A Shortage of Investment Bankers?
Even with an average salary of $400,000, the big banks are struggling to fill slots.
Good morning! The Morning Report will return on Monday. Here’s hoping that all those celebrating have a wonderful holiday weekend.
Here are today’s highlights:
Amazon is hitting its merchants with a fuel-and-inflation surcharge.
The producer price index is up 11.2 percent.
Holiday travel is back but with lots of bottlenecks.
Even investment banks are experiencing a labor shortage: “This is a sector more used to causing shortages than suffering from them, sucking in would-be math teachers and disaffected doctors. Nor has its promise of riches dimmed: average pay at Goldman last year was $400,000. Why the struggle to hire?”
“One popular line of argument holds that banking is the victim of a generational shift. Everyone from hiring managers to university careers services reports that young workers care less about salary and more about work-life balance.”
“The industry’s staffing model, meanwhile, is ill-suited to spikes in demand. ‘If the large banks aren’t able to pay their best people well, they lose them all,’ explains one headhunter. The only way to do that and remain profitable is to be ruthless about headcount, running teams with ‘very little fat’ in normal times.”
“At the same time, the list of other firms offering bankers eye-watering salaries has lengthened.” READ MORE
Some businesses are trying to lure employees back to the office with alcohol: “Sure, executives could simply order people to return to their cubicles, and some have, but many want their workers to come back and like it. That means giving people what they want, or at least what bosses think they want. People like to wear comfy hoodies, right? OK! They miss their dogs when they go to work, don’t they? The canines can come! They love an afternoon cocktail, yes? Check out our new office bar!”
“Sam Welch, a freelance writer in Los Angeles, recently visited the new office of a prospective client and was struck by the wide selection of libations available at all times. ‘I immediately understood the vibe,’ says Ms. Welch, 25. ‘It was very Mad Men.’”
“The question is whether it will work at a time when many people view flexibility as the ultimate amenity and care more about compensation than connecting with their co-workers.” READ MORE
Amazon is hitting its third-party sellers with a 5-percent fuel and inflation surcharge: “The surcharge, which is scheduled to kick in April 28, will apply to U.S. sellers who use the Fulfillment by Amazon service that stows, packs, and ships products. ... Amazon merchants were already grappling with cost-related fee hikes that took effect in January and averaged 5.2 percent. ‘Consumers will lose,’ said Dan Brownsher, who runs Channel Key, a Las Vegas ecommerce consulting business with more than 50 clients selling products on Amazon. ‘Amazon already raised fees in January, so sellers will have to raise prices.’”
“Amazon’s relationship with merchants has been fraught in recent years. Sellers have complained to regulators that the company’s power lets it dictate terms.”
“Besides paying Amazon to handle shipping, merchants say they are compelled to buy advertising to make their products stand out on Amazon.com.” READ MORE
The producer price index is up 11.2 percent year over year: “U.S. monthly producer prices increased by the most in more than 12 years in March amid strong demand for goods and services, the latest sign of persistently high inflation that could compel the Federal Reserve to aggressively tighten monetary policy. The report from the Labor Department on Wednesday also showed strong underlying inflation pressures at the factory gate, raising doubts that a decline in the cost of goods, excluding food and energy, in March reported in Tuesday's consumer prices data would be sustainable. Economists expect the U.S. central bank will hike rates by 50 basis points next month, and soon start trimming its asset portfolio.”
“In the 12 months through March, the PPI jumped 11.2 percent, the largest year-on-year increase since the current series was introduced in November 2010, after advancing 10.3 percent in February.” READ MORE
Retail sales rose 0.5 percent in March as consumers kept spending: “Juan’s Flying Burrito, a New Orleans-based restaurant group with five locations, has seen a 60 percent increase in sales over last year and is nearing pre-pandemic levels of business, one of its owners said. The return of tourists for Mardi Gras and New Orleans’ role as host for this month’s college basketball Final Four tournament have juiced sales. They are expecting another bump when the city hosts two big music festivals this spring, including its famous Jazz and Heritage Festival, after the pandemic forced multiple cancellations of the events.”
“Still, shortages and skyrocketing prices for key ingredients mean the restaurant chain still faces challenges. It is paying $100 per case of limes, which is more than five times what they previously cost, Mr. Morris said, and avocado prices are up strongly, too.”
“‘It’s really hard to not have those in a Mexican-concept restaurant,’ he said.” READ MORE
Holiday travel is back but the labor shortage is a concern: “Large crowds are snarling airports across the world as holiday travel returns to levels not seen since before the Covid-19 pandemic. Many travel restrictions imposed over the past two years have now been lifted and people are making up for lost time to visit relatives, travel for work or take a vacation, especially during the Easter holidays. But airlines and airports are struggling to ramp up, as a labor shortage stymies efforts to recruit new workers and Covid infections sideline many existing employees. The airport in Austin, Texas, has been overrun in recent weeks, with long lines for security, and to return rental cars late last month.”
“In the U.K., British Airways has made cuts to its flying schedule until May, while London Heathrow Airport says it is scrambling to hire 12,000 workers.”
“And in Sydney, Australia’s biggest city, the airport is expecting Thursday—the day before a four-day Easter weekend—to be the busiest domestic-travel day since March 2020, a huge challenge with 20 percent of its staff missing work every day because of Covid-19.” READ MORE
Airfares jumped nearly 11 percent from February to March: “One reason airlines feel comfortable raising prices so much is because Americans are so eager to travel. Delta Air Lines said that increased travel demand is helping offset a sharp rise in the price of jet fuel. Roughly 70 percent of Americans are comfortable going on vacation, according to a recent survey from Morning Consult. The survey also found 48 percent of Americans describing themselves as comfortable flying.” READ MORE
Okay, so maybe you shouldn’t put everything you’ve got into NFTs:
Techmeme @TechmemeAn NFT of Jack Dorsey's first-ever tweet, which sold for $2.9M last year, has been up for sale since last week and has failed to garner a bid over $1K (@iamsandali / CoinDesk) https://t.co/V1A2ooDjJ6 https://t.co/yKLfhh07zL
THE 21 HATS PODCAST
Do You Really Want That Shiny Object? This week, Laura Zander tells Shawn Busse and Jay Goltz about her eight-month roller coaster ride
, pursuing an acquisition. The deal would bring a new brand and profitable revenue at a reasonable price. To Laura, the creative challenge and opportunity are exciting—“really, really exciting”—but the financials are a concern. “Do I do this?” she asks. “Is it worth it?” And then there’s the broker, whose numbers don’t add up and who wants to collect his fee—including his piece of the earnout—immediately. Plus: Shawn explains how the rise of inexpensive design contractors forced his company to become a better business.
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If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren