Women on Wall Street Fall Further Behind

Nancy Davis, a rising star at Goldman Sachs, (GS) left in January 2008 after an eight-year run betting the firm's money on derivatives to become a portfolio manager at Highbridge Capital Management. She lost that job 10 months later when the hedge fund cut back in the recession.

For women in the financial-services industry such as Davis, who's still unemployed, the last few years haven't been kind. More than five times as many women as men lost their jobs in the three years after July 2007, and pay for full-time female managers compared with their male counterparts worsened between 2000 and 2007, according to U.S. government data.

It has been more than a decade since a case brought by Smith Barney brokerage employees served to dismantle Wall Street's mandatory arbitration rules. Merrill Lynch was confronted with sex-discrimination claims from 900 women, and Allison Schieffelin, a former bond saleswoman, filed a gender-bias suit against Morgan Stanley (MS)—a case later settled for $54 million. Yet not a lot has improved for women in banking.

Women managers in finance, which includes bank tellers and executives, have seen the pay disparity worsen in recent years. Based on median salaries, they suffer the largest pay gap of any industry, earning 58.8 cents for every dollar a man earned in 2007, the most recent year for which data is available, down from 63.9 cents in 2000, according to Government Accountability Office data analyzed by Bloomberg. "When you have an industry dominated by men like finance and compensation going through the roof, it's not surprising that it increases the gender disparity between men and women," says Joan C. Williams, a professor at the University of California's Hastings College of Law in San Francisco. "The sky's the limit for men who hit a home run, but women can't get to first base."

Last month, Goldman Sachs was sued by three former female employees who say they received less pay and fewer promotions than men at the firm. One of the women claimed she had been pinned against a wall and groped by a male colleague after a 1997 client meeting at Scores, a Manhattan topless bar. Ed Canaday, a Goldman Sachs spokesman, says the suit is "without merit."

Women have gained some ground over the last decade. Executives including Mary Erdoes, CEO of asset management at JPMorgan Chase (JPM), Lisa Carnoy, co-head of global capital markets at Bank of America (BAC), and Isabelle Ealet, global head of commodities at Goldman Sachs, have risen to positions of prominence at the biggest U.S. banks.

Davis, 33, says Goldman Sachs and Highbridge, which is owned by JPMorgan, bent "over backward to keep women." Goldman gave Davis a maternity "buddy," a senior female manager, to help her make the transition back to work after both of her pregnancies and placed her in its Leadership Acceleration Initiative, a program to promote development of high performers. "I never saw unfairness or discrimination," says Davis.

Still, for a trader with her credentials, finding the right job with the right work-life balance has been harder than she expected. Davis wants to see her four-year-old and seven-year-old before bed without being relegated to the "mommy track," she says, recalling a recent job interview she had with a small hedge fund: "I think they were concerned about my ability to work until 2 a.m. given my family commitments. They realized that, and I realized that. It wasn't the right fit."

Many Wall Street firms assign women to less prestigious trading desks and divisions with the smallest bonus pools, says Kelly Dermody, a partner at Lieff Cabraser Heimann & Bernstein, the law firm representing the women suing Goldman Sachs. "Women are fighting the same old battles, just in a new environment higher up the chain," she says. One of the complaints in the Goldman Sachs case is that the proportion of female managers shrinks at higher levels. Women constituted 29 percent of the firm's vice-presidents, 17 percent of its managing directors, and 14 percent of its partners in 2009, the complaint says. JPMorgan has three women on its 16-person operating committee. Morgan Stanley has just one woman among its top dozen executives. Citigroup (C) doesn't have any women on its 19-member executive committee. Shannon Bell, a spokeswoman for Citigroup, said women run many businesses and important functions, including the firm's private bank, personal banking, and wealth management. Darin Oduyoye, a spokesman for JPMorgan, and Mark Lake, a spokesman for Morgan Stanley, declined to comment.

"In the old days the problem was conscious, explicit discrimination," says Susan Estrich, a professor of gender-discrimination law at the University of Southern California in Los Angeles. Today, it's different, she says. "People who are doing the judging unconsciously prefer people they're comfortable with, people they know, people who look like them, people whose experience they recognize."

The bottom line: While some conditions have improved, women in finance are earning a smaller percentage of men's pay than they did in 2000.

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