The Cost of Living in Manhattan

I just returned from NYC. The mood there is pretty bleak :-(

It looks like people are deserting the city in droves. Entire areas of finance and banking are gone and won't return for many years. I heard some very detailed estimates of the carrying cost of supporting a family in Manhattan (see Times analysis here):

$500k per year (pre tax) for minimal high end lifestyle (2 kids in private school, nanny, 2000 square feet of living space; not counting big vacations or Hamptons rental)

$150-200k per year (pre tax) for minimal non-Manhattan life: kids in public schools, long commute to and from the city.

The problem is that $500k is the compensation cap figure, and $150-200k is the base salary number, which is all most people are getting these days. The phrase I heard several times is "I'm effectively paying to work here -- no f#%king way!"

The cost of living in Manhattan is going to drop precipitously in a nasty 1-2 year equilibration.

I also heard serious apocalyptic predictions about US hyper-inflation starting in a year or two.

This is what the money men have to look forward to -- the post 1920s finance bust will probably repeat:

Comments

[EMS:]

So then, what are your investment ideas ?

Mar 02 08:41 PM

[Amateur Hour:]

Stephen --

What do you make for a living?

My guess is that you are -- or were, prior to being laid off -- an investment banker or hedge fund analyst who went to a good school but are not that intelligent. You so fund managers and VPs who also went to good schools but are not that intelligent make a lot of money doing things they were too lazy to ever try and comprehend.

I am a lawyer at what some would consider the top firm in new york. I work in the corporate department and for years saw bankers and fund managers - probably your bosses -- who clearly had no idea what they were doing but were getting paid twice as much as the partners I worked for.

We all realized that you guys were penny rich and dollar poor. Underwriting stupid deals for arrangement fees; passing the risk on to others. Making a living as your client's b*tch.

You got used to the easy money. But built up no skill set -- again because you didn't take the time to understand what it was that you were doing -- what financial products you were buying or selling or structuring. Because you were too stupid or short sighted to realize that this would all come to an end -- you lived a life style that you cannot ever hope to replicate.

You have a degree, but no marketable skills. And you right an article showing just how detached your are from reality by complaining about the cost of private school, summer houses, etc.

If you are married, your wife will probably leave you anyway. Based on your picture, you are not attractive, and she was probably just with your for the money or the prestige of saying she dates a guy who works for a hedge fund or is a VP or MD at a bank.

Instead of writing a blog about a lifestyle you will never live again -- do something you probably have not done in years -- think critically. Develop a skill set.

You should have plenty of time to do so now that your wife / girlfriend is off screwing some other guy who actually has something to show for his ivy league education.

Don't waste your time responding to me. You better get to work before your severance runs out . . .

Mar 03 01:05 AM

[Mr Mcknuckles:]

Your numbers are insane.$200k for non-manhattan life of long commute and public schools?

You can easily live in Manhattan with a family for $150k. I do. Plenty of other people do for much less. I suspect you are aware that there are areas called Harlem or Chinatown -you should visit them, they might make you think a bit and have some fun. Your "analysis" is why Wall Street has laid an egg - all about the comps, nothing about reality. CPDO anybody?! LOL.

Anyway, great for me. Gotta go look for a cheap flat screen TV on Craigslist - I figure some unemployed banker must be looking to raise some quick cash.

Mar 03 06:48 AM

[dtblount:]

Blind Squirrel,

Apparently, working at the "top firm" in NYC doesn't require that you are resourceful. By clicking on Hsu's "Profile" tab, you can see that he is quite accomplished and successful...not the ignorant HF/IB analyst you assume he is.

Granted, the article isn't exactly thought-provoking, but it is very similar to a satirical piece I came across on another site, outlining the "difficulties" for CEOs earning salaries limited due to their participation in various gov't programs. Hsu is also obviously not complaining about how hard HIS life is...merely stating some things he heard on his trip to NYC.

Your blanket criticism of hedge funds is also quite ridiculous. I'm sure your law firm has some sort of retirement package in place...likely allocated to or long-only equity portfolios or mutual funds. How are those doing right now??? Depending on the index you follow, the average hedge fund was down around 20% last year...definitely not a good year, but far better than most other broad indices. The fund I work for was up last year and is still currently up...and my own retirement account has done a bit better.

Yes, some hedge funds were run by fools using strategies that were not hedged at all...but, then again, some lawyers are ambulance chasers...or Marc Dreier (www.bloomberg.com/apps...).


Cheers

Mar 03 10:47 AM

[Gumpwine:]

I am guessing that Blind Squirrel also forgot to use his spellcheck because his grammar is atrocious. This is surprising for an attorney at "what some would consider the top firm in new york." Maybe they don't count English proficiency now that we are in the digital age. Also, the top law firms in NYC earn a lot of money and the partners don't suffer too much. And guess where most of those fees have come from in the past ten to twenty years? Maybe they don't make the same as the ridiculous amounts that the top investment bankers earn, but some bill out at over $1100 an hour. I'm not sure about anyone else, but that seems to be a pretty absurd number to me.

Mar 03 11:59 AM

[MauDib:]

House paid for (taxes $980/yr), Ranch paid for - view about 2 miles, not another man-made thing in sight, fed income tax rate 35%, retired at age 45. Keep the concrete canyons.

Mar 03 09:04 PM

[Al-USA:]

Dr. Hsu is a theoretical physicist so that puts him in the top of the IQ curve.

There aren't many fields of study where the opportunity exists to gain "immortality": Einstein, Newton, etc. These two are known to most all people, not just science types. Does anybody remember any "immortal" lawyer types? I don't think so.

Mar 04 01:42 PM

[Mike@lovegolf:]

I just came from a business trip to NYC (Manhattan) and stayed at the Waldorf and NY Palace. I observed the people in the city and came to on conclusion....pity! Pity for the poor and the wealthy. How can anyone ignore living in the country-side, enjoy a sane cost of living or have some sense of privacy over the crowds, crime, high cost?
I am enlighted and will never return to NYC. I make 190K/yr and value it so much that I would not waste it in NY.

May 24 12:02 AM