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C 2004) Sociological Forum, Vol. 19, No. 2, June 2004 (°
Engendering Inequality: Processes of Sex-Segregation on Wall Street Louise Marie Roth1
Women’s numbers in high-paying, male-dominated occupations have risen in the past three decades, but they disproportionately hold lower-paying jobs within those occupations. A cohort sample of Wall Street securities professionals shows how sex segregation occurs over time, as men’s and women’s different experiences lead them to change functions, to change firms, or to leave the securities industry. While seemingly similar processes impinge on the careers of everyone in this exceptionally high-paid occupation, family constraints and gender discrimination produce differential results for similarly qualified men and women. Over time men disproportionately gain the very highest paying Wall Street jobs. KEY WORDS: gender inequality; sex-segregation; high-status professions; securities industry.
Quantitative studies often attribute gender inequality in earnings within professions to sex-segregation by establishment and by job (Bartlett and Miller, 1988; Bird, 1996; Dixon and Seron, 1995; Petersen and Morgan, 1995; Rosenberg et al., 1993; Sokoloff, 1988; Tanner et al., 1999a,b). Women tend to be employed by lower-paying establishments than men (Baron and Bielby, 1980; Dixon and Seron, 1995; Guthrie and Roth, 1999) and to occupy lower ranks or lower-paying jobs within organizations (Bielby and Baron, 1984; Halaby, 1979; Reskin and Roos, 1990). Statistical research has demonstrated that occupation and establishment segregation explain up to 89% of the gender gap in earnings (Petersen and Morgan, 1995; Reskin and Roos, 1990; Treiman and Hartmann, 1981). 1 433 Social Science Building, Department of Sociology, University of Arizona, Tucson, Arizona,
85721; e-mail:
[email protected]. 203 C 2004 Plenum Publishing Corporation 0884-8971/04/0600-0203/0 °
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However, most research on sex-segregation has analyzed aggregate patterns, with less emphasis on how workers’ extra-occupational constraints, interactions between workers, and interactions with managers and clients contribute to the allocation of workers to jobs over time (Baron and Pfeffer, 1994; Reskin, 2000). Within occupations, what processes lead women disproportionately into lower-paying, detailed jobs? In this article, my primary objective is to illustrate processes that lead to sex-segregation within a highpaying, male-dominated occupation.2 I use qualitative career history data from 76 current or former Wall Street financial professionals to elaborate the processes through which extremely comparable workers become sexsegregated into different detailed areas during the first 5–7 years of their careers. The intent of this paper is to elaborate the processes that produce sex-segregation of jobs within a single occupation, with two connected objectives: to advance understandings of how structural patterns are reproduced over time, and to uncover empirically how men and women are sifted into different and differentially remunerated positions within a little-known and elite occupation.
SEX-SEGREGATION WITHIN OCCUPATIONS Prominent explanations for how women end up in lower-paying positions rely on supply-side theories that focus on the characteristics that individuals bring into the labor force, or demand-side explanations that focus more on cultural, structural, and organizational constraints. (For a more comprehensive review, see Marini, 1989.) Supply-side explanations from human capital theory argue that men and women choose different jobs because of the gender division of labor in the family (Becker, 1980; Mincer and Polachek, 1980). While women may vary in their preferences for paid labor and family work, with some women prioritizing paid employment, a majority of women prioritize family over career (Hakim, 2001). Accordingly, women expect to take primary responsibility for caregiving in families, and anticipate that this responsibility will constrain their involvement in paid work. The resultant expectations about their career trajectories lead men and women to invest differentially in education, training, and job-related 2 One
might expect additional, and possibly similar, matching processes to create racial–ethnic segregation. However, my sample included only seven nonwhite respondents, six of whom were female. Because the majority of Wall Street professionals and respondents in the sample are white, and nonwhite respondents were of diverse ethnicities and are small in number, I am unable to analyze the effects of race on Wall Street career patterns. For the purposes of this article, I focus on gender comparisons, even though race/ethnicity undoubtedly also affected respondents’ experiences, in most cases through white privilege (McIntosh, 1993).
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skills. Consequently, most women deliberately enter lower-paying jobs because they provide greater flexibility for domestic and family responsibilities (Becker, 1980; Hakim, 2001; Mincer and Polachek, 1980). Jobs with higher concentrations of women should thus be those that involve fewer hours and that penalize employees less than other jobs for career interruptions. However, research has demonstrated that men and women have different earnings even when their job preferences and investments in human capital are identical (e.g., Blau and Ferber, 1992; Marini, 1989). As a result, many scholars argue that demand-side influences are more instrumental in creating sex-segregation, so that men and women have differential access to occupations and establishments because of discrimination by employers in hiring and promotion (e.g., Blau and Ferber, 1992; England, 1992; Kilbourne et al., 1994; Marini, 1989). Thus, women are hired into lower-paying jobs because employers and/or recruiters have a bias against hiring women into higher-paying jobs. Reskin and Roos (1990) argued that employers’ hiring preferences form a rank-ordered labor queue that leads them to favor certain types of workers. Accordingly, employers hire men first for traditionally “male jobs,” and women first for traditionally “female jobs.” Because men filled all professional jobs on Wall Street until the 1970s, queuing theory predicts that, without outside pressure, employers in this industry will hire men first and hire women only when men are no longer available. While some demand-side explanations focus on hiring, others claim that discrimination generates inequality after the point of entry (Jacobs, 1989). Using the metaphor of “revolving doors,” Jacobs (1989) argued that women experience a high degree of mobility over the life course among femaledominated, sex-neutral, and male-dominated occupations, and that this mobility ultimately reproduces patterns of sex segregation. In other words, women may enter high-paying, male-dominated occupations, but then coercive forces within those occupations filter many of them out over time. Once women have broken into a desirable, male-dominated occupation, many of them encounter glass ceilings and hostile environments that lead them to abandon these positions or move into part-time or lower-prestige work (Epstein et al., 1999). Jacobs (1989) attributed the revolving door phenomenon to social control processes within workplaces, which can take obvious or subtle forms. In highly male-dominated jobs, women may experience pressure as “tokens,” whereby they are highly visible and differences between them and the dominant group become exaggerated (Kanter, 1977).3 Token women 3 While Kanter’s theory was gender-neutral, others have found that the processes she elaborated
are accurate for women in male-dominated professions but not for men in female-dominated professions (e.g., Williams, 1992).
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in male-dominated jobs may be highly constrained in their behavior and, thus, experience limitations to their further advancement or to greater increments in compensation. Jacobs (1989) also suggested that discrimination by employers, harassment by supervisors and coworkers, and less access to informal organizational support contribute to a revolving door pattern for women. While purposive actions on the part of employers and coworkers may play a role, others have also suggested that subtle cognitive processes such as co-worker, manager, and client preferences to associate with others like themselves, or expectations that men will be more competent, also lead to obstacles for women (Erickson et al., 2000; Foschi, 2000; Martin, 2001; Pierce, 1995; Reskin, 2000; Ridgeway, 1997; Roth, 2004; in press). On Wall Street, entry into professional jobs requires a particular set of qualifications regardless of gender or race. Wall Street also has a welldeserved reputation for being a high-intensity environment where professionals work long hours. All entrants must be willing to take on the challenges of this highly competitive environment, leading them to have similar motivation and ambition. The early years of these careers are particularly demanding, as junior employees often work 80-hour weeks. Junior employees perform the grunt work of analyzing clients’ profitability, while senior employees work shorter hours and are more involved in client contact. As a result, the first 4 years exhibit high rates of attrition. Promotions for the first 7 years are “lock-step,” occurring at regular intervals for employees who persevere. Those who remain in the industry for 4 years are promoted to vice president. Promotion to senior vice president or principal occurs after another 2–3 years, while promotion to the highest level, managing director, is less certain and depends on the active development of client relationships and bringing in business, or rain-making. As securities professionals move beyond the vice presidential level, their hours often become shorter, and they describe the work as more interesting. Thus, many view the first 4 years as both a learning experience and an endurance test. Employees who are unable to “hang on” to these high-paying, stressful jobs through this period never regain access to the profession’s fast track. While female entrants to the profession are very similar to their male counterparts in motivation, ambition, and human capital, there is sexsegregation on Wall Street. Segregation that occurs within the first 5–7 years is important because it determines men’s and women’s promotional tracks. Men and women may consider different lifestyle or family constraints in their career decisions. Hiring processes may initially segregate more women into lower-paying areas of this occupation. Interactive or organizational processes may also disproportionately push women out of the highest-paying jobs over time. If women leave the highest-paying jobs in this industry in the early years of their careers, they will encounter a “glass ceiling” effect,
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because they will never regain access to those jobs or the career ladders that are attached to them. The aim of this paper is to explore some of the forces that produce sex-segregation among men and women who are extremely similar in the characteristics that they bring to the labor market. To what extent is sex-segregation present at the outset of Wall Street professionals’ careers, and how does this segregation change over time? What, in short, can we learn from Wall Street professionals about processes of gender segregation?
DATA AND METHODS I address these questions with qualitative data from the career histories of current or former Wall Street financial professionals. The securities industry is an elite service industry where white men are the traditional incumbents. Women only began to enter Wall Street as professional employees in the 1970s (Blair-Loy, 1999; Fisher, 1989; Herera, 1997). Wall Street professionals represent an elite population that is difficult to study because of secrecy in the industry, time constraints among these professionals, and general difficulties gaining access to elites. This setting is an extreme case in terms of pay, prestige, and time commitment, but my findings should illuminate segregation processes that exist in other elite occupations and may uncover processes operating in other cases. More specifically, other male-dominated, knowledge-intensive, client-oriented jobs, such as law or medicine, may exhibit similar processes. The data consist of career histories of 76 MBA graduates who began their careers in nine major Wall Street securities firms in the early 1990s. While the sample is not large compared to quantitative studies, it is substantial for an in-depth interview study of this type. I randomly selected samples of 44 women and 32 men, using placement reports and alumni information for the years 1991–1993 from five elite graduate programs in finance. Wall Street firms hire a majority of their incoming associates from the top six MBA programs in finance, and five of these programs agreed to assist in this research. The five graduate schools of business had 621 graduates who started careers in the top Wall Street firms, as defined by Eccles and Crane (1988), for the three sample years (498 men and 123 women).4 To compare by gender, I selected separate subsamples of men and women using a random numbers table, and I oversampled women in order to analyze women’s 4 The
firms were Morgan Stanley, Goldman Sachs, Merrill Lynch, Lehman Brothers, Salomon Brothers, Smith Barney, First Boston, J.P. Morgan, Bear Stearns, and Donaldson Lufkin and Jenrette (DLJ).
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stories in depth. As a result, the gender proportions in the sample do not reflect the population from which it was drawn. Among those selected for an interview, 10 refused to participate (5 women and 5 men), and 29 were impossible to find (17 women and 12 men). I may have been unable to find these prospective respondents because they had changed firms or had moved to another city or country, both of which are common in this industry. Women were particularly difficult to locate, possibly because many had married and changed their surnames since business school and/or did not have a telephone number listed in their name. Thus, the response rate is 66%, and the cooperation rate is 88%. Respondents who remained in the industry should have been at or above the rank of vice president at the time of the interview. In 1998 and 1999, I conducted in-depth interviews to assess respondents’ career histories and total compensation for 1997. The interview schedule was partially structured to elicit respondents’ career histories from the time they completed their bachelor’s degrees until the time of the interview, their responses to events, and their motivations for making career decisions. The questions that provided data elaborating some of the processes that lead to sex-segregation in the securities industry are available on the Internet.5 Interviews lasted an average of 1 hour, and occurred in a location of the respondent’s choice. I tape recorded most interviews,6 which were later transcribed verbatim and analyzed using Atlas.ti software. I coded respondents’ career sequences and transitions and sought patterns in their career-related decisions. All names are pseudonyms. Obtaining interviews using a cohort sample offered several advantages. Most important, it isolated a group of men and women who were very similar in the characteristics they brought to the labor market. Respondents were similar in terms of important human capital variables, the market conditions under which they started their Wall Street careers, and the organizational prestige of the institutions where they began careers in the securities industry. As a result, my findings cannot be attributed to differences in length of time in the pipeline, training and credentials, organizational prestige, or market cycles. Inspection of Table I reveals that a majority of respondents had undergraduate majors in economics, business, or finance. Over half had work experience in finance prior to finishing the MBA (0 = no previous experience; 1 = some previous experience). A substantial majority also continued to work for one of the top nine Wall Street firms at the end of 1997. At the 5 The
relevant questions are available at www.LouiseRoth.com/Appendix respondents refused to permit tape recording. In those cases, I took detailed notes during the interview and transcribed it as soon as possible after the interview’s completion.
6 Three
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Table I. Comparison of Men and Women on Wall Street by Selected Characteristics Variable
All cases
Background characteristics Married (%) 60 (0.06) Parent (%) 43 (0.06) Nonwhite (%) 10 (0.04) Human capital Econ major (%) 56 (0.06) Math major (%) 21 (0.05) Previous Wall 54 (0.06) St. experience (% with any) Job-related characteristics Hours/week (mean) 61.62 (1.30) Less than VP (%) 29 (0.06) VP (%) 59 (0.06) Above VP (%) 12 (0.04) Top firm 1997 (%) 82 (0.05) Total 1997 (mean) $431,434 (30,453)
Men
Women
70 (0.09) 56 (0.10) 4 (0.04)
54 (0.08) 34 (0.08) 15 (0.06)
1.40 1.76 −1.63
44 (0.10) 26 (0.09) 59 (0.10)
63 (0.08) 17 (0.06) 51 (0.08)
−1.55 0.88 0.64
64.26 (2.18) 15 (0.07) 59 (0.10) 26 (0.09) 89 (0.06) $566,111 (50,887)
59.88 (1.58) 39 (0.08) 59 (0.10) 2 (0.02) 78 (0.07) $342,743 (31,189)
t value
1.67 −2.33∗ 0.06 2.63∗ 1.21 3.96∗∗∗
Note. Numbers in parentheses are standard errors. All numbers are rounded to two decimal places. Two-tailed significance: ∗ p < 0.05; ∗∗∗ p < 0.001.
time of the interview, 60% were married, and 43% were parents. Their ages ranged from 29 to 44, with a median age of 33. The median number of self-reported hours per week was 60, with no statistically significant gender differences.7 The many similarities among these men and women permit an assessment of differences among otherwise comparable individuals. The sampling strategy also permitted the retention in the sample of employees who had left finance or had changed firms, and an assessment of their rationales for changing their career paths. Respondents’ total annual compensation in 1997 ranged from $62,500 to over $1,000,000, with a median of $410,000 and with substantial and significant gender differences (Roth, 2003). Women’s median earnings were $325,000, while men’s median earnings were $525,000. Both men and women on Wall Street had tremendously high earnings by national standards, but women’s mean earnings were approximately 60.5% as much as their male peers from graduate school. This falls far short of the 75% relative earnings for women compared to men in the U.S. labor force for the same year (U.S. Census Bureau, 1998). Gender differences were also statistically significant, 7 Self-reported
hours are expected to be inaccurate and somewhat inflated, but one expects respondents to inflate their weekly hours in similar ways across the sample. In fact, one might hypothesize that there would be gender differences in the accuracy of self-reported hours. Because of social stigma attached to excessive hours among women, and especially women with children, women may be more likely to underreport hours. However, such a gender gap would be impossible to measure and is inconsequential to the current analysis.
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despite the small sample size, and remained significant when other variables were controlled. However, accounting for job segregation and other structural variables in regression analyses reduced the effect of gender on 1997 pay by 17% (Roth, 2003). This suggests that sex-segregation within the securities industry affects compensation. But what explains the sifting of men and women into different jobs within this industry?
THE DIVISION OF LABOR ON WALL STREET Before this question can be answered, one must understand the internal differentiation of securities firms. Major securities firms contain several interlocking functions, including three broad areas on the “sell side”: investment banking, sales and trading, and equity research. These “sell side” functions underwrite and sell securities, and are the traditional domain of investment banks. Most major securities firms also have merchant banking, proprietary trading, and/or asset management divisions, which manage portfolios on the “buy side.” These divisions purchase and manage portfolios of investment securities for their firms or for investors. Investment banking functions are divided into corporate finance (underwriting new stock issues by assisting private companies in taking their shares onto the public stock market, structuring securities, and negotiating mergers or acquisitions), and public finance (underwriting loans and securities for tax-exempt and government institutions). Investment bankers typically work long and unpredictable hours. Senior bankers pitch business to prospective client companies and develop relationships with clients who require ongoing financial services, while teams of more junior employees evaluate the clients’ financial condition, develop presentations, and structure deals using mathematical models. As an investment banker’s career progresses, hours usually decline, and client relationships become more important. Investment banking functions in large investment banks often specialize into groups by industry (e.g., metals and mining, technology), region (e.g., Asia, Latin America) or financial product (e.g., mergers and acquisitions, high-yield, asset-backed securities). Investment bankers receive the majority of their annual compensation in the form of a year-end bonus. Over the course of a year, the fees that the group generates influence the size of the bonus pool available to distribute within that group, and individual team members are ranked in relation to one another and compensated accordingly. Sales and trading functions buy and sell securities. Some employees in sales and trading receive commission, rather than a bonus, while others receive a bonus that is at least partly based on their profits and losses (P&L).
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These functions are driven by market conditions and tend to be very stressful during market hours. Salespeople and traders have direct contact with clients who order transactions, and most of them have some responsibilities for entertaining clients after hours. Like investment banking groups, sales and trading are often divided into groups (or “desks”) based on an industry, region, or product. Equity research departments advise sales and trading and investment banking with in-depth analyses of companies and market trends. Equity analysts usually specialize in a particular industry, and they write reports analyzing the health and profitability of companies in their industry. Their reports recommend stocks and bonds for salespeople and traders to buy and sell. These analysts also advise investment bankers of companies that would be advantageous prospective clients for underwriting or M&A business, and provide information on companies that are already clients. Research analysts who specialize in most major industries are ranked by Institutional Investor magazine, and equity analysts with high II rankings are in high demand (Investment Dealers’ Digest, 1998b). Equity research analysts tend to work more predictable hours than investment bankers, and client contact varies widely among these employees. Some analysts juggle multiple roles of tracking stocks, scouting for merger ideas, seeking lucrative underwriting business for their firms, and/or generating sales commissions. All research analysts provide crucial support for other functions. On the “buy side,” asset management and proprietary trading divisions purchase stocks and bonds and manage portfolios of assets for the firm or for investors. Employees in these areas earn commissions when they buy and sell stocks and mutual funds, and rely on equity research analysts’ advice in choosing stocks. Securities firms also require a corporate infrastructure in the form of internal divisions involved in risk management, corporate strategy, operations, information technology, public relations, and human resources. Different areas of the industry offer differing levels of compensation. Few compensation figures are available from the industry, but a survey compiled from executive recruiters who worked with major securities firms offers a glimpse into the average pay in corporate finance in 1997 for different MBA cohorts. The survey data, published in Investment Dealers’ Digest (1998a) are presented in Table II alongside the median earnings for corporate finance employees in the sample for the same years. As Table II reveals, compensation in the sample is quite similar to industry estimates for corporate finance. Sample medians represented 92.5% of industry estimates for 1991 graduates, 97.2% for 1992 graduates, and 107% for 1993 MBAs, suggesting that this sample provides a good approximation for young corporate financiers in 1997.
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Roth Table II. Average Annual Pay Ranges for Investment Bankers, 1997 MBA class 1991 1992 1993
Low
High
Median
Median for sample
$425,000 $390,000 $300,000
$840,000 $740,000 $600,000
$635,000 $540,000 $430,000
$587,500 $525,000 $460,000
Note. Based on the table, “Money Still Talks: Average Annual Pay ranges for investment bankers, 1997,” compiled from executive recruiters who work with Bear Stearns; Chase Manhattan; Credit Suisse First Boston; DLJ; Goldman Sachs; Lehman Brothers; Merrill Lynch; J.P. Morgan; Morgan Stanley, Dean Witter; Salomon Smith Barney. Only one of these firms, Chase Manhattan, was not included in the present study. The table includes only those respondents whose area in 1997 was corporate finance. Statistical tests comparing measures of central tendency could not be computed because the table published in Investment Dealers’ Digest contained no information about the number of cases.
For equity research, Investment Dealers’ Digest (1998b) estimated that senior analysts without II rankings earned in the range of $200,000 to $350,000 in 1997, while most top-ranked analysts earned $600,000 to $900,000. In the sample, only two respondents in equity research had top II rankings, and their compensation was $650,000 and over $1 million respectively. Among other equity analysts who remained in top firms, compensation ranged between $162,500 and $375,000, with a median of $280,000.8 These sample estimates are again very similar to the published industry figures for the same year, suggesting that this sample may be quite generalizable to equity research analysts on Wall Street. Unfortunately, publicly available data for compensation in this industry are rare, and no industry data were available for public finance, sales and trading, asset management, or support functions. Because of the bonus compensation system, compensation varies not only by function, but also between specialized groups and among employees within each group. Several respondents referred to firm revenues as a “pie.” The bonus amount that any employee receives at year-end is based on at least three variables: (1) total firm revenues for the year (i.e., how big a pie there is to divide); (2) the revenue production of the group and its proportionate contribution to the firm’s profits (i.e., how large a slice of the pie is allocated to the group); and (3) the performance of individual employees over a year relative to their peers, as evaluated by others within the work group (i.e., how large a bite each employee within the group is entitled to). There are also potential differences according to industry, region, or product specialization within areas. In investment banking, the industries, 8 Some
research analysts had moved out of top Wall Street firms, usually to buy-side research positions. As a result, among all equity analysts, the range of earnings was $112,500 to $425,000, with a median of $193,750.
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regions, or products in which the group specializes affect bonuses because some client organizations tend to produce deals with larger fees. For example, automotive, oil and gas, and large industrial companies generate more revenue than consumer products. Public finance, which has nonprofit institutions and municipalities as clients, and the area of emerging markets, which often serves countries with relatively small GDPs, have client bases that pay smaller fees, even though they involve a similar amount and type of work. Consequently, sex-segregation by function or work group will produce gender inequality in earnings if women disproportionately occupy lowerpaying areas of these firms. Figure 1 depicts the differences in mean compensation by area of finance for the sample. As the figure demonstrates, the average income is highest for respondents in corporate finance ($539,700), followed by those in sales and trading ($506,250). The lowest average compensation was $260,000 for respondents in public finance, followed by the internal support functions that do not directly produce revenue. Equity research has a more indirect impact on transactions and deals than investment banking or sales and trading, with correspondingly lower pay. While industry data were available only for corporate finance and research, the comparability of the sample and industry averages in these areas suggests that the sample compensation may be generalizable to these cohorts of securities professionals in 1997. SEX-SEGREGATION ON WALL STREET: FINDINGS AND OBSERVATIONS Respondents were often keenly aware of pay differences across functions within the firm. At least five respondents specifically observed that
Fig. 1. Average compensation by function.
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areas with a higher proportion of women were also lower-paid. Regarding the gender composition of her second job, Nicole remarked, I would say internally it’s still not 50/50 anywhere; however, in (my second area) it may well be 50/50 only because it’s one of the less well-paid parts of the bank. And one of the—but in a funny way for the same reason it’s a place where women have sometimes been able to get ahead faster.
In other words, sex-segregation of the securities industry sometimes visibly contributed to gender inequality. Sex-segregation by area occurred at the outset of respondents’ careers. Women were more likely to start their careers in functions that paid less, like support functions, equity research and public finance, while men were somewhat more likely to begin in asset management or corporate finance. No male respondents worked in public finance. The vast majority of respondents (78%) also changed work groups and/or changed firms at least once during the 5–7 years between completing the MBA and the time of the interview. Many respondents moved into similar functions with similar earning potential and, as a result, the overall pattern of sex-segregation in the sample did not change substantially. However, women’s dominance in equity research increased over time, while men’s dominance in the highest-paying area, corporate finance, also increased. This shift largely reflects movements of women from corporate finance into equity research, and of men from sales and trading into corporate finance. The relative proportions of men and women in each function at the beginning of their careers and in their most recent securities jobs are presented in Fig. 2. Thirty-five respondents (46%) changed firms, and 33 (43%) changed function, industry specialization, or product specialization. Most respondents
Fig. 2. First and most recent functions by gender.
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cited more than one reason for making a career change, and many respondents changed jobs more than once. Women were slightly more likely than men to change firms (48% vs. 44%), and somewhat more likely than men to change work groups (50% vs. 34%), although these differences were not statistically significant. However, respondents’ reasons for changing firms, functions or work groups indicate some of the processes leading to increasing sex-segregation over time. Some reasons for changing areas were gender-neutral. In terms of pushes out of a work group, male and female respondents were similar in their likelihood of being fired (3 women, 4 men) or transferred against their will (1 woman, 2 men). Respondents sometimes moved out of work groups with poor deal flow (6 women, 2 men), or out of firms that experienced proprietary losses or mergers (3 women, 2 men). Having a difficult manager motivated job changes for seven respondents (4 women and 3 men). These obstacles appear to be unrelated to gender. Men and women also experienced some similar pulls toward new groups or firms. Ten men and 18 women moved toward opportunities with better long-term promotional and monetary potential. Six men and five women were attracted to more prestigious firms. This suggests that men and women were both likely to be motivated by career ambitions and monetary success. Men and women were also both likely to move toward desirable opportunities outside traditional investment banks (4 women, 3 men). For example, Wall Street workers sometimes received offers to work for their clients, or opportunities to enter entrepreneurial ventures. While male and female respondents shared many considerations, there were at least two ways in which they differed. First, women more often changed jobs due to lifestyle or family considerations (14 women vs. 5 men), and women more often experienced these considerations as constraints rather than preferences. Women were also more likely to describe a better organizational or work culture as a reason for moving into a new job (8 women, 2 men). This may be related to women’s greater likelihood of encountering a hostile work environment or discrimination. In fact, women were substantially more likely to cite hostile work environments or discrimination as reasons for changing jobs (11 women, 2 men). Nine women also suggested that their mobility had been blocked because they could not penetrate informal networks with male managers, coworkers, or clients, while no men described similar difficulties. I discuss these issues below. LIFESTYLE AND FAMILY CONSIDERATIONS Lifestyle and family considerations affected the career decisions of 5 men and 14 women. While Wall Street firms offer paid maternity leaves
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that are generous by U.S. standards, some of the high-revenue functions like investment banking had time and travel demands that prohibited any family involvement beyond breadwinning. Actual or expected caregiving roles in their families motivated 12 women to move into jobs with fewer hours. Danielle described problems with business travel when both parents work on Wall Street. I can’t get on a plane at the drop of a hat now. I remember once when [my husband] and I were both at [the Wall Street firm where we both worked]. Actually, when I was pregnant was when we realized we might have a problem. We came back from vacation and we got back, and [my husband] had a message on the machine saying he had to go to London the next day, and I had one saying I was going to Texas for a week. What do you do if you both have calls like that when you have kids?
She moved into a less demanding position at a start-up venture capital firm. For nine women, job-related time and travel demands were incompatible with caregiving, leading to career paths that demanded less. No female respondents had partners who shouldered most of the childcare responsibilities, and most had partners with professional jobs. (Twenty-two of 27 women with partners, or 81%, had partners who were also professionals.) Because most Wall Street women with children had responsibilities for caregiving in dual-career families, they often moved out of high-paying jobs with demanding hours. For three women, changing jobs to improve their hours did not mean moving from a high-paying to a lower-paying area. For example, Barbara, who had two children during her Wall Street career, started in an investment banking position on the advice of one of her professors at business school. However, she intended to move into a sales position as soon as possible because of more predictable and manageable hours in sales and trading: I had planned on being in sales and trading. That would be less demanding on my time. More manageable than an investment banking career. . . . I actually did a very short stint in investment banking. . . . They asked me to stay longer, but I only did it for a few months because the hours were . . . you know, I pulled all-nighters. I worked weekends and did ridiculous things that I knew, even though I didn’t have any kids at the time, I knew that that wasn’t the kind of career I wanted. With kids or not, that’s not the kind of call I want on my personal time. I left within six months. I went into sales and trading. So I would say . . . I just expected that, while my children were young, I would be able to manage career and family.
After 6 months, she moved into trading at her first firm, and later into a sales position at another firm. This allowed her to work market hours and to manage her family responsibilities while maintaining a lucrative career in a high-paying area of the industry. While three women managed their careers to work predictable hours and to stay in high-paying positions, 10 women who started in maledominated specialties moved into lower-paying jobs for lifestyle or family
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reasons. These women changed firms or changed work groups in order to manage family obligations. Three of them remained on Wall Street but moved from corporate finance into equity research or support functions. Seven moved into smaller firms or changed from sell-side to buy-side positions. For example, Natalie moved from investment banking into a support function when she was expecting her first child: There were several reasons. The first was purely lifestyle. I just didn’t want to work all the time. Call me crazy. The second was that, in spite of the fact that I didn’t love investment banking, I liked [my firm]. There are some really good people in banking, enough that I felt that I would like to stay at the firm if I could. I also was considering starting a family. I actually told banking in January of ’96 that I didn’t want to stay in banking, and asked them if they would give me time to look in the firm and maybe find something else here. They were really great . . . They let me wind down the project I was working on. The ones that I had started. Nobody pressed me . . . I actually talked to (my current) area first, because I was interested in them, and they didn’t have any positions available at the time. Then I got pregnant, which I wanted, but it was quicker than I thought. No one tells you that it could happen right away . . . then a month later [my current group] called, and I really liked the head of the group, so I took it.
Her shift out of an investment banking job into a support area of the firm with better hours offered her the lifestyle that she wanted, but the position paid much less than her previous position in corporate finance. For five women who moved into buy-side positions, there was a definite recognition that changing areas meant sacrifices in compensation. Sarah, who was expecting her first child when I interviewed her, said that she was much happier since she had moved from corporate finance into asset management because a change in management in her previous group had escalated already heavy time demands: I went from not really doing a lot of all-nighters too often, to pulling them maybe once every other week. And if I got home for the 11:00 news, it was an early night. It was not fun. And I had started dating my husband at that point and was just never seeing him.
She switched to the buy-side within her Wall Street firm in order to gain better hours and to leave an unpleasant environment in her previous job, but she recognized that this meant a sacrifice in compensation. For four women, family considerations led to exits from the paid labor force, at least temporarily. These four women were all married to highlypaid professional men, so that they experienced no financial pressure to continue their careers, thus enabling a move toward domesticity (Gerson, 1985). Three of these women had children, while the fourth anticipated starting a family soon. As I discuss below, the three women with children also experienced strong pushes out of their careers in the securities industry as they encountered pregnancy discrimination, hostile work
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environments, and disappointing bonuses that pushed them to choose domesticity. While lifestyle concerns were most important for women, and especially for women with children, these considerations also influenced the career decisions of five men. For three of these men, a desire to relocate outside of New York City was primary. When asked why he changed jobs, Collin said, I came home, and my wife said she and the kid and the dog were moving, and I could come if I wanted to. . . . My family wanted to leave New York. Basically, I went to my boss in New York and said, “I don’t want to leave [the firm]. I don’t think you want me to leave. I can’t stay in New York.” And he said “Fine, we’ll send you to Houston to be the M&A guy.”
Family pressure led Collin to request a transfer out of New York, while a desire to raise their families in less urban environments also encouraged Todd and Brad to move. Three of the five men, including one of the men who wanted to relocate, were also focused on spending more time with their children when they decided to change jobs. However, among these men, only one entered a job with much lower earning potential. Kevin had been working in corporate finance, but was not passionate enough about his work to maintain the required time commitment after his first child was born. I really, really didn’t want to be working as much, basically. I wanted—it sort of made you realize that you wanted to spend . . . at least I wanted to spend a lot more time with my family at home. My wife and my newborn child. It made me think about it. . . . It was very interesting work, but I wasn’t passionate about it, and you sort of have to be, to be able to do that for any extended time. . . . I definitely, definitely made the decision I didn’t want to do investment banking any more. It was just too much. It was too much work, and I didn’t have a true love for doing it, so it didn’t match my own priorities enough.
In this case, changing careers from corporate finance into human resources, a non-revenue-generating area, meant a slower track with a much lower earnings trajectory. However, it is important to note that, where most women with lifestyle considerations changed jobs because they needed to manage caregiving responsibilities in dual-earner families, all five of the men who cited lifestyle issues had wives who were homemakers. None of them changed jobs to take on a majority of the caregiving responsibilities in their families, so their family considerations represented preferences to spend more time with their children rather than imperatives. Moreover, three of the five men who described lifestyle motivations for their career decisions were also attracted toward a more appealing and more lucrative opportunity. Todd started up his own company, of which he is now CEO. Dylan was one of the most highly paid men in the sample, earning over a million dollars in 1997. He
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said, “Compared to the people my year in banking, I am making multiples of my peers in banking. At least twice as much.” His job change not only improved his lifestyle by increasing his time with his family, it also improved his compensation and career trajectory. Thus, men’s lifestyle concerns often acted in concert with better career opportunities. In contrast, women’s lifestyle concerns were often combined with additional pushes out of their jobs from discriminatory processes.
DISCRIMINATION AND BLOCKED MOBILITY Subtle and overt discrimination led 11 women to change jobs or leave the industry. In contrast, only two men changed jobs at any point because of discrimination. One case, George, was transferred to London against his will because of his European nationality, in spite of his own desire to remain in New York. He subsequently changed firms in London and negotiated a transfer back to New York. In another case, discrimination was based on Collin’s Southern origin. Collin said, I left New York and went to Houston with [my first firm], which was fine, but I ended up working for an asshole there, and that’s really the reason I left (the firm), because I just had a personality conflict with my direct supervisor. It was either that or beating him to death in a dark alley. So I left. . . . I was told that because I have a southern accent, people expect their investment bankers to be smarter than they are and, despite the fact that you are smarter than they are, your southern accent might lead them to believe that you’re just a hick.
He moved to a firm that was not among the top Wall Street firms. However, he remained in corporate finance and was very successful in his new position, earning over $500,000 in 1997. While he experienced discrimination in his previous job due to his regional accent, neither he nor any other men moved into functions with lower earning potential because they experienced discrimination, and no men described discrimination on the basis of gender. In contrast, eight women who had worked in male-dominated areas of corporate finance or sales and trading indicated that gender discrimination had influenced their decision to change firms or work groups. For three women, this discrimination was quite blatant. For example, Emma changed from one top Wall Street firm to another because of a hostile work environment in her first firm: They were downright hostile, to the point where I would do a lot of the recruiting and interviewing for our group, and I was told things like, “Don’t bring a woman, I wouldn’t hire a woman into this group.” These were more my colleagues than . . . you know, senior people couldn’t say that. Things like, because I came in through the regular recruiting process, not how a lot of these guys have been brought in, “If you’d interviewed here through us, we never would have hired you.” A lot of things
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She remained in the same high-paying area of corporate finance. Ultimately, she was even more successful in her second firm because she left an environment that was not only hostile to her as a woman, but which also had fewer live deals to work on than her subsequent job. However, the hostility towards women in her first job suggested that men engaged in practices that reinforced boundaries around certain areas of the industry, creating limits on women’s options that men did not face. While discrimination could be blatant, it usually took on more subtle forms. Nine women described changing jobs because of male colleagues’ and managers’ preferences to associate with others like themselves, or subtle psychological processes that undermined their credibility (Roth, 2004). Karen noted that men in her first job in corporate finance tended to have affinities with one another that provided valuable assistance and informal mentoring, while women were held to higher standards for competence. When was the last time I got a stock tip? I’ve never gotten a stock tip from a guy. But they are always giving each other stock tips. It’s that kind of thing. It’s just the hanging out in somebody’s office and bullshitting with them and getting invited to play golf with them. . . . Around here, at least, if you’re liked, you don’t have to be a star performer to get ahead as a guy, whereas women, I think that category doesn’t exist. It doesn’t matter whether they like you or not, they base it more on your performance. But for guys, it can be a very mediocre white male, but because he’s liked and he’s congenial, then he gets through the ranks. And it just doesn’t happen for women at all. You really have to prove yourself.
Dissatisfied with her job in mergers and acquisitions, and experiencing blocked mobility there, she was persuaded to move into public relations. However, the pay and promotional potential of her new job were much poorer than in corporate finance, and she was looking for another job change at the time of the interview. For four women, job changes were also motivated in part by the belief that their clients preferred to work with securities professionals who resembled themselves (Roth, in press). Since they specialized in industries filled with male-dominated client firms, these women perceived their mobility to be blocked. For example, Allison initially worked in a corporate finance group that served large industrial companies. All my clients, my clients treated me very well, and I know that my clients thought I was smart. My clients knew that I did good work for them and stuff, but you knew
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that—and this happens even though you’re thirty years old—they think of you as their daughter. Their attitude is kind of like, “Isn’t she cute? She’s the hard-working associate.” It just used to be so hard to get across, “I am the account officer.” It was the client. It was all of these copper mining companies, companies that make bottles and things, where, . . . the client base was very middle-aged, white, and male. No one ever treated me me poorly or anything like that, but I think that over time they’d rather hang out with their banker who is a guy. . . . I think that I’m at least as capable as most of the guys in my group, but it’s just more natural, and in the end this business is not how smart you are, or anything like that, it’s relationships. I just think that you’re never going to have a relationship with Chrysler as a woman, and there are exceptions, it’s just that I don’t feel like, I used to fight the tide, but I don’t want to do it any more.
Client relationships were becoming increasingly important as her career progressed, and she foresaw disadvantages relative to her male peers. As a result, she moved into a work group with more women and fewer maledominated clients, but where her earnings would be lower. In fact, some female respondents observed that women fared better in areas with limited client relationships, where face-to-face entertaining was not expected on a regular basis, and “buddy” relationships were not formed (Roth, in press). This may seem counterintuitive given stereotypes that women are better with people, but client relationships were often characterized by homosocial bonding activities that made relationship-building difficult for female professionals. In addition to subtle discriminatory processes emerging from interactions with clients and coworkers, discrimination on the basis of pregnancy was common. Sixteen women who worked in sell-side functions of corporate finance, sales and trading, or equity research described pregnancy discrimination against themselves or other women in their work environment. For example, Barbara described her experiences as a trader during her first pregnancy. When I was pregnant, people I sat immediately with, they just did not think that I should come back to work. So they were mad at me if I did, and would say right to me, one of my bosses and another MD,9 would say, “Who’s going to raise your children? Don’t you think that you’re the best person to raise your children?” They would give me lectures every day. “This is a serious thing. You’re bringing someone into the world.” On and on and on. “You never know. You don’t know.” Every single thing that came on the radio about a nanny, or child abuse, cigarette burns, “Why would I subject my child to that?” I heard that kind of thing all the time. Also, towards the end of my pregnancy, one of the MDs did not want me to sit in his chair, because he was afraid my water was going to break. So he absolutely forbade me from sitting in his chair. Sometimes I forgot, and I sat, and he said, “Get out of my chair! Get out of my chair! Don’t you sit in my chair!” It was like a joke.
She moved into a sales position at another firm after her maternity leave, largely to escape this hostile environment. Women like Barbara who 9 In the securities industry, MD stands for “managing director,” which is an upper-level position.
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described pregnancy discrimination often noted that their male colleagues with children had wives who were homemakers. They perceived that their own aspirations to combine career and family failed to fit a mold for “family” that these men could fully understand. For three women, hostility and subtle forms of discrimination on the basis of pregnancy led to exits from the labor force. In a particularly egregious case, Mia was fired during her second pregnancy. I will say that after I got the babies, I think a lot of men were a bit jealous because they were a little more lenient on what I could do. And in a way, I didn’t blame them for being jealous, but I was still performing as well as I had been in the past. I didn’t think it was a detriment in my performance that was significant. . . . But this new research director, in November, he took me out for a dinner . . . he took certain analysts out alone for dinner to talk about their careers. And he had twins, and he said, “Wow, my twins are one and a half. My wife quit work. Are you going to quit?” Things you’re not supposed to ask. And so I hid this pregnancy from them, and then some people found out I was pregnant. . . . But I think part of it was just . . . it was definitely discriminatory. I think it was discrimination, and they paid. They settled with me, so they must have thought . . . been nervous a little bit.
While she was a highly-paid equity research analyst with a coveted II ranking, her firm laid her off. This event solidified her decision to leave the labor force. In three cases, women who experienced discrimination in high-paying functions managed to move into other high-paying jobs. However, the consequences of working in an environment that was discriminatory to women were not always so serendipitous. Because of discrimination, five women experienced downward career trajectories from high-paying areas like corporate finance or sales and trading either into lower-paying areas like equity research, asset management, or support functions, or into smaller firms. In describing her experiences of discrimination, Sarah said, It was interesting, because this guy, George, who initially headed the group, he had very good relationships with one of our clients, and they had been friends for a long time, and they were one of our bigger clients. And he used to, like, to go out there and would never take me because they used to go to tittie bars and stuff with the clients. “That’s nice. Thank you.” Although eventually I ended up working on a deal for this client, so who knows. But initially, for any of the marketing pitches, any of that stuff, he wouldn’t take me out to see the client. He’d go out, smoke cigars, and ogle women. We’d sort of hear about it through the grapevine when they got back.
While she had been very unhappy in her corporate finance group, where she had little support and no access to a mentor, her move into asset management reduced her earnings and earning potential considerably. She said, “I have to say the pay scale here isn’t anywhere near what it is in investment banking.” For five women, discrimination led to job changes with reduced earning potential, while this was not a cause of downward career trajectories for any male respondents.
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In addition to propelling five women into lower-paying jobs, discrimination led four women to leave the securities industry. As mentioned above, three of these women became homemakers. The fourth left in search of a job where evaluations of her performance would be less affected by the personal biases of her colleagues. Sabrina, the only African American respondent, said, The two places I went, they had specific hiring goals that they wanted to fill. I fit the bill. But other than that, I couldn’t see any real commitment to diversity . . . when you walk up on your secretary and she’s telling “nigger nigger” jokes in your face, to your co-workers, how do you deal with that? What do you say? “I’m going to give up all of this money because my feelings are hurt.” Because I know the secretaries always put my work at the bottom of the pile because they know I don’t have any power here. What could I say? . . . I realized or I came to believe that I would never be taken seriously as an analyst. I was tired of knocking my head against the wall. I was tired of being in a position where someone’s perception of me, their confidence in me, so many intangible things had a bearing on how I was viewed as a performer, instead of the cold hard facts. “Did I make this recommendation to you? Did you make money on this recommendation?” End of story.
As a black woman, she perceived discriminatory stereotypes that undermined her credibility, and consequently limited her success in the field and firm. As a result, she decided to exit finance to pursue a different career where she expected to be evaluated more objectively. However, it was unlikely that her new career would be as lucrative as her position on Wall Street. While women who exited finance tended to leave the labor force, three men exited finance in pursuit of entrepreneurial opportunities. Alexander explained why he left his job in corporate finance to join a business that his family owned and ran: First of all, I loved what I was doing. I liked the people, I liked the job, and I was doing well. But we have this great family business, and it’s a third-generation family business. It is the largest [specialized product] company in the world with, at that point, we had nine family members involved in it, and I was one of the last hold-outs who they were trying to get into the business. I had eschewed them for years, and after a couple of years in investment banking, I felt like one day I would move over and join our family’s business, but, for a bunch of reasons that I could detail for you, if I was ever going to do it, the time to do it was then.
All three men focused on the pull of their new opportunity as the rationale for their decision to leave the securities industry. Unlike the women who exited finance, these men were drawn to the chance to work for companies where they had ownership. In fact, nine respondents (4 women and 5 men) who continued to work in finance indicated that they would leave for the right entrepreneurial opportunity. These men were following a common dream.
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DISCUSSION AND CONCLUSIONS An aggregate pattern of sex-segregation is evident within the securities industry, and this pattern appears to become more pronounced over time. While this study is limited to a single and somewhat unique industry, similar processes are likely to occur in other prestigious, male-dominated jobs, as others have found for the legal profession (Dixon and Seron, 1995; Epstein et al., 1999; Hagan and Kay, 1995). Within 5–7 years after completing the MBA, women were more likely than men to find themselves moving from high-paying corporate finance jobs into lower-paying jobs in equity research or asset management, in smaller firms, or out of the securities industry. Thirteen women and five men found themselves on downward trajectories, and another five women exited the labor force. For seven of these 23 respondents (3 women and 4 men), these moves were a consequence of gender-neutral processes like market cycles or firm losses. However, for 15 others, downward trajectories or exits from finance were a consequence of family considerations (6 women, 1 man), discrimination (2 women), or both (6 women). As women experience higher rates of attrition or disproportionately move into lower-paying jobs or smaller firms early in their careers, the proportion of women at the upper ranks of corporate finance and sales and trading on Wall Street is likely to remain small. Some influences like desires for more challenging work or more money, or market deterioration, firm restructurings, firm mergers, or proprietary losses were important for both men and women. However, the data also illuminate a number of important gender differences. First, women were much more likely to confront dilemmas related to childcare responsibilities. None of the men had primary caregiving responsibility in their families, while none of the women had partners who were primary caregivers. As a result, family responsibilities produced some gender-specific constraints among these professionals. While human capital and other supply-side theories would define decisions related to family responsibilities as supply-side, these forces are also structural. Women with children did not have stay-at-home spouses, while 14 of 17 (82%) male respondents with children did. Because of the gender division of labor in the family, women’s career options were more constrained than men’s. This was especially the case because the vast majority (81%) of female respondents with partners had partners who were also professionals, and therefore needed to accommodate two careers. Moreover, the desire to work fewer than 50 or 60 hours per week is relevant only because of the way that Wall Street employers organize work, which one would have to classify as a demand-side factor. Furthermore, the decisions of women to change jobs because of family responsibilities often conjoined with discrimination processes.
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In analyzing how lifestyle and family considerations affected sexsegregation, it is worth noting that some jobs with higher proportions of women actually did provide more manageable hours as a trade-off for earnings and that some women moved into support functions, equity research, and asset management for these reasons. However, sales and trading provided hours similar to these areas with much higher pay, yet only two women described moving into sales and trading as a strategy to manage their time. Moreover, public finance was the area with the lowest proportion of men and the greatest likelihood of being described by respondents as mixed-sex or female-dominated, despite the fact that this area also demanded long hours and a lot of travel. Women’s disproportionate representation in this area appears to be more a function of the fact that public finance lost its appeal to men, who flocked instead to higher-paying corporate finance areas (Fisher, 1989). Thus, theories that focus on lifestyle and family influences offer at best a partial explanation for sex-segregation. Women do not necessarily end up in jobs that accommodate their family responsibilities, as human capital theorists suggest they should. Second, gender discrimination from managers and coworkers was both common and unique to women’s experiences, although some men experienced discrimination based on other attributes such as race, nationality, or region of origin. Also, while overt discrimination did occur on Wall Street, it was less common than a matrix of subtle, interactive processes. Predominantly male peers, predominantly male managers, and predominantly male clients often exhibited preferences to associate with other men, making it difficult for women to succeed in areas that were more maledominated (Roth, 2004; in press). As a result, women in male-dominated positions often encountered barriers to success in their everyday interactions in the workplace. Difficulties establishing the types of relationships that they needed to succeed, with clients or with mentors, derailed some women, while this was not mentioned by any of the men. These gender differences emerged despite the fact that these men and women were extremely similar in the characteristics that they brought to the labor market, the organizations in which they started their careers, and the business cycles that affected their careers. Similar “revolving door” processes are likely to operate after the point of entry in other male-dominated occupations, especially those that maintain their desirability to male workers. Women who stayed in areas like corporate finance and sales and trading at top firms were unusual in two ways. First, they typically had a powerful mentor who supported their careers, and this mentor was usually a man (Roth, in press-a). Thus, as Kanter (1977) found over 20 years earlier, informal organizational sponsorship is essential if higher proportions of women
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are to succeed in male-dominated professions. Second, these women were highly career-committed, determined to be successful, and strategic about managing their careers to maximize their success and longevity within the securities industry (Roth, 2004; in press). Most of these women deliberately chose or moved into areas where their success would not depend on subjective evaluations of performance among male managers and peers, or on buddy relationships with executives from male-dominated client companies. The most successful women selected positions in quantitative products in corporate finance or in sales and trading, where their contributions to the firm’s revenues are recorded and, therefore, very visible. Efforts to increase women’s representations at higher echelons of male-dominated occupations and to improve women’s relative compensation might focus on counseling women to enter jobs where their contributions are objectively measurable. It is worth noting that the emphasis of many demand-side theories on hiring may be misplaced. Most of the mechanisms involved in sifting similarly qualified men and women into different jobs operated subtly over time. I have examined processes affecting job changes and career choices for Wall Street professionals during the first 5–7 years of their careers, when gender-biased social and cognitive processes differentially affect male and female professionals. Over time, the group of women who maintain high-paying jobs may grow, as more women demonstrate ambitions to be successful professionals, and these women shift the balance of power in the industry. However, these processes may simply reduce the presence of women in the highest-paying areas of Wall Street even more as rank increases. Some of the women who maintained high-paying trajectories after 5–7 years could later experience attrition, as interactive processes of discrimination and family demands continued to affect their career decisions. The bear market that followed the late 1990s boom may have lowered the probability that many women would move into the upper echelons of Wall Street, as occurred after the crash of 1987 (Fisher, 1989). Even as the proportion of women who rise through the ranks gradually increases, women who remain in high-paying areas are likely to face increasing isolation and escalating pressures as they rise through the ranks of Wall Street.
ACKNOWLEDGMENTS I thank four anonymous reviewers for comments on earlier drafts. This research was partially supported by a Doctoral Dissertation Improvement grant from the National Science Foundation.
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