, but now there’s this cumulative fatigue of COVID remote work. It’s all new.” Money is not enough, he said, employees are looking for a change of scenery as a way to cure this growing sense of fatigue.
About 65% of employees say the pandemic has made them rethink the place that work should have in their lives, research firm Gartner found in a recent survey. Compensation isn’t the main motive.
Johnson said that his 800-plus clients, which have included financial institutions like Credit Suisse, are unclear on how to handle the situation because there is no historical precedent. “They’re all very nervous about what the turnovers are going to look like,” he said.
He predicts that it will be high well into 2022.
As employees return to the office and are confronted once again on a daily basis with annoying personalities and the grievances of office-life, they may also decide the money just isn’t worth it. Gallup research found that 50% of employees leave their jobs “to get away from their manager to improve their overall life at some point in their career.”
“If you’re exhausted, you think ‘do I really want to live in New York or Boston or San Francisco? Do I want to deal with the high prices and high taxes there? Why don’t I move to a warmer climate, and live a more relaxed lifestyle?'” said Johnson. “I think that’s more apparent than it would have been two or three years ago.”
The greener pastures of Silicon Valley, which offers good pay, lush benefits, and at least the veneer of a better work-life balance are also wearing away at Big Banks hiring prospects. Some institutions are catching on.
Goldman Sachs is introducing an unpaid sabbatical for longtime employees, offering longer bereavement leave, and increasing its retirement fund matching contributions. The question is whether it’s too little, too late.
This story was originally featured on Fortune.com