This past week, Goldman Sachs announced its latest round of annual promotions, and in doing so, it offered all of us a reminder that Wall Street is still more or less an adult chapter of the He-Man Women Hater's Club. Just 14 percent of the bank's new partners, and 23 percent of its new managing directors, were female, according to Bloomberg. That's pretty paltry, and about in line with the last couple years.
The sobering stats prompted Business Insider's Henry Blodget to ask his readers just what the heck was going on. Though he later nixed this passage after deciding it made him sound like a "sexist neanderthal," here's how he initially framed the issue.
Choice of words aside, Henry's on target about at least one thing: Babies probably explain much of the gap, and not just at Goldman. As Anne Marie Slaughter will tell you, even highly educated women tend to do a disproportionate share of child rearing in this country, and research suggests that ends up putting a huge dent in their careers.
In 2010, Harvard economists Claudia Goldin and Lawrence Katz teamed with Marianne Bertrand of the University of Chicago to publish a paper investigating why it is that, over the course of their work life, female MBAs earn so much less than their male classmates. They tackled the question by surveying graduates of Chicago's Booth School of Business from the classes of 1990 and 2006. Their findings suggested that family obligations were in fact a huge part of the reason why females have so much trouble climbing the elite corporate ladder.
The men and women of Booth started out making roughly similar salaries, as shown in the graph below. Men did slightly better for themselves, in part because they were a bit more likely to take jobs in investment banking or consulting.
Over time, however, the Booth men far outpaced the Booth women. After 10 years or more in the job market, the median male graduate earned about $242,000; the median female earned just $146,000.* The main reason for that chasm was that women were much more likely to take a break from their careers, or work reduced hours, which had a massive influence on pay. Here's how the researchers summed it up:
Women have more career interruptions, and work shorter hours, including more work in part-time positions and self-employment. Although these differences are modest, the remuneration disparity they entail is exceptionally large. [...] Any career interruption--a period of 6 months or more out of work--is costly in terms of future earnings, and at 10 years out, women are 22 percentage points more likely than men to have had at least one career interruption. Deviations from the male norm of high hours and continuous labor market attachment are greatly penalized in the corporate and financial sectors.