Data from the Census Bureau shows a disparity in average wages between women and men across all categories, except for personal care and service workers. In fact, the gender pay gap in this sector is fairly pronounced. As of 2020, the median pay for women is 83 cents for every dollar a man earns.
The greatest gap is in the financial services sector, which is dominated by Wall Street personal advisors, agents, and securities analysts. So in an era when women are graduating from financial degree programs at greater rates than ever before, why are they still lagging significantly behind their male counterparts when it comes to salary? And what's behind the gender pay gap?
- The gender pay gap is the disparity in average wages between women and men.
- One of the largest gaps in pay between women and men is in the financial services sector.
- Wall Street is often considered to be a male-dominated industry.
- Women are paid less and aren't promoted to leadership positions when compared to their male counterparts.
- Women typically face more challenges because of families and child-rearing compared to men in the financial industry workforce.
Gender Pay Gay and Residual Inequality
Equal Pay Day is recognized in the United States every year on March 15. The date is significant because it marks the point every year that women finally earn the same amount of money that men do from the previous year. This means that it takes almost 15 months for a woman to earn as much money as a man in a full year. The day also highlights some of the inequalities that continue to persist in the working world.
Research shows that women are still underrepresented in a number of fields, including the financial services industry, even though the gender pay gap is narrowing. This fact is notably visible within management positions where men far outweigh women. In fact, there were only 74 women chief executive officers (CEOs) leading Fortune 500 companies in the United States as of March 2022. This represents less than 15% of the entire list of companies.
A report from payroll company ADP highlighted some of the differences in pay between men and women, who make up more than half of the workforce in the American financial sector. The average pay for people in the industry was $33 per hour. But the average hourly salary for men far exceeded that amount at $40 while women made much less, averaging about $27 per hour.
So what are some of the reasons behind the divide? Some of the compounding factors include:
- Work experience
- Gender segregation within the workplace
Climate In Wall Street Firms
There are some very clear images that come to mind when people think of Wall Street. This part of the industry is commonly associated with aggressive men—cutthroat individuals who have their eyes on the prize and will do anything to achieve their goals. This may include limiting the talent pool and keeping women out of this so-called boys' club. These are common themes throughout films like Wall Street and the Wolf of Wall Street.
But is all of this truly fiction? And what does the reality tell us? Wall Street has been dominated by men for years and is still very much a man's world. Women who are able to make their way into the industry earn less than their male counterparts and are still very much underrepresented. In fact, many of the major banks, investment firms, and brokerages continue to be led by men with only a select group of women taking the reins.
Jane Fraser became the CEO of Citigroup (C) in February 2021 and was the first woman to lead a major Wall Street bank. She is among a small group of women that lead financial firms. According to Deloitte, only 24% of financial company leaders in 2021 were women. That figure is only projected to grow by 4% by 2030, which is still considerably low.
The same can be said about sales and trading. Even though there are more women entering these fields, they are still very much male-dominated. There is a significant gender pay gap. And the opportunities for success and movement end up going to men, according to Lisa Marie Roth, who researched discrimination and the gender pay gap between men and women on Wall Street for her book Selling Women Short.
The idea of the three-martini lunch is very much alive and well. This concept suggests a leisurely culture of people networking and making deals over a long lunch before heading back to the office to sign off and head home. But that can't be further from the truth.
The financial services sector is all about high stress and long hours. And it takes a lot of time and effort to break into the business, not to mention working through the night. A 2021 survey of individuals working at ten major financial firms, including Citi, Goldman Sachs (GS), and Wells Fargo (WFC), highlighted some of the following findings:
- A first-year analyst averaged 83.5 hours each week, leaving about 5.75 hours for sleep each night with bedtime. Bedtime was around 1:32 a.m.
- Associates said they put in about 80 hours each week and slept an average of six hours every night. Bedtime was around 1:13 a.m.
The study also asked participants to rate their mental health before and after they started their careers. The average score for respondents before their current job was 8.3. That score dropped, with the average current rating for mental and health dipping down to 5.0. People surveyed felt physically competent with an average score of 8.3 before their current jobs and rated their current level of physical fitness at 4.9.
Employees also felt the sting of high-stress working conditions in their personal relationships. As many as 84% of people suggested that the long hours and conditions of their jobs negatively affected their life outside the office, including personal relationships. Some of the most common detrimental conditions they named were:
- Impossible deadlines
- Being left out at meetings
The Equal Pay Act was enacted in 1963. According to the law, employers aren't allowed to pay men and women differently when they work under the same conditions and have the same qualifications.
Childbirth and Childcare
Juggling a family and a high-stress career can be a challenge for anyone. Men and women often find it difficult to manage long bankers' hours or those long days on the trading floor while maintaining healthy relationships with their partners and/or children—at least for those who have them.
But women are often at a greater disadvantage than men in this sense because of stereotypical gender roles—notably, the idea that women are the caregivers of the family. As such, it isn't surprising to note that women are often more likely than men to make career changes and adjust their working lives to compensate for their families.
Women who go into financial careers are often warned about the pressures they may face before they even start. They may find that taking time off to have or take care of children can set back their career goals and encounter difficulties when the time comes to return to the workforce.
The COVID-19 pandemic opened up new concerns about the gender pay gap and made it even more noticeable. Research suggests that women were paid less than men and received fewer opportunities in the workplace because of childcare. In fact, women faced the brunt of the responsibility of childcare because of lockdowns with as many as 62% of women saying they expected to handle family matters during the pandemic.
But this isn't new. After the 2007-2008 financial crisis, Wall Street began a massive round of layoffs to deal with the growing recession and collapse of the financial markets. Statistics indicate that the layoffs affected women more than men.
What Is Meant by Wall Street’s Gender Pay Gap?
Wall Street's gender pay gap is the difference in pay that men receive compared to women who work in the financial services sector. According to research, women earn less than men. Research indicates that women earned an average of 83 cents for every dollar earned by men.
How Is the Gender Pay Gap Calculated?
The U.S. Census Bureau releases data on salaries and pay. It also issues guidance on the gender pay gap. This gap is calculated using median full-time salaries of women and comparing them to their male counterparts.
What Is the Gender Pay Gap for the Financial Sector?
According to statistics from payroll company ADP, the average hourly salary in the financial sector was $33 per hour. Women, though, earned $27 per hour while men far exceeded that (and the average) at $40 per hour.
The Bottom Line
There's no doubt that Wall Street is a man's world—one that has historically been closed off to women. Not only are the opportunities to enter and advance in financial services limited for women, but so too, is the pay. Although they may work the same hours and find themselves sweating it out under the same conditions, there is a huge disparity in the way men and women are paid and how they're treated by their bosses and male counterparts. Until Wall Street begins to make changes to the workplace and its employment standards, women's wages and place in the industry will continue to lag behind.