Despite the cost of living, investment bankers in the U.S. who want to make real money need to work in New York – at least that’s one prevailing theory. However, new data suggests that the income disparity between New York and other locations in the U.S. is only prominent at the lowest rungs of investment banks. Once you hit a certain level, pay is more correlated with performance, not location.
A new compensation study from banking executive search firm Pinpoint Partners found that salary among investment bankers at junior levels in New York is around 10% to 15% higher than the next best-paying locations: Midwest (Chicago) and Northern California (San Francisco). As an example, the average salary for a first-year analyst in New York is $83k – roughly $10k more than what analysts are likely to earn in the Midwest. The average bonus in New York is $49k, compared to just $37k in the Midwest. Meanwhile, first-year associates in New York take home $21k more in total compensation than those in the Midwest ($252k vs. $231k)
But as you can see in the chart below, the narrative changes significantly once you reach the title of vice president. Shockingly, of the seven U.S. regions, only first-year VPs in the South were paid less, on average, than their colleagues in New York. There aren’t huge deviations in terms of percentages, but that’s the point. The pay difference between New York and other U.S. cities “significantly ceases as seniority rises, highlighting the importance of individual performance over physical location,” according to the authors of the study.
Sure, you can squeeze out a few thousand dollars more in New York during your first years in banking, but the difference in cost of living likely negates most of the added compensation. Once you reach the level of VP, no one cares about your zip code, it seems.
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