The Progress and Pitfalls of Diversity on Wall Street

More minorities and women are working on Wall Street, but white men remain very dominant when it comes to the financial rewards available there, according to a new report issued by CUNY's Center for Urban Research (CUR), which is located at the Graduate Center of the City University of New York (CUNY).

The report, The Progress and Pitfalls of Diversity on Wall Street, considers the financial industry centered in and around New York City as a crucial site for examining one of the major economic challenges for the nation during the next quarter century:  the collision between the growing diversity of the college-educated workforce and the historical recruitment and promotion patterns focused on white men.
It is based on an analysis of census data from 2000 and the 2005-2009 period, conducted byRichard Alba, Distinguished Professor of Sociology and Acting Director of the Center for Urban Research and Joseph Pereira, Director of the CUNY Data Service. 
Some key findings include:
  1. The white-male share of the core Wall St. workforce is declining over time.  For instance, white men were two-thirds of older workers (45 years and older) with high-status occupations in 2000, but they were only 46 percent of younger workers (30 and younger) in 2005-09.  The shift has not been altered by the layoffs associated with the economic downturn.
  2. In ethno-racial terms, the bulk of diversity on Wall St. is due to the rapidly growing share of Asian workers, who have gone from 5 percent of older core workers in 2000 to 19 percent of younger ones in 2005-09.  Latinos have increased their share as well, but African Americans have not.
  3. Women are increasing only modestly their presence in the Wall St. workforce, and they remain distinctly underrepresented by comparison with their proportion of the college educated.
  4. White men take home the lion's share of earnings from Wall St.  Especially among workers older than 30, ages when earnings can be very high, white men's median earnings exceed those of other groups by margins that frequently approach or even surpass 2-to-1.
"The rising presence of women and minorities on Wall Street is a welcome signal that they can find a home in an industry that is so influential in the overall economy," said Richard Alba, one of the co-authors. "However, their lower earnings are an indicator of lack of parity of position with white men.  The concern is that white-male dominance will persist in the face of massive demographic change, cutting the industry off from the talent and leadership potential to be found among women and minorities and symbolizing to the larger world an unfair distribution of financial reward and economic influence."
The report notes two possible classes of explanations for the group disparities evident in the Wall St. workforce: minorities and women may differ in the human-capital characteristics required for career trajectories oriented towards top positions, and/or they may be excluded by discrimination, institutional or individual, from these trajectories.  Census data cannot tell us which kind of explanation is more important; deciding between them requires other kinds of data, which currently do not exist.