By Paul J. Davies
"Doing God's work," is the line everyone remembers from Lloyd Blankfein, Goldman Sachs' then chief executive officer, in a 2009 feature in Britain's Sunday Times. But a different quote always stuck with me for its seriousness and menace. It was from Sarah Smith, chief accountant at the time, about the investment bank's 24/7 work culture. "When you're needed, you're here. And if you're needed and you're not answering your phone, you won't be needed very long," she told the paper.
That epitomizes the unforgiving, all-consuming work ethic of an industry that revels in its supposedly masculine traits of stamina, competitiveness and aggression. It's a world where most women get less equality of pay and promotion than in other fields.
Now, Goldman Sachs has agreed to pay $215 million to settle a gender discrimination class-action lawsuit filed way back in 2010. Led by initial plaintiffs Cristina Chen-Oster, Shanna Orlich and others, it represents about 2,800 female junior bankers in revenue-generating roles.
The money seems unlikely to change lives - about one-third will go on legal fees, according to Bloomberg News, leaving on average $52,000 per claimant as compensation for treatment, going back as long ago as 2002, that limited their careers. Lawyers for the plaintiffs from Lieff Cabraser Heimann & Bernstein and Outten & Golden hope the impact of the settlement goes well beyond that. As part of the deal, Goldman has agreed to independent three-year reviews of its performance evaluation processes and pay equity.
"Given Goldman's prestige and influence, and the historic nature of this settlement, we believe this result will help women both at the company and across the banking sector," Kelly Dermody, co-counsel from Lieff Cabraser, said in an email. Goldman said it was "proud of its long record of promoting and advancing women," in a statement on Monday.
To be fair to Goldman, things have likely changed at least a bit since Chen-Oster first filed a discrimination complaint against the bank in 2005. In the past few years especially, the industry was shaken by loud complaints about working conditions and 100-plus-hour weeks from younger staff, who also gained leverage while the booming technology and private capital industries competed for their talents. As the Covid-19 pandemic waned, Goldman and its peers had to balance return-to-office demands with more non-monetary benefits, such as increased and more balanced parental leave.
The settlement means the juicy details of Goldman's culture and practices won't be aired in court. But the real meat of the case would have been in the data on actual outcomes for women in its investment banking, asset management and securities divisions. U.S. companies make less of this information available than their counterparts in the U.K. or Europe, but surveys and countrywide research offer a glimpse into the scale of the issues banks must still overcome.
First, the financial services sector struggles to retain women and develop them into senior roles. Entry-level jobs are split roughly 50-50 between men and women, but that parity disappears rapidly as employees climb the ranks, according to survey work published in 2021 by McKinsey and LeanIn.Org that examined the industry in North America. At senior vice president and "C-suite" executive levels, the proportion of female employees had fallen to less than 30%. The loss was even greater for women of color: From one-in-five entry-level employees to fewer than one-in-twenty executives.
What is more, senior women are more likely to have a spouse who works full-time than men, and are many times more likely to say they are mostly or solely responsible for running households, too. They take on informal responsibilities at work, such as promoting diversity, equity and inclusion much more than men do. They are also more likely than men to report feeling burned out, McKinsey found.
Motherhood is regularly held up as the obvious restricting factor on women's careers. However, work from Pew Research suggests that conclusion is simplistic and possibly plain wrong. Starting a traditional family does have an impact, but more on boosting the pay and hours worked among men - a fatherhood wage premium. Across American businesses, women with children at home who have a bachelor's degree or higher qualification earn about the same as women with the same education and without children, Pew Research found in a study published in March.
Education seems to have stopped improving things. Over the past 40 years, the proportion of working women with a higher education has grown sharply from 20% to 48%, according to Pew, overtaking men, who went from 26% to 41%. However, since 2002, the pay gap between equally educated men and women hasn't improved, even though it shrank dramatically in the previous 20 years, Pew found. The gap has persisted even as women increased their share of higher-paying occupations in managerial, finance, legal and science-based roles.
So, if not motherhood or education, then what? Broader economic conditions over the past twenty years, especially since the 2008 financial crisis, might have had an effect, holding down pay and progress for both sexes and in many industries. But stereotypical ideas among male leaders that women are less suited to hardcore finance jobs might also be a persistent obstacle to progress.
In 2013, before Ruth Porat left her role as Morgan Stanley's chief financial officer for the same job at Google, now Alphabet, she revealed in a speech how she had almost missed out on being hired by Morgan Stanley in the mid-1980s because some of the men reviewing her candidacy doubted she would have the stamina to succeed.
The world has changed over the past 40 years, including at investment banks. The industry even got its first big bank female CEO two years ago when Jane Fraser took the top job at Citigroup. But the wider inequities endure. High finance will always be an arena for committed, competitive people with a head for numbers and probably sharp elbows, too. These aren't exclusively male attributes and never were. Women like Sarah Smith have risen to the challenge for years, proving that it's bank executives that need to work harder to understand why more of their female employees still aren't getting a chance at senior roles.
Paul J. Davies is a Bloomberg Opinion columnist
** The views expressed do not necessarily reflect the views of Independent Media or IOL.
WASHINGTON POST