It’s the end of the financial world as we know it. Yes, the typical Goldman Sachs employee may soon not be a member of the one percent.
Average compensation at one of Wall Street's most historically well-paid investment banks is set to drop by nearly $100,000 per employee on average by the end of 2013, thanks to a combination of increased regulations, penalty fees and fewer deals, according to a recent study by JPMorgan Chase cited by FORTUNE. That means the average Goldman employee will make $314,000 per year.
Last year, a $368,000 income was necessary to rank among the top one percent of earners, according to FORTUNE.
That may not go over well with Goldman employees. The scene at Goldman last year around bonus time was described as "a blood bath," according to one worker.
Like many other financial firms, Goldman has struggled to adjust to the post-financial crisis world. In the second quarter of this year, the company's net profit fell 11 percent. With that drop in profits has come declining pay rates and 3,000 layoffs over the past year, including at least 50 as recently as June, according to The New York Times.
But it's not just Goldman that has been forced to cut costs. Analysts estimate that there will be up to 15 percent fewer Wall Street employees by 2013 than there are currently, CNNMoney reports. Meanwhile, Goldman competitor Deutsche Bank recently noted that the entire investment banking industry will have to cut costs significantly to remain profitable.
Goldman -- rarely one to back down even in the face of government scrutiny or a public relations catastrophe -- may take issue with the JPMorgan report. While the latter estimated that the firm's return on equity, a vital measure of profitability, will decline, representatives from the bank remain optimistic that it will increase, according to Reuters.