You seem to suggest that Geography determines entry level pay. I think there are at least two other things that are relevant – skill level / brilliance (that @1Rubin brings up), and the ability of the company to monetize your skill. Skill can vary widely amongst entry level candidates. And some companies may have a high bar of the skills/brilliance they are looking for in entry level candidates, and are willing to pay for it.
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I think those jobs just have a higher barrier to entry. Pay is largely a regional and sector phenomenon.
That’s not how the professional job market works. Employers are looking for people that can competently do the job and can prove a track record. If they don’t have a track record, they can have an entry level job to build a track record. I’ve never met an employer that paid more money for a semi-qualified smart person when an experienced professional with a track record was available.
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Entry level software jobs range in pay from something like 50k to 500k. Your model doesn’t explain that much of variation.
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I work in IT. There’s no such thing as a $500,000 entry level programming job. Also, they vary widely because of the cost of living. Ultimately, a zero experience professional will have an entry level job. After experience is gained, they can expect a higher salary.
There exist 500k entry level jobs.
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For fresh undergrad? Where?
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Hudson River Trading is offering up to $600k. There are a few other companies that are close.
There are dozens over $300k.
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I was hoping you would jump in. Those that can get ‘close’ to $500K include Citadel and Shaw, maybe Jane.
I’m sure there are more, but neela’s point above is a good one that these peeps are likely bringing something to the firm that the firm can monetize sooner rather than later. And these opportunities are still low percentages and low absolute numbers.
They are relatively rare. I would guess there are roughly 1000 positions across all finance companies each year that pay > $300K to fresh undergrads, spread across software engineering, research, and trading.
Currently, the highest paid 10-week software engineering summer internship is paying about $70,000 (including bonuses) plus providing free housing. A list of these companies can be found at 2022-2023 Tech Internship Guide & Salaries | Levels.fyi , and this same list gives a pretty good indication of what companies pay the most for fresh undergrads as well.
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I am curious. Do you happen to know what DE Shaw is offering these days? For New Grad. Research / Investments – not SWE.
Also does anyone know what Citadel Securities non-negotiated trading/research offer is this year?
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I don’t, sorry
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This definitely happens. Where you have to pay as much or more may not be common, but there’s definitely companies for which the cost of the hire is not the motivation for hiring someone smart with less specific experience, even if it was cost neutral or slightly negative.
There is always a matter of enjoying your work and having a purpose. Its hard for many contentious young undergrads to find joy and purpose in making wealthy, wealthier.
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I agree.
But talk to young folks who grew up overseas and it’s often a different story. A candidate I was interviewing stopped me in my tracks (which is hard to do) because I asked “Why finance?” and the answer he gave- “If you think a functioning capital markets system isn’t important, try living in a country without one”-- was just outstanding. He was then able to give specific examples of the corruption, oligarchic, “pay to play” political system which grew out of a chaotic and unregulated banking system, which was just spot on.
So yeah- the average 22 year old doesn’t want to commit to making rich people richer. But there are side benefits to many jobs in the financial sector- providing secure retirements for firefighters and nurses, allowing veterans to get a mortgage, etc.
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That’s the wrong comparison. There are many super-selective employers who only hire “smart” people and an “experienced professional” who isn’t “smart” won’t get hired. If “smart, experienced professionals” are rarer than hens’ teeth, you’ll be left with the choice of hiring “semi-qualified smart” people or no one at all.
My first employer was like that. They pretty much only hired Oxbridge STEM PhDs straight from college, and their competitive advantage was to have one person build complex software models that at any other firm would require a team of 10 people (so they paid about twice the salary of any other potential employer). That’s not unlike the business model of some of the super high paying quant firms listed above. And there were no “experienced professionals” for them to hire who could do the job.
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But were they paid massively more than other entry level people doing similar work in the same town? In my limited experience, there’s a higher barrier into the coveted jobs, but the entry level, first job out of college pay isn’t wildly different for similar titles. In some cases, National Labs for example, the “smartest” might get paid less than their private sector counterparts.
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These are quite rare exceptions, even for people with a PhD.
There are lots of “smartest” who get paid much less than their private sector counterparts. NASA, CIA, FBI, Interpol, SEC, DOJ, etc. But that’s not a bug- it’s a feature. In many cases, the private sector compensates for the years spent in government service (look at the signing bonuses at top law firms for young associates who have clerked at SCOTUS) to “make them whole”. And when they don’t, there are lifetime advantages that can accrue to someone’s career if they’ve spent time in an elite sector of government. The cybercrime folks- for example- might be making GS-15 while a federal employee, but can walk into a job in the private sector at 400K (energy companies, financial services) doing pretty much the same thing.
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Well there wasn’t really any “similar work”. But in the days before quant hedge funds (which now pull from that same pool and likely outcompete them) they did pay massively more than any other job available to their candidate pool anywhere in the country (and their advertising was geared to that, along with the usual “intellectual challenge, blah blah”). And actually they were located in a leafy suburban town not the city of London, so COL was a bit lower.
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