Hard Times on Wall Street

A WSJ After the Boom feature entitled “From Ordering Steak and Lobster, to Serving It” (and with the Web title attribute “Former Wall Street Employees Forced to Accept Low-Wage Work“) is getting some play.  A snippet:

Carlos Araya used to order lobster, filet mignon and $200 bottles of red wine at the Palm Restaurant in midtown Manhattan.

Now, he seats customers at its Tribeca branch.

Mr. Araya, 38 years old, lost his job in 2007 as a crude oil trader on the New York Mercantile Exchange. After visiting dozens of headhunters with no luck, he applied in August 2008 to be a host at the Palm to support his wife, two young daughters and mortgage payments. His salary has plunged from $200,000 to $25,000.

Now, this is a sad story.  I know nothing about the man not contained in the piece but let’s charitably presume he’s a decent sort who worked incredibly hard to become successful doing something he enjoyed and then, through no fault of his own, wound up having to take a job that paid less and was less psychically rewarding to boot. That sucks and I hope there are better days ahead.

That said, unless he’s the Worst. Waiter. Evuh., the $25,000 salary doesn’t come close to representing his earnings from the job.

Looking at a rather dated sample menu, I see that appetizers go for $6-$18, salads from $8-$14, and steaks from $24 to a whopping $86.  And sides are extra!  Their wine list doesn’t come with prices but I’ll take an educated guess and estimate that those served by the glass go from $8-12 and bottles range from $40-$400 or so.    An average couple having dinner with a bottle of wine (say, $50), two appetizers (say, $20), and steaks (say $80) with two sides (say, $15) and dessert (say, $15)– all very conservative estimates — would come in at $180 before taxes.  At 20 percent, pretty standard in that sort of joint, that comes to $36.  Many — frankly, most — Palm dinners have the money to spend $200 on a bottle of wine alone, as Araya says he did, so he surely gets $50 tips several times a night for parties of two and huge tips for larger parties.

I’d be surprised if he wasn’t pulling in $400-$500 on an average night.  Let’s call it $450 times 5 days a week times 50 weeks a year.   That’s $112,500.  Plus the $25,000 salary, which brings it to $137,500.  And, again, those are conservative figures all around.

Now, that’s still a significant pay cut but it’s a decent income even in Manhattan.  Again, Araya didn’t work his whole life to be waiting tables at 37 and I hope he gets back to doing something he enjoys soon.  But many of his former colleagues are doubtless doing worse.

Elsewhere, Moe Lane and Karol Sheinin are less sympathetic.

FILED UNDER: Economics and Business, Media, , , , , ,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. John Burgess says:

    The article said that he was a ‘host’, not a waiter, but that may not actually be a different thing.

    That said, he probably does have a salary of $25K, before tips. So, the article is truthful in its quest for pity. It may be less than truthful in not disclosing he income, however, if that does include tips.

    If he is indeed a ‘host’, then he might not get tips other than the occasional $20 slipped to him for a better table. He may or may not partake in tip-splitting (I don’t know The Palm’s practice).

    So, it is possible that he has a poorly-paid staff job. If so, that’s definitely a come-down.

  2. Dave Schuler says:

    I have no sympathy for him whatever. If that’s all he can do either a) he was enormously overpaid in his prior job or b) the issue is not finding a job but supporting his lifestyle. Is he unwilling to move? Perhaps his wife has a decent job and she’s reluctant to move to somewhere he might be able to find a job. Those are choices not necessities.

  3. odograph says:

    It’s an example of how higher income brings higher employment risk. The higher the income the harder it is to replace. That’s why they suggest that executives keep more “months” in emergency funds than factory workers.

    Note to the kids, if you get that flush job, bank a good portion of it before you take risks that require continued high income (like $800K mortgages).

  4. odograph says:

    (Maybe this is why I always get a kick out of those Millionaire In A Prius stories.)

  5. Eric Florack says:

    I have no sympathy for him whatever. If that’s all he can do either a) he was enormously overpaid in his prior job or b) the issue is not finding a job but supporting his lifestyle

    I suspect the issue is both, Dave. The role he was in is likely one of the more * verticalized jobs in the world… only a handful of people know how to do it effectively, and there’s somewhat less call for it, than there are people who can fill it, recently.

    Moving likely isn’t an option for several reasons, not least of which being that’s where jobs in the line of work he was trained in, and apaprently performed well at, are most pletiful.

    I’m hip to a lot of that, having been in a fairly vertical job situation most of my life.

    *Vertical, by my lights: Narrow interest, very specialized work, highly paid because onlya few people can do it really well.

    And of course supporting the lifestyle is the issue… or at least being able to keep up with the bills and payments imposed during the former role.

  6. […] Welcome, Outside the Beltway readers. I actually didn’t even consider the tip […]

  7. Drew says:

    I find myself somewhere between Dave and Bit.

    To Dave’s point, I have no sympathy to the degree the guy entered a highly volatile line of work and is not willing to – for example – move, given his realities. Similarly, I have no sympathy for the laid off $40K worker who says “there ain’t no jobs” when what they really mean is “there ain’t no jobs I want to do within a 50 mile radius.” Big difference. To his point: these are choices.

    Bit tempers those remarks by noting that this guy is a specialist. The market may return. And if he is to return to what he does best in a couple years, Dubuque, Iowa ain’t the place to be located. He needs to get by in the interim. But please, no tears.

    I don’t mean to be self indulgent here, with a life story. But….. as a first out of college job I worked in a steel mill (Metallurgical Engineer). Thinking this was not exactly the best place to fulfill my career Karma (brilliant, eh?) I subsequently put myself through two serious graduate schools. Spending all I’d previously saved, basically dedicating my 20’s to education instead of the pleasures and vices I saw my friends immersed in…..and graduating without the proverbial pot to piss in, off I went. Fast forward: I eventually found my way into private equity investing, lived to tell about it, and have reaped the attendant rewards.

    The point?? Its a high stakes game of poker when people make high beta career and related decisions. If you go for the gold, you should get the rewards. (All you spread the wealth lefties.) But if you lose, and wind up with your face in the shixt….no tears. You took your chances.

    And if you are one those who didn’t want to take the risks, but envy the material gains of those who did? Shut up. You made your choices. No tears.

  8. Michael says:

    If that’s all he can do either a) he was enormously overpaid in his prior job or b) the issue is not finding a job but supporting his lifestyle.

    Or c) he was very good at what he did, but what he did doesn’t transfer well to other professions.

    Seriously, what other jobs would look at “crude oil trader” as good work experience? And out of that small handful, how many of them are located outside of Manhattan?

  9. Michael says:

    And of course supporting the lifestyle is the issue… or at least being able to keep up with the bills and payments imposed during the former role.

    I’m not sure I’d use the word “imposed”, certainly there was a great degree of choice in the debts he incurred.

    By the way, do you want us to call you Eric now or Bithead still?

  10. PD Shaw says:

    Yeah, I agree with Michael, this is the pernicious effects of specialization. I’m sympathetic, but I’m more sympathetic to the guy or gal who couldn’t get whatever job the trader’s taken.

  11. Tlaloc says:

    My heart aches.

    Of course I’m sure he wasn’t one of the idiots that crashed our economy, no that was the other wall street guys.

    &^%$ him.