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Reality check: why Wall Street bankers actually aren't that rich

Traders work on the floor of the New York Stock Exchange. Wall Streeters make a lot of money. But how far does it go?
Traders work on the floor of the New York Stock Exchange. Wall Streeters make a lot of money. But how far does it go?
Spencer Platt/Getty Images

The New York State Comptroller has just released a report surveying the condition of compensation on Wall Street. On its face, the news is good, if you're a banker: the average pay package (that's salary plus bonus, typically) is up more than 16 percent, to $326,950.



Well, that's where the news is not so good. That $362,950 is the average — some make more, much more, and some make less. But once you apply what I'll call "New York City math" to that figure, the average Wall Streeter begins to look...downright strapped!

First, taxes: Uncle Sam and his state and local pals take $362,950 down to $265,326 for a married couple, filing jointly, with two dependents.

Assuming the average Wall Streeter lives in a recently-purchased Upper East Side co-op and puts 50 percent down on a $2.2-million three-bedroom in a doorman building, there's a $9,723 monthly housing cost to contend with — $116,676 each year.

Then there's the nearly $40,000-per-year tuition for two children at Manhattan's elite private schools. Goodbye, $80,000! Before you even get to the backpacks and pencils and obligatory iPads.

The average Wall Streeter is now left with $68,650. A summer rental in the Hamptons will eat up $45,000 of that. Skip summering in the Hamptons and you're left with about $5,720 per month to cover everything else. Child care. Summer camp. Lavish birthday parties. Dining out. Cabs. Maybe a car payment and insurance. Health clubs. Grooming. Clothing for four people in a world where Target perhaps isn't an option.

Also, food. And more insurance to keep everything afloat if something awful happens to the average Wall Streeter.

And don't forget vacations, to lower the blood pressure from — you know — working on Wall Street. And the many other expenses, from ballet lessons to ballet tickets, associated with living in The City That Never Sleeps.

Mind you, Forbes ran the numbers on living "well" — as the publication characterizes it — in the Northeast in 2005. Cost? About half-a-million. The average Wall Streeter may also be part of a couple that includes the average Law Partner in a Big Firm. But even of you double the Wall Street average pay, you can see how quickly the lower reaches of the 1% can get into a cash-flow crunch. 

Not all of Wall Street lives so expensively. Substantially more modest costs can make that $362,950 go a lot farther. But the New York Metro area is by no means terribly affordable. This is why when you're talking about the theoretically rich, you have to deal with merely rich and truly wealthy. The average unmarried Wall Streeter can seem very flush. But add in the usual grownup expenses, and you can see how he or she could feel like an abject financial failure. 

Don't cry for them, but understand their unique plight.

(By the way, "Wall Street" for the N.Y. Comptroller is lower Manhattan and its associated neighborhoods, but "Wall Street" as a term encompasses much of the U.S. financial-services industry. And there's plenty of that in relatively more affordable Los Angeles.)

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.