The Frustratingly Messy Reason Women Still Lag Behind At Goldman Sachs

Last week, Goldman Sachs announced its annual promotions, in which 266 employees advance to become managing directors on January 1, while a smaller elite group becomes partners. As it turns out, women make up just 23% of those new managing directors, and 14% of the new partners. Meanwhile, a gender discrimination lawsuit against Goldman, accusing it of bias and an “outdate corporate culture,” winds it way through the court system. Why, after all these years and negative attention, do women still lag behind at Goldman?

That’s the question Jordan Weissmann asks in a smart, short blog post at the Atlantic. Weissmann summarizes research by three top economists who investigated why female MBA graduates wind up earning so much less than their male peers over time. The researchers surveyed graduates of Chicago’s Booth School of Business from the classes of 1990 and 2006, examining their starting salaries, the trajectories of their careers, and their own reasons for making various decisions.

There’s one chart that pretty much tells the whole story: Women and men start out with roughly similar salaries. Men do start out earning slightly more, but that’s partly because they choose higher-paying fields like investment banking. (Female MBA’s choices at this stage have been examined by other researchers, who have found that women often assume they have little chance of getting a job in the highest-paying fields.)

By a decade or so after graduation, however, men earn drastically more than women. The reason will not come as a shock: Women were much likelier to take a break from work and to work reduced hours, largely because of motherhood. Mothers wound up with 8 months less experience than their male peers, and worked 24% fewer hours. Childless women lagged behind by just 1.5 months, and worked 3.3% less each week. And as the researchers sum it up, “Deviations from the male norm of high hours and continuous labor market attachment are greatly penalized in the corporate and financial sectors.”

Interestingly, as Weissmann points out, mothers who took time off for children have one big thing in common: They’re married to rich men. Weissman frames this as a symptom of the fact that “America still treats childcare largely as a women’s obligation,” which is surely part of the picture. But presumably those women with rich husbands could also afford the very best childcare, making it easier for them to work full-time if they chose to. Women without high-earning husbands cut their hours slightly, but generally stayed in the workforce. Money gives you more options, not fewer. And when women have the option — when they’re given the freedom to choose because they’re not worried about money — they wind up likelier to interrupt their careers.

None of this means Goldman doesn’t discriminate in overt or subtle ways, of course. But it’s another reminder that the wage gap remains stubbornly complicated.

Photo: Dmitriy Shironosov /

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    • Lastango

      Thanks for acknowledging the messiness. Not long ago, in the piece at the link below, we had this bit from one of those ubiquitous professional “researchers” who make their living mining the pay difference issue:
      “But the pay gap is real. It’s still there… There’s good reason to believe that part of that unexplained gap is due to gender discrimination, and most of it is probably unconscious.”
      As I said in my comment there, the fact that women start out with roughly equal salaries is significant. (In the linked piece, about the UofT, the women were earning a bit more at the beginning.) If gender discrimination were the active element in creating the pay difference, it would be present at the beginning too. The major differences in earnings show up later — when a lot of other differences show too, in lifestyle choices and childrearing.
      Reaching for gender discrimination as the one-size-fits-all explanation is a weakness we need to get over. I realize why the people who earn a living throwing gasoline on the issue won’t stop exploiting the leverage they get from their incendiary pronouncements, but the rest of us have the option of not buying it until we dig deeper. I’m especially suspicious of claims the discrimination is “unconscious” or “subtle”. That sounds like, “I haven’t got any proof, so you’ll just have to take my word for it.”