Schiff, 46, is facing another kind of jam this year. Paid a lower bonus, he said the $350,000 he earns, enough to put him in the country’s top 1 percent by income, doesn’t cover his family’s private-school tuition, a Kent, Conn., summer rental and the upgrade they would like from their 1,200-square- foot Brooklyn duplex.
“I feel stuck,” Schiff said. “The New York that I wanted to have is still just beyond my reach.”
The smaller bonus checks that hit accounts across the financial-services industry this month are making it difficult to maintain the lifestyles that Wall Street workers expect, according to bankers and their accountants, therapists, advisers and headhunters.
“People who don’t have money don’t understand the stress,” said Alan Dlugash, a partner at accounting firm Marks Paneth & Shron who specializes in financial planning for the wealthy. “Could you imagine what it’s like to say, ‘I got three kids in private school. I have to think about pulling them out?’ ”
Facing a slump in revenue from investment banking and trading, Wall Street firms have trimmed 2011 discretionary pay. At Goldman Sachs and Barclays Capital, the cuts were at least 25 percent. Morgan Stanley capped cash bonuses at $125,000, and Deutsche Bank increased the percentage of deferred pay.
“It’s a disaster,” said Ilana Weinstein, chief of IDW Group. “The entire construct of compensation has changed.”
Most people can only dream of Wall Street’s shrinking paychecks. Median household income in 2010 was $49,445, lower than the previous year and less than 1 percent of Goldman Sachs chief executive Lloyd Blankfein’s $7 million restricted-stock bonus for 2011. The percentage of Americans living in poverty climbed to 15.1 percent, the highest in two decades.
Comfortable New Yorkers assessing their discomforts is at least as old as Edith Wharton’s 1905 novel “The House of Mirth,” whose heroine Lily Bart said “the only way not to think about money is to have a great deal of it.”
Wall Street headhunter Daniel Arbeeny said his “income has gone down tremendously.” Executive-search veterans who work with hedge funds and banks make $500,000 in good years, said Arbeeny, declining to discuss his income. He said he no longer takes annual ski trips to Whistler, Tahoe or Aspen.
On a recent Sunday, he drove to Fairway Market in the Red Hook section of Brooklyn to buy discounted salmon for $5.99 a pound. “They have a circular that they leave in front of the buildings in our neighborhood,” he said. “We sit there, and I look through all of them to find out where it’s worth going.”
He reads other supermarket circulars to find good prices for his favorite cereal, Wheat Chex.