Selling Women Short: Gender Inequality on Wall Street (review)

Louise Roth's Selling Women Short is at the vanguard of a new focus in the stratification literature: how do subtle workplace mechanisms reproduce ascriptive inequality. Employing multiple methods, Roth examines how gender hierarchies are reproduced, even among the "best and the brightest" and even within the most "meritocratic" of workplaces.

Roth's choice of Wall Street as her research setting is inspired. Wall Street firms claim to be meritocratic, as do most of those working there. Her sample (76 male and female securities professionals) controls for human capital (all graduated from the top five MBA programs 1991-1993, and all initially worked in a major Wall Street investment bank). Here are women and men quite similar in background, education, and experience, who worked in well paying jobs during the Bull Market of the 1990s. And, what's more, their workplaces are governed by institutionalized bonus pay systems and merit-based procedures. What better set of conditions could exist to produce gender equity in outcomes?

Nonetheless, these Wall Street firms reproduce gender hierarchies, and Roth provides important insights into why this occurs. Subtle mechanisms of inequality emerge out of interpersonal interactions among coworkers, managers and clients, and are institutionalized in formal policies and procedures, even gender-neutral, "objective" workplace practices. Despite their strong belief in meritocracy, workers, managers and clients all reproduce gender hierarchies, through unconscious biases that affect how work gets distributed, merit determined and earnings decisions made.

One important arena in which inequality is reproduced is the job allocation process. Men predominate in the best paying jobs (e.g., corporate finance), women in the least (e.g., public finance). One partial explanation for this job segregation is that women sometimes respond to family constraints by choosing specialties such as public finance, support or equity research as opposed to the more lucrative corporate finance or sales/trading. Or, women might avoid certain clients whose functional areas or client-bonding practices are seen as hyper masculine (e.g., those in oil and gas, or those who regularly golf, hunt or go to strip clubs). These "choices," however, are not entirely voluntary; there are frequently "push" as well as "pull" factors involved in such "job choice."

Other practices are more clearly discriminatory, even if not in intent. For example, homophily preferences are an important mechanism reproducing gender inequality. Male peers, managers and clients can advantage men by preferring male coworkers. Firms with diverse clients sometimes advantage women and minorities, but these firms typically specialize in lower paying functions (e.g., public finance). From the perspective of firms, therefore, the gendering of job (or task) assignments can appear quite rational, even as it is discriminatory.

A second arena in which inequality is reproduced is in Wall Street's bonus system. Wall Street professionals earn much of their pay via a bonus system based on performance reviews. Their strong belief in meritocracy is rooted in the "objective" criteria used to set these bonuses: how much money you make depends on how much business you bring in. But Roth's research raises serious questions about how meritocratic this process really is. She describes how non-merit factors subtly bias even the most meritocratic performance-based pay systems. Her qualitative data provide innumerable examples of arbitrariness, misinformation and occasionally outright discrimination negatively affecting women's pay relative to men's. Rather than performance leading to merit pay, evaluations were sometimes manipulated to justify bonuses. Often it was the subjectivity, as opposed to the objectivity, of the review process that was most notable. Roth's findings suggest that subjective evaluations of performance – as mediated through the perceptions of peers, managers and clients – negatively affected women's performance rankings relative to men's.

Selling Women Short points to both subtle factors that emerge out of interpersonal interactions among coworkers, managers and clients, and those institutionalized in formal policies and procedures. These forms of inequality come alive in the worlds of the women and men Roth interviewed. We feel connected to...