Every few months, a different publication comes out with a study examining the pay gap on Wall Street. The end result is always the same – a confirmation that one still exists. But the latest report is a bit more eye opening than others because it neutralizes certain variables that some in the industry use to explain away the issue.
The two most common explanations for the pay gap in banking are that women often leave the industry to have kids, thus stunting their growth potential when they reenter the workforce, and that females often self-select themselves out of higher paying jobs.
Indeed, the latest Bloomberg study confirms that latter point, one that we have looked at ourselves. Nearly half of male MBA respondents who entered finance went into commercial or investment banking, areas where pay is strongest. Meanwhile, just 40% of female MBAs did the same, with many choosing lesser-paying jobs at insurance and brokerage firms, according to the study.
The diverging of career paths certainly contributed to the pay gap, which averaged $21,872. However, because Bloomberg was able to collect enough responses, they were able to pin down statistically significant data for each line of business, something earlier studies haven't been unable to do.
In their sample, roughly 500 men and 100 women went into commercial and investment banking. Those female respondents made nearly $12,000 less than the men, confirming that it is not just an issue of self-selection. Bias, whether intentional or not, still plays a major role.
Female bankers are well aware of the issue. Heck, men are too. In our recent diversity study, nearly nine out of 10 women said they believe men are paid more in equivalent positions. More than half of men agreed.
How to Ace an Informational Interview (eFinancialCareers)
Bring a resume but don’t offer it unless they ask for a copy. Do not try to make this a job interview unless they take it that direction. Let them do most of the talking. And other tips.
The 2015 Bonus Roundup (eFinancialCareers)
Flat is the new up. Down is the new flat. Up is almost unheard of.
Really, Really Bad Timing (Bloomberg)
We told you last week how J.P. Morgan traders made nearly $300 million by shorting the franc. Citi, on the other hand, took a bath. What’s worse, reports are surfacing that the bank decided not to renew derivatives trades that hedge against currency swings just one week before the Swiss central bank took the price cap of the franc. Ouch. Citi traders lost nearly $200 million.
Hedge Funds Launching Everywhere (WSJ)
Two partners at Tiger Global Management, Andrew Bellas and Alexander Captain, resigned this month as they prepare to start their own firms. Elsewhere, two former hedge fund managers who were forced to close their firms less than two years ago, Michael Karsch and Adam Weiss, are getting back on the horse. Both are reportedly prepping to launch new funds.
Hopeless (NY Times)
Alex Hope, the infamous "FX trader" who cheated investors out of $7.6 million and spent much of it on one evening, was handed the longest prison sentence ever given as a result of a prosecution by the Financial Conduct Authority or its predecessor. It’s kind of scary that seven years is the longest sentence ever doled out by the Brits for stealing millions from investors. Maybe it’s because he represented himself in court.
Hiring and Firing at CIBC (Bloomberg)
The Canadian Imperial Bank of Commerce (CIBC) plans to hire around 5,000 people next year, mostly in operations. To make room, Canada’s fifth biggest lender will cut around 500 jobs companywide.
Hedge Fund Bonus Cuts (Reuters)
Hedge fund profits were down nearly 30% last year overall. This will result in a total bonus pool of $9.2 billion, down from the $23.1 billion the industry shared for 2013.
Buzz Around the Office
Ice Cold (Real Radio)
A Nashville radio talk show host was in the middle of a live interview when he was interrupted by a man who served him divorce papers. It kind of put a damper on the interview.
Quote of the Day: "Women aren't being underpaid intentionally by these organizations, but unconscious biases can really filter into these issues that they need to root out from the get-go.” – Anna Beninger, director of research at Catalyst, a nonprofit that advocates women's advancement in the workforce, told Bloomberg