|Felix Salmon||Feb 23, 2018|
Here’s quite a headline, from Bloomberg:
Who knew that JP Morgan was a bastion of sexual equality? This is the bank, after all, which not so long ago settled a federal sexual-harassment lawsuit for $1.5 million.
Of course it’s not true that women at JP Morgan earn 99% of what men at JP Morgan earn. Specifically:
If you add up all the money that JP Morgan women make each year, it’s nowhere near 99% of all the money that JP Morgan men make.
Even if you average all the money that JP Morgan women make each year, and compare it to the average amount that JP Morgan men make, that would effectively sideline the important issue that there are more men than women at the bank. Even so, the men would still come out way more than 1% ahead.
If you require the bank to release unadjusted gender pay-gap numbers, as the UK is in fact doing, then, as JP Morgan admits, the statutory report “will show a gap between the pay of men and women”.
On the other hand, if you allow JP Morgan itself to massage its own pay numbers, and adjust them for “factors such as job role, seniority and locale,” then – presto – the pay gap disppears! Female CEOs at JP Morgan make just as much as the male CEO, Jamie Dimon, who earned $29.5 million in 2017. There aren’t any female CEOs, however, so Dimon’s pay doesn’t factor into JP Morgan’s calculations.
The way that gender pay gaps work, certain jobs tend to be male-dominated (walk onto any trading floor and you’ll see what I mean immediately), while other jobs, often in areas like HR, marketing, and corporate social responsibility, tend to be female-dominated. The male-dominated jobs pay more than the female-dominated jobs, which means that men make more than women. And if a female-dominated job becomes male-dominated (computer programming is a great example of this happening), then it goes from being relatively low-status and low-pay to being high-status and high-pay.
None of that dynamic shows up in JP Morgan’s gender-gap figures. Even worse, promotions don’t, either. If the senior ranks of JP Morgan are staffed mostly by men, and those men overwhelmingly promote other men to join them in those ranks, then that doesn’t show up in the 1% figure because JP Morgan is just comparing pay between men and women in similar jobs. If you’re fortunate enough to be a woman in a senior executive role at JP Morgan, I’m sure you’re handsomely paid. But it’s still statistically much more difficult for you to get that job than for a man who was hired at the same time as you.
The fact is that there are, in fact, quite a lot of senior women at JP Morgan, at least by big-bank standards. If you look at the bank’s 11-member operating committee, for instance, it features five women, including CFO Marianne Lake. (On the other hand, just two of the 12 board members are women.)
But the main point here is not about JP Morgan, it’s about the wisdom of taking companies at their own word when it comes to measuring the gender gap. Ask just about any company, and they’ll tell you, after assiduously running their own numbers, that they’re thisclose to gender pay parity. On the other hand, ask them to hand over the data so that you can double-check their calculations, and they’ll suddenly tell you they can’t possibly do that, it would be much too expensive.
In other words, this is an area where “trust but verify” doesn’t work: companies have shown, repeatedly, that they can’t be trusted to impartially represent their own internal numbers. If you want reliable data on gender pay gaps, you need to make sure that some kind of third party is doing the analysis, otherwise the results are going to be worthless.
Which is to say, if you want to judge the state of Wall Street gender parity by looking at Bloomberg headlines, don’t look at that one. Here’s a better one, instead.