Goldman Sachs' pay is booming as it adds thousands of juniors

2021 was a good year to apply for a graduate job at Goldman Sachs. After graduate recruitment at the firm was cut back during the peak of the pandemic, today's results suggest it was revitalized in 2021.

Goldman released its third quarter results today. They reveal that headcount increased by 2,200 people between the end of June and the end of September 2021. This was the second-highest third quarter increase in the past five years. 

The third quarter is when campus hires (analysts) begin their training programs in investment banks, and third quarter headcount increases are typically the result of their arrival. In 2020, Goldman only added 1,800 people in the third quarter. In 2019, it added 2,200, but in 2018 and 2017 it only added 1,800 and 1,700 respectively.

This year's bumper crop of new graduates comes after Goldman promised to add more junior staff following complaints about long hours from its existing M&A analysts in February. It also comes as the firm is committed to adding more staff in low-cost locations like India. 

Although many of the staff who've been hired will be comparatively cheap, Goldman's third quarter results also reflect rising pay at the firm in a year when net earnings to date are up by a massive 257% on 2020. Average compensation per head for the first nine months of this year was $337k, up from $265k in the same period of last year.

As the charts below show, Goldman's M&A advisory bankers and equity capital markets bankers are likely to be the biggest beneficiaries of higher bonuses for 2021. However, the firm's commodities salespeople and traders may also want to lay claim to higher pay after three months in which the firm said commodities revenues were "significantly higher." This was in direct contrast to JPMorgan, which said its commodities revenues were particularly poor in Q3. 

Despite the increased graduate hiring, getting a junior job at Goldman Sachs isn't easy. Goldman Sachs said it received 19,000 applications for 440 jobs available in its European graduate programme, and 100,000 applications for its 2,900 global internships. 

Equally, despite record high headcount, Goldman isn't thought to be making its usual headcount cuts this year. Today's results explain why: the firm is simply too busy to cut staff in the fourth quarter. 

Photo by Jakob Rosen on Unsplash