A study by a USC business professor released last week reveals some shocking facts about the effect the investment-banking industry has on young employees’ health. Tracking four cadres of investment bankers from two anonymous New York firms, Professor Alexandra Michel documents how i-bankers punish their bodies in an effort to succeed in a highly-competitive, highly-compensated work environment.
Investment bankers have it worse than their peers in finance. As hectic as a trader’s or broker’s work life may be, their work day starts and ends around the stock market’s opening and closing bells — sort of like grammar school, with more cussing. Investment bankers, who advise clients on things like IPOs and mergers and acquisitions, don’t have the same time constraints, Michel notes. Their workday ends when they want it to. But the competitive environment, open offices and free meals create a workplace culture that leads many associates to put in up to 18 hours a day — harming their physical wellbeing for their firm, their clients and the bottom line.
Investment bankers, as they become more addicted to work, rely on substances, too. Some gain weight, some develop drinking habits, some do worse. Some became nervous wrecks, flipping out on cabbies for no apparent reason. Another subject recalled being so self-conscious about his drinking habit that he could hardly keep up with routine conversation. Read the full study here (.pdf).
Hath not a banker eyes?
What makes the timing of the story especially tragic is that investment banks had a terrible year for compensation, and it has been suggested by many that compensation won’t return to boom-era levels. Imagine toiling away a year of your life, expecting some reward beyond a nice, but by no means huge, base salary, to discover that there was no light at the end of the tunnel. As unsympathetic and apparently soulless as institutions like Goldman Sachs and Morgan Stanley may be, their employees are people with hopes and needs just like you.
But that offers a silver lining to this whole mess. Would anyone be willing to submit themselves to this lifestyle just for the prestige? Likely not.
Best and brightest?
The economic crisis, the Occupy Wall Street movement and downward pressure on wages in the sector have coalesced into a sort of perfect storm of soul-searching in the institutions that feed young workers into this lifestyle. NPR recently reported on a movement called Stop the Brain Drain, started by a Stanford student to keep America’s “best and brightest” from being lured into the world of finance.
Best and brightest is what Ivy League students and investment bankers like to be called, but it’s not always the case. Or at least bankers don’t always let their nuanced understanding of Kantean metaphysics be known as they muscle their way around the packed watering holes of Murray Hill. Perhaps a better way to describe the sorts of people who might become an investment banker would be: pedigreed and motivated.
As hip as it is to malign those with top-tier educations — by Occupiers and Tea Partiers alike — a Wharton MBA doesn’t simply materialize for those born with a silver spoon in their mouth. These are motivated people: people who want the corner office and the single malt scotch as rewards for hard work. Investment banking is hard work. It’s probably too hard. And this sort of work has been disproportionately rewarded, to the economy’s detriment and the well-being of the bankers.
Higher and better use
Perhaps owing to our Puritan roots, Americans are known for our troubled relationships with our jobs. While there are certainly Frenchmen who might qualify as workaholics, the nation still shuts down every August — sometimes at Mémère’s expense. Our European friends know that work is a means to an ends, and their culture and generous labor laws reflect that. For many Americans, especially those in competitive sectors, work becomes an ends in itself.
Similarly, Wall Street investment bankers’ talent for creating securities to increase liquidity became an ends, not a means. Instead of increasing liquidity, mortgage-backed securities created incentives to originate mortgages and build useless sprawl — eventually plunging our nation into a terrible financial crisis.
Now that the industry is paying the price for this, it has become less attractive to our best-educated, most-driven workers. Let’s hope they go elsewhere, and use their estimable drive and smarts to find new ways forward for the United States.