A CLASSMATE OF MINE at Harvard Law School recently spurned a job offer from the prestigious New York law firm of Sullivan & Cromwell despite the $ 120,000 starting salary. Instead, he'll head to the greener pastures of investment banking, where first-year associates can earn upwards of $ 160,000. Within five years, investment bankers barely 30 years old can make over half a million dollars a year -- while corporate lawyers with five years' experience are bringing in a mere $ 200,000. "A hundred thousand dollars is chump change," grouses my 23-year-old friend. "You can't live in New York City on that. Corporate lawyers are basically only middle class."
Nowadays, it isn't just a handful of techno-nerds with their risky Internet ventures who are getting rich. Thousands of workers at secure jobs with law firms and banks command mind-numbingly high salaries. These young, white-collar employees may not receive as much money or media attention as the dot-com millionaires, but there are a lot more of them. And they earn salaries unheard of even in the heyday of Ronald Reagan. Indeed, by most measures, the 1990s, not the 1980s, was the "decade of greed."
At least in the '80s, it was the 30-and 40-year-olds who made a killing on Wall Street. Now, sprightly twentysomething graduates genuflect before the almighty dollar. In 1988, law students thrilled at the news that the blue-chip firm of Cravath, Swaine & Moore had upped its first-year salary to $ 71,000. Back then, only the seniormost associate took home a six-figure salary. Times have changed. Recently another classmate of mine, with no work experience, received a $ 30,000 signing bonus from a consulting firm. That's more than the U.S. per capita income.
While lawyers covet the wealth of Wall Street, investment bankers envy the surreal stock options of Silicon Valley. "[Young bankers] says, 'I want to be a multimillionaire by the time I'm 30, but if I stay at Morgan Stanley, it may take me until I'm 50,'" Morgan's head of investment banking, Joseph Perella, told the New York Times last year. They want "instant gratification," he added. So do some bigwigs. For example, Thomas Casey, 47, left his $ 5-million-a-year job at Merrill Lynch to reap higher rewards at an Internet start-up. This exodus to dot-com companies partly explains why investment banks are forced to recruit lawyers and law students.
After hours, their bank accounts flush, these Americans are splurging on luxuries. Last year, Porsche produced over 45,000 of its pricey (starting around $ 50,000) sports cars, near the all-time high. And New York City restaurants have noted a dramatic increase in sales of wines costing over $ 1,000. Government statistics confirm that Americans are living beyond their means. At the end of the 1990s, the private savings rate was actually negative (-1.4 percent), meaning that people were spending more than they earned. Compare that with the 1980s savings rate of 5 percent, which the media bemoaned as a sign of America's decline. Consumer and corporate debt also hit record highs during this past decade. Credit card debt alone stands today at a staggering $ 600 billion. Moreover, American investors have less patience and self-restraint. In the 1980s, investors had a comparatively long-term view, holding stocks for an average of two years. In the 1990s, they sold within an average of eight months. Amidst all this wealth, meanwhile, charitable contributions are declining. The Independent Sector, an umbrella group of charitable organizations, reports that in 1998 households donated on average only 2.1 percent of their income, down from 2.5 percent in 1989. Furthermore, the percentage of people making charitable contributions at all decreased from 75.1 percent in 1989 to 70.1 percent last year.
Tellingly, the media, which excoriated the gilded 1980s, have mostly ignored the rapacity of the 1990s. In 1987, a Time magazine cover story grumped, "What's Wrong: Hypocrisy, Betrayal and Greed Unsettle the Nation's Soul." The piece solemnly rued "the 'My decade,' a time when by one's possessions thou shall be known and judged." Now, Time says nary a word about the 1990s -- except to celebrate it, as when it named Jeff Bezos, the multi-billionaire CEO of Amazon.com (a company that has yet to make one cent in profit) Person of the Year for 1999. Imagine Time 15 years ago bestowing that honor on Henry Kravis or Donald Trump.
What accounts for the disparate treatment of the '80s and the '90s? One explanation is the media's liberal political bent. During the 1980s, Ronald Reagan led the country, while Bill Clinton was at the helm in the 1990s. Time magazine was openly contemptuous of Reagan in that 1987 article. "The problem starts at the top," it preached. "No better symbol exists of the public philosophy of the Reagan era than the Adam Smith neckties worn proudly by presidential confidants. The result is an Administration whose clarion call is 'Enrich thyself.' For Reagan, money is the measure of achievement, and he has left no doubt that he prefers the company of the wealthy." President Clinton, of course, hobnobs with rich friends who offer million-dollar loans to finance the purchase of a glitzy New York home. For that matter, he may even become one of the new rich himself: Washingtonian magazine reports in its January 2000 issue that he is contemplating a $ 10 million-a-year job at the investment bank Lazard Freres.
In Oliver Stone's 1987 movie Wall Street, Michael Douglas played the high-flying investment banker Gordon Gekko. In a memorable scene, Gekko ends his paean to American capitalism by proclaiming, "Greed . . . is good." Maybe, but it seems we only call it by its name when the Oval Office is occupied by a Republican.
Kenneth Lee is the author of Huddled Masses, Muddled Laws (Praeger, 1998).