This is Exactly Why I Give Up on Michissip...I Mean Michigan

**313WX** · August-13-13, 04:45 PM

Unions Are Upset That A 22-Year Old Financial Analyst is Billing $275/hr as a Consultant For The City of Detroit

**313WX** · August-13-13, 04:53 PM

Really?

I can understand if you're upset about the fact that the city's being billed so much money for someone to tell us our watch is broken. But what I don't understand is what the age of this guy has to do with anything.

You people bitch, moan and groan about this backwater not having enough opportunities for 48% of our college graduate children who leave the state to never return, yet when this young man who's probably set for life doing consulting work for a city that filed the largest municipal bankruptcy in history is doing something most seasoned financial people wouldn't dream of doing until they're grey in the head and receding, you people chastised the poor guy because he's actually doing something that's quite rare for someone in his age in this state, and that's being successful.

It's not his fault the city's broke. He's just here, in theory, helping to clean the mess his parents and grandparents made with their purely idiotic decisions over the past half century.

This is exactly why the majority of Michigan's young and educated flee this state as soon as possible after graduating college, because of this toxic provincial mindset.

**jt1** · August-13-13, 05:03 PM

Originally Posted by 313WX

Really?

I can understand if you're upset about the fact that the city's being billed so much money for someone to tell us our watch is broken. But what I don't understand is what the age of this guy has to do with anything.

You people bitch, moan and groan about this backwater not having enough opportunities for 48% of our college graduate children who leave the state to never return, yet when this young man who's probably set for life doing consulting work for a city that filed the largest municipal bankruptcy in history is doing something most seasoned financial people wouldn't dream of doing until they're grey in the head and receding, you people chastised the poor guy because he's actually doing something that's quite rare for someone in his age in this state, and that's being successful.

It's not his fault the city's broke. He's just here, in theory, helping to clean the mess his parents and grandparents made with their purely idiotic decisions over the past half century.

This is exactly why the majority of Michigan's young and educated flee this state as soon as possible after graduating college, because of this toxic provincial mindset.

I think the age certainly brings into question his ability and knowledge. He may be the smartest person in the world however the type of work he is doing requires experience to truly be the best.

I'm all for retaining the best and the brightest and paying good money to keep them but I think it is a viable question.

My issue is more with the reporting. There is absolutely no reason the local media should be listing his name, age, where he went to school, etc.

There's a difference between being educated/intelligent and being an expert in your field. The sad thing is that even with his bill rate, I'm guessing he is making borderline $100K which is about a fifth of his bill rate.

**313WX** · August-13-13, 05:16 PM

Originally Posted by jt1

I think the age certainly brings into question his ability and knowledge. He may be the smartest person in the world however the type of work he is doing requires experience to truly be the best.

I'm all for retaining the best and the brightest and paying good money to keep them but I think it is a viable question.

My issue is more with the reporting. There is absolutely no reason the local media should be listing his name, age, where he went to school, etc.

There's a difference between being educated/intelligent and being an expert in your field. The sad thing is that even with his bill rate, I'm guessing he is making borderline $100K which is about a fifth of his bill rate.

But none of that should be relevant. For one, he's on a team of consultant from Conway MacKenzie. It's not as if he's the only one consulting the city of Detroit. For two, I'm sure even at his age, he brings a lot more to the table to help the city restructure its finances than anyone down at City Hall or any of the unions can combined. To pick at what he's being billed merely because of his age reveals much bigger problems they have with this than the bill itself.

**dtowncitylover** · August-13-13, 05:17 PM

A high school classmate of mine, two years out of State makes this kind of money in Chicago. Saw him last year, wearing the best clothes, lives in a nice neighborhood. He does financial work also. I'm not mad or jealous, he got himself a good degree from a good school and got a good job. It's nothing I care to do. Good for him. And good for this guy for doing what he wants to do. But now he is being derided for his age. Tsk tsk. We want to get good paying jobs, called "lazy" when we can't find anything, and then when we do we're scolded for being too young.

**douglasm** · August-13-13, 05:27 PM

What he's billing doesn't really upset me that much. In my little town, our city attorney [[a very part time job) bills $200 an hour, his assistant $175 and the para-legal $125, this for a town of about 900. Given the scope of the problem in Detroit and the ratsnest people are trying to untangle, it doesn't seem unusual that a financial analyst is billing $275.

Remember too that he isn't walking away with $275 per, either. People tend to forget that a hunk of his pay goes to the back office operations of the firm he works for, including various assistants that help him compile the information he needs.

**EastsideAl** · August-13-13, 06:14 PM

What a poorly written article. Somebody obviously has no idea how the consulting business works. That kid isn't making anywhere near $275/hr, nor is he the one billing it from the city.

He's an employee of a consulting firm that is billing the city that amount for his services - and, it seems, is also billing much more for the services of several other, apparently more experienced, people. The firm is charging for access to professional people they have theoretically vetted and trained. But unless those people are partners in the firm, most of that billed rate is not going to them personally, but straight into the firm's coffers to pay for expenses and the partners' share of the profits.

The unions' anger also seems misplaced. Again, perhaps because of a misunderstanding of how that business works. They really shouldn't be singling out this guy over what the city's paying his company for him. But they should be objecting to the huge amount these "services" are costing a purportedly broke city that can't even afford to keep lights on, police and fire depts. staffed, or its pension obligations funded. And the amount of padding involved for the firm's profit margin, way over and above what the individuals are actually paid for their work.

**iheartthed** · August-14-13, 10:17 AM

Originally Posted by EastsideAl

What a poorly written article. Somebody obviously has no idea how the consulting business works. That kid isn't making anywhere near $275/hr, nor is he the one billing it from the city.

He's an employee of a consulting firm that is billing the city that amount for his services - and, it seems, is also billing much more for the services of several other, apparently more experienced, people. The firm is charging for access to professional people they have theoretically vetted and trained. But unless those people are partners in the firm, most of that billed rate is not going to them personally, but straight into the firm's coffers to pay for expenses and the partners' share of the profits.

The unions' anger also seems misplaced. Again, perhaps because of a misunderstanding of how that business works. They really shouldn't be singling out this guy over what the city's paying his company for him. But they should be objecting to the huge amount these "services" are costing a purportedly broke city that can't even afford to keep lights on, police and fire depts. staffed, or its pension obligations funded. And the amount of padding involved for the firm's profit margin, way over and above what the individuals are actually paid for their work.

Yeah, this is much ado about nothing. I work for a consulting firm that provides similar services and $275/hr is actually below industry median for that level. It was not a well written article at all. And no, all of the money doesn't go directly to his salary. His employer also has to pay medical, dental, retirement benefits, provide equipment, etc., which is factored into the hourly rate.

ETA: His managers probably bill at twice his rate but don't contribute twice as much productivity...

**LeannaM** · August-14-13, 01:22 PM

Originally Posted by EastsideAl

What a poorly written article. Somebody obviously has no idea how the consulting business works. That kid isn't making anywhere near $275/hr, nor is he the one billing it from the city.

He's an employee of a consulting firm that is billing the city that amount for his services - and, it seems, is also billing much more for the services of several other, apparently more experienced, people. The firm is charging for access to professional people they have theoretically vetted and trained. But unless those people are partners in the firm, most of that billed rate is not going to them personally, but straight into the firm's coffers to pay for expenses and the partners' share of the profits.

The unions' anger also seems misplaced. Again, perhaps because of a misunderstanding of how that business works. They really shouldn't be singling out this guy over what the city's paying his company for him. But they should be objecting to the huge amount these "services" are costing a purportedly broke city that can't even afford to keep lights on, police and fire depts. staffed, or its pension obligations funded. And the amount of padding involved for the firm's profit margin, way over and above what the individuals are actually paid for their work.

Seems fair to me. Perhaps the firm should be chastised for charging so much or the city should have shopped around more. Not necessarily the analyst's fault.

I'm 23 and look 15. I'm still in college, but once I graduate with my teaching degree in a year I expect people to think I don't know what I'm doing. That kind of comes with the territory being fresh out of college. I assume it's worse in a high-skill, high-pressure, high-income career in finance. Still, being young doesn't mean he's incapable. Everybody has to start somewhere. And he is part of a team working on this, right? So I don't have a problem with his age.

**Cliffy** · August-13-13, 06:43 PM

This is highway robbery by the consultants. I mentioned this in another thread a few days ago. Some kid out of college who doesn't know his ass from a hole in the ground is not worth $275 an hour to ANYBODY. This consulting firm is a vulture just like Orr's law firm charging $1000 hour. I don't blame the kid and he's just going along with it but I blame all the Republicans who are sooooo in love with consultants and the private sector and they can do no wrong. People can't get an ambulance or police car but we have money to burn for these people. We are broke. Who gives a shit if this is the best or whatever they bill themselves as. We got no money. This is seriously fucked up and anyone who blindly goes along with this is an idiot.

**Honky Tonk** · August-13-13, 07:05 PM

Originally Posted by Cliffy

This is highway robbery by the consultants. I mentioned this in another thread a few days ago. Some kid out of college who doesn't know his ass from a hole in the ground is not worth $275 an hour to ANYBODY. This consulting firm is a vulture just like Orr's law firm charging $1000 hour. I don't blame the kid and he's just going along with it but I blame all the Republicans who are sooooo in love with consultants and the private sector and they can do no wrong. People can't get an ambulance or police car but we have money to burn for these people. We are broke. Who gives a shit if this is the best or whatever they bill themselves as. We got no money. This is seriously fucked up and anyone who blindly goes along with this is an idiot.

If I were you, I'd march right into City Hall and tell them "Look, I'm more then qualified to do this kid's job, not only that, I'll do it for $22 an hour, plus lunch!" Maybe they'll give you a crack @ it?

**canuck** · August-13-13, 07:34 PM

Originally Posted by Honky Tonk

If I were you, I'd march right into City Hall and tell them "Look, I'm more then qualified to do this kid's job, not only that, I'll do it for $22 an hour, plus lunch!" Maybe they'll give you a crack @ it?

Good one HK!

**coracle** · August-13-13, 07:58 PM

Originally Posted by Cliffy

This is highway robbery by the consultants. I mentioned this in another thread a few days ago. Some kid out of college who doesn't know his ass from a hole in the ground is not worth $275 an hour to ANYBODY. This consulting firm is a vulture just like Orr's law firm charging $1000 hour. I don't blame the kid and he's just going along with it but I blame all the Republicans who are sooooo in love with consultants and the private sector and they can do no wrong. People can't get an ambulance or police car but we have money to burn for these people. We are broke.

Just imagine Cliffy these Republican vultures in the Private Sector charging $275 -$1000 per hour to clear up the mess wouldn't exist if it wasn't for the fifty years of Democrat assholes in the Public Sector that created it. It's a dirty job but somebody has to do it.

**DetroitPlanner** · August-13-13, 08:22 PM

Originally Posted by coracle

Just imagine Cliffy these Republican vultures in the Private Sector charging $275 -$1000 per hour to clear up the mess wouldn't exist if it wasn't for the fifty years of Democrat assholes in the Public Sector that created it. It's a dirty job but somebody has to do it.

The majority of the current debt has a lot to do with why they are in this mess. Republicans pretty much run banking and the markets. Lets not kid ourselves.

**Cliffy** · August-13-13, 09:41 PM

Originally Posted by coracle

Just imagine Cliffy these Republican vultures in the Private Sector charging $275 -$1000 per hour to clear up the mess wouldn't exist if it wasn't for the fifty years of Democrat assholes in the Public Sector that created it. It's a dirty job but somebody has to do it.

Right... Lets blindly start paying $275-1000 hour and we don't know how many hours and what exactly they are really doing. Lets turn a blind eye to the financial industry because those guys never steal. I mean this Conway Mckenzie outfit that is HQ in NYC is really cleaning it up. Again, I've worked with consultant contracts in the public sector. They send you an invoice with hours worked and you really can't prove anything. Same shit here. There is no way some kid straight out of MSU with just a bachelors and 1 year experience is getting paid $100 hour either. Just more consultant scams.

**DetroitPlanner** · August-13-13, 08:20 PM

Originally Posted by Cliffy

This is highway robbery by the consultants. I mentioned this in another thread a few days ago. Some kid out of college who doesn't know his ass from a hole in the ground is not worth $275 an hour to ANYBODY. This consulting firm is a vulture just like Orr's law firm charging $1000 hour. I don't blame the kid and he's just going along with it but I blame all the Republicans who are sooooo in love with consultants and the private sector and they can do no wrong. People can't get an ambulance or police car but we have money to burn for these people. We are broke. Who gives a shit if this is the best or whatever they bill themselves as. We got no money. This is seriously fucked up and anyone who blindly goes along with this is an idiot.

WHAT?!? But privatizing is supposed to SAVE money and be cheaper!

**ghettopalmetto** · August-14-13, 06:56 AM

Originally Posted by Cliffy

This is highway robbery by the consultants. I mentioned this in another thread a few days ago. Some kid out of college who doesn't know his ass from a hole in the ground is not worth $275 an hour to ANYBODY. This consulting firm is a vulture just like Orr's law firm charging $1000 hour. I don't blame the kid and he's just going along with it but I blame all the Republicans who are sooooo in love with consultants and the private sector and they can do no wrong. People can't get an ambulance or police car but we have money to burn for these people. We are broke. Who gives a shit if this is the best or whatever they bill themselves as. We got no money. This is seriously fucked up and anyone who blindly goes along with this is an idiot.

Don't you understand? Money manipulators are SMARTER and WORK HARDER than the rest of us!

I know it's not nearly as sexy a profession, or apparently as useful, but I know consulting engineers with 30 years experience who don't bill at $275 an hour. But this kid, whose feet are barely wet, can justify that rate for grunt work?

Just goes to show you where we are as a culture/society/economy, where bean counters are treated like rock stars, while the people who actually MAKE THINGS are expected to make concession after concession in their wages and benefits.

It's nothing personal against Mr. Johnston. But damn, if this is the "cheap" guy on the team.... Smells like profiteering to me: Socialize the losses, privatize the profits.

**corktownyuppie** · August-14-13, 07:42 AM

Originally Posted by ghettopalmetto

Don't you understand? Money manipulators are SMARTER and WORK HARDER than the rest of us!

I know it's not nearly as sexy a profession, or apparently as useful, but I know consulting engineers with 30 years experience who don't bill at $275 an hour. But this kid, whose feet are barely wet, can justify that rate for grunt work?

Just goes to show you where we are as a culture/society/economy, where bean counters are treated like rock stars, while the people who actually MAKE THINGS are expected to make concession after concession in their wages and benefits.

It's nothing personal against Mr. Johnston. But damn, if this is the "cheap" guy on the team.... Smells like profiteering to me: Socialize the losses, privatize the profits.

I guess I'm annoyed because no one seems to comparing the right numbers. Union head is pissed because associate bills at $275/hr while employees only make $20 per hour. Ok, we'll first problem is that you are comparing a billing rate to a wage, which are two totally different numbers, but that's beside the point. This is like trying to compare President Obama's salary to Miguel Cabrera's compensation per plate appearance against a hospital janitor's hourly rate. The three numbers might be interesting, but changing one doesn't affect any of the others.

Cutting this consultant's pay in half doesn't somehow increase a policeman's salary, for example. The numbers are unrelated.

The other problem is that too many people are angry but don't really understand who to be angry at. So out of either desperation or ignorance or both, they just pick someone they perceive to be highly paid without even knowing whose side he or she is really on.

As mentioned above, the bankruptcy filing is designed to inject more money INTO the city, not out of it. And if you want to eliminate $5 Billion in debt, paying $5 Million in fees is a really small price to pay, for example. None of the money that will be saved can be injected into the city while uncertainty about the bankruptcy is high, and that will need to be litigated.

So if you're pissed about how much we are paying to Jones Day and Conway, don't blame them or the city. Blame the creditors who are fighting the bankruptcy.

You want a quick and easy way to not have to pay all of these fees? Find a time machine. Go back to 2010. Get all the creditors, unions, and retirees to be willing to accept and eat the costs of restructuring while also forgiving the debt. VOILA! You just saved millions in consulting fees.

People will need to have some hard conversations about how we prioritize the following:

city services for current residents
future access to credit [[both local and state)
cultural assets
wages and benefits for less than .5% of the city population
retiree benefits
Local control
Income inequality and its consequences
And more

I'm willing to engage in serious, thoughtful debate about how we prioritize the above going forward, even if we initially disagree. But to point at some insignificant data point about how one person bills too much while 100 people get laid off? Thats just lazy thinking.

You can argue that spending $5 million to save $5 billion is a bad investment. Fine. Then propose a better option.

Years ago everyone warned about the high costs of litigating a bankruptcy instead of working it out ourselves. We all knew this was coming. This is gonna be a messy, expensive divorce. And instead of bitching about the cost of the divorce attorneys, we can end this at ANYTIME, by having all parties just agree to a settlement out of court.

**mwilbert** · August-14-13, 08:29 AM

As has been said, gigantic markups are the bread-and-butter of the consulting business, and this analyst is probably making 25%-30% of what is being billed at most.

What you can do if you think an underqualified person is being put into an expensive slot is ask the consulting company to reclassify the position; I have no idea what is in this contract, but, for example, you might change his slot from financial analyst to research assistant, and probably downsize the rate to $125-150/hr or so. If they refuse, you can usually insist that they use a different person, which probably they won't want to do.

But the underlying fact is that hiring name-brand consultants is expensive, and Detroit is in a position where it needs to do that.

**Eber Brock Ward** · August-14-13, 09:06 AM

Originally Posted by mwilbert

As has been said, gigantic markups are the bread-and-butter of the consulting business, and this analyst is probably making 25%-30% of what is being billed at most.

What you can do if you think an underqualified person is being put into an expensive slot is ask the consulting company to reclassify the position; I have no idea what is in this contract, but, for example, you might change his slot from financial analyst to research assistant, and probably downsize the rate to $125-150/hr or so. If they refuse, you can usually insist that they use a different person, which probably they won't want to do.

But the underlying fact is that hiring name-brand consultants is expensive, and Detroit is in a position where it needs to do that.

Rule of thumb for large professional organizations is 1/3 to the talent, 1/3 to overhead, and 1/3 to the partnership.

If the associate is making 25-30% of that, it's not totally out of line with that.

**Locke09** · August-13-13, 07:29 PM

It's not so much a matter of the young man's age, but a question of just how expert he is after being out of school for one year. The average pay of the highest 10% of financial analysts is $145,000. In New York the average is $116,000 and in Connecticut it is $127,000, according to latest studies I could find.

It was said in the article that a reasonable portion of the rate that one would expect to be paid to the employee is 35%. Are we to believe a person 1 year out of college is making about $157,000 per year - higher than the highest 10% of financial analysts? If the answer is no, than Conway MacKenzie, who by the way has been around the City supposedly doing "turnaround" since long before January 2013, is fleecing the City.

Just because the City needs expert help does not absolve the City of the need to ensure that the help is not inordinately high.

Reminds me of the story of two twin brothers. The older one is famished and feels he is about to starve. He asks his younger twin for some of the stew he has made. The younger one says, "Sure, but you have to give me your birthright in exchange." The older one says, "Fine, whatever, I'll starve if I don't get something to eat." The younger brother went down in history as a "trickster". The older one went down in history as an idiot.

**firstandten** · August-13-13, 07:30 PM

I heard of the $275/hr the kid probably gets 35% of the amount

**JBMcB** · August-13-13, 07:43 PM

Originally Posted by 313WX

Unions Are Upset...

Well, asked and answered. Unions have no concept that education and ability drive pay. If the law firm were unionized, the kids would be getting $20/hour and the guys doing the exact same thing but have there for ten years would be getting $800 an hour.

**Locke09** · August-13-13, 08:23 PM

Originally Posted by JBMcB

Well, asked and answered. Unions have no concept that education and ability drive pay. If the law firm were unionized, the kids would be getting $20/hour and the guys doing the exact same thing but have there for ten years would be getting $800 an hour.

Right - education and ability. He has a Bachelor's not a Masters. he doesn't have his CFA yet, which some get instead of a Master's or in addition to a Master's, denoting they are very well-equipped in financial knowledge. He has one year's experience.

In the highest paid region in this industry, Connecticut, he would make about $78,000 according to multiple salary studies [[30% higher than the average salary for this classification). That's $39 per hour. Let's say $60 per hour with great benefits. That's less than 25% of the rate being paid. It's not about his salary, it's about the firm's rate.

I guess since the City's paying half and the State's paying half, all the firms just decided to double their rates.

I wish the News had asked what has been delivered thus far for the fees this company has charged since January 2013. Surely there must be something tangible for the millions in fees. Because if you're charging about $250,000 every two weeks, you've racked up millions in invoices. Perhaps something wonderful has been done and it really was worth the cost.

**Jason** · August-13-13, 08:59 PM

We don't know how much the guy is getting paid.

All we know is that the firm is billing by the hour [[based on a very broad categorization of the employees). The document is just a list of the people assigned to this job, and how many hours they worked.

This just happens to be the job that the new guy got assigned to. And I'm sure his individual responsibilities on the team are in line with him being the new guy fresh out of college.