Bye, Ladies: Why Women are Fleeing Wall Street

For the first time in U.S. history, there were more women in the workplace in 2010 than men. At the same time, however, women have been abandoning the financial services industry in droves. Why? Theories abound, but none are entirely satisfying.

In the past 10 years, 141,000 women, 2.6% of female workers in finance, disappeared from the industry, while the ranks of men in the industry grew by 389,000, or 9.6%, according to a review of data provided by the federal Bureau of Labor Statistics.

That reverses the trend during the 1970s and '80s, when women flocked to the business. A number of factors may be driving this exodus, says reporter Kyle Stock of FINS.com, a career website for finance professionals:

Pervasive technology. The spread of automation in banking, brokerage and insurance, especially in the kind of back-office jobs dominated by women, has had a disproportional impact on the distaff side.
Wider career and educational choices. Emerging job and educational opportunities are drawing women away from finance, particularly the historically male-dominated precinct of Wall Street.
Sexism. "Mad Men"-style sexual discrimination may largely be a thing of the past in other industries, but it persists in finance, although in subtler forms.
Poor lifestyle. Working on Wall Street is a notorious grind, with 90-hour work weeks, fierce competition and a myopic focus on the bottom line. With more career opportunities than ever and a renewed devotion to balancing life and work, more women are taking a pass on finance.
Sagging reputation. Women are more put off than men by the reputational damage to banks, insurers and related companies triggered by the financial crisis.

Enjoy the Kung Pao
I buy the first two explanations, which may relate to the third. There's little doubt that technology and outsourcing is displacing employees in finance, especially in the generally more junior positions often occupied by women. And given a choice between climbing the ladder in nonfinancial firms -- or at their own companies, in an age of lower barriers to entrepreneurship -- and squashing your nose to the glass ceiling on Wall Street, it's reasonable to conclude that many women are choosing the path to success of least resistance.

Younger women, in particular, seem to be thinking along these lines. While the number of women in their mid-50s and up in finance has surged since 1999 (even surpassing their male cohorts entering the field), the number of women aged 20-to-35 joining the profession during that period has fallen more than 16 percent, Stock says.

The last two proposed factors strike me as more dubious. Could it really have been a secret to women thinking of joining a top-tier financial firm that life on the Street largely consisted of eating Chinese takeout while crunching numbers till the wee hours of the night? Not judging from my conversations in recent years with the entirely clear-eyed women I know who have joined, or quit, the financial world. They tend to be just as cognizant as men of the downside of working in finance as drawn by the upside of making big bucks.

I'm also not persuaded by the idea that women are leaving financial services because of the industry's tarnished reputation. That's the explanation offered by Sylvia Ann Hewlett, who heads a New York think-tank focused on work and family issues:

More than anything else, the things that distinguished women from men in 2008 was that they hated what happened to the reputation of Wall Street. Women seemed to care a lot about the status, the integrity and the mission of their company, and when that became tarnished, that was a real dealbreaker for women. --It was pretty important for them to work with a company they could feel proud of.

Uh, "integrity?" Whatever there is to be said about the virtues of finance (which are considerable, by the way), few people of either sex are likely to mistake a life dedicated to discounted cash flow analysis and hostile takeovers for one doing cancer research or saving the whales. If anyone, female or male, joined Goldman Sachs (GS) out of some high-minded desire to improve America's economic efficiency or otherwise do "God's work," then they're kidding themselves, or perhaps just naive. On the Street, scruples are for suckers, and have been for a very long time. You don't need a "Y" chromosome to understand that.

Service Without a Smile
I'll throw out another hypothesis. Women are leaving financial services because finance is less and less about service. Goldman, just to stay with that particular apotheosis of "evil," actually conspired with certain clients in selling CDOs at the expense of other clients. This dynamic is visible not only on Wall Street, but across the financial industry, where satisfying the customer often takes a back seat to making your numbers.

But why should women in finance care any more than men about providing good service? Because that's one area where evidence suggests they may have a competitive advantage when it comes to advancing their careers.

A trio of Emory University finance professors found in a 2007 study that female equity analysts on Wall Street tend to "outperform men from their clients' perspective" -- despite being less accurate in their earnings forecasts! The lesson here is that performance for sell-side analysts, who deal with demanding institutional investors, may be less about quantifiable metrics than about more intangible qualities, like communication skills, responsiveness and ability to resolve conflict.

If those qualities are decreasingly valued in finance, then it's no wonder women are getting out.

The End of Men?
One of the enduring questions about Wall Street is whether a culture synonymous with greed and deceit will ever change. There's two centuries of history to doubt it will.

But a related, equally interesting question is what might happen if women eventually gain the upper hand in high finance, one of the last, most heavily fortifiied bastions of corporate patriarchy. Would that culture change for the better, as "old girl" networks replace old boys, or do the economic imperatives encoded in a global finance ensure that dogs, no matter their gender, will always eat dogs?

Such questions aren't in the least theoretical. As The Atlantic's Hanna Rosin provocatively suggested in her recent story declaring "The End of Men," women may well be better adapted than men to the rigors of a modern economy:

Women dominate today's colleges and professional schools -- for every two men who will receive a B.A. this year, three women will do the same. Of the 15 job categories projected to grow the most in the next decade in the U.S., all but two are occupied primarily by women. Indeed, the U.S. economy is in some ways becoming a kind of traveling sisterhood: upper-class women leave home and enter the workforce, creating domestic jobs for other women to fill.
The postindustrial economy is indifferent to men's size and strength. The attributes that are most valuable today -- social intelligence, open communication, the ability to sit still and focus -- are, at a minimum, not predominantly male. In fact, the opposite may be true.... It may be happening slowly and unevenly, but it's unmistakably happening: in the long view, the modern economy is becoming a place where women hold the cards.

If so, Wall Street's days as an economically violent testosterone ghetto may be numbered. Would women do better? They can hardly do worse.

Image from Flicker user Michael Hadassah
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Alain Sherter

Alain Sherter covers business and economic affairs for CBSNews.com.

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