*ORIGINALLY PUBLISHED IN THE MIDDLEBURY CAMPUS, CENTERFOLD IN FALL 2016*
“Education then, beyond all other devices of human origin, is a great equalizer of the conditions of men – the balance wheel of the social machinery.” -Horace Mann, 1848.
Nearly two centuries later, this quote from an early pioneer in U.S. education still rings true – especially among Middlebury graduates. The gender-pay gap among alumni is shocking: female graduates employed full-time are paid half as much as their male peers ten years after enrolling, according to a 2016 report by the Center for American Progress. Compared to other elite liberal arts schools like Bowdoin, Williams and Amherst, our “College on the Hill” ranks worst.
Because the report’s sample size is limited, it’s hard to pinpoint why Middlebury women make so much less than men or even whether the disparity is as large as the numbers suggest. However, national research on the earnings of college graduates confirm that a gender-wage gap is widespread, and persists. Most studies blame this divide on men being more likely to major in fields related to high-paying science, technology, engineering and math (STEM) careers.
But at a liberal arts college, nearly 80 percent of Middlebury students don’t major in STEM, according to a 2015 Student Profile report. The College also doesn’t offer pre-professional degrees like engineering.
Statistics from the College’s Center for Career and Innovation (CCI) suggest it is finance — male students are more likely to pursue and stick with lucrative banking jobs — that explains why this gender-wage gap exists. So as an established hiring pipeline for many Wall Street firms, should the College try to balance the gender gap in finance? It’s complicated.
Report’s Nuts and Bolts Show Some Rust
The Center for American Progress tracked student earnings by matching tax records with federal financial aid forms. The data comes from a single cohort, students that enrolled in college during the 2000-2001 academic year who received federal aid.
According to the report, Middlebury’s gender-wage gap ranked first among NESCAC schools at $51,373. The median difference was $22,964. Williams had a 10-year earnings difference of $25,835; Bowdoin’s was $19,698. The school that came closest to Middlebury was Amherst with a wage difference of $49,393.
But economics professor Caitlin Myers, who studies how economic policies affect women, warned against jumping to conclusions about Middlebury’s performance compared to other NESCACs.
“That [gender-wage] gap is for people who attended Middlebury 15 years ago. It’s not necessarily the case that it’s the experience current Middlebury students will have,” she said. She also noted that the report only included the earnings of students who received federal aid so the data might not reflect the gender-wage gap among the entire graduating class.
Another caveat, the sample sizes were likely very small. Only 24 percent of the College’s students received federal aid according to the FAFSA website. If the average entering class is 650 students, the numbers from the report were calculated using just 155 students.
“It’s about statistical significance,” Myers said.
Professor Peter Matthews, head of the economics department, raised concerns about the sample size as well.
“The sample is small enough that one or two well-paid ‘outliers’ might explain the 2011 outcome,” he said. “It might have been more useful to know, for example, how median compensation for men and women from the NESCAC evolved over this period.”
The Center for American Progress only reported the mean earnings of graduates in its 2016 report. Without the medians, it’s impossible to know whether a handful of salaries skewed the results.
The researchers of this report said they were unable to explain what was causing the national wage gap between men and women because the available data was not broken down by major or career path.
Both professors insist that Middlebury’s gender-wage gap doesn’t stem from discrimination in the classroom. The economics department has actively tried to recruit and retain its female economics majors by hiring more female professors. The current economics faculty is about 50% female.
“The proportion of female majors has never been higher, and we expect that it will continue to grow,” Professor Matthews said.
In 1999, only 17 percent of economics majors were women, according to Professor Matthews. In 2016, it has nearly doubled to 35 percent.
“This said, there are still more men than women in economics, and the economics major here is larger than at most, if not all, NESCAC schools,” Matthews said. He also noted that the College, as opposed to the economics department, is well-connected to Wall Street and that many male graduates across different majors end up in finance.
If Not a Pipeline Problem, Then What?
Most big firms recruit a junior analyst class that is roughly 50/50 men and women according to CCI director Peggy Burns.
“We have recruiters in finance and consulting industries that are really very committed to recruiting women and under-represented groups,” Burns said.
A 2016 international report by World Economic Forum found the percentage of women in junior roles within finance was 43 percent, higher than the average across all industries. In mid-level positions, the proportion of women declined to 33 percent. Among senior analysts, it dropped to 20 percent. At the CEO-level, women held just nine percent of all positions.
Economics major Erin Giles ‘17 worked at a small investment bank in Boston last summer.
“I felt like I had an advantage in getting hired because I’m a woman. But I was at an immediate disadvantage once I stepped into the office. It was a very ‘bro’ culture,” she said. “I had to go outside to use the women’s bathroom because there wasn’t one in the building. There just weren’t that many women in the office.”
The Campus reported last spring that Middlebury men were slightly more likely to major in fields linked to high salary jobs, like computer science and economics, than women. But a survey of the class of 2015 graduates revealed the finance was the only sector to remain stubbornly male-dominated six months after graduation. Of the 435 respondents, almost a quarter worked in finance: 29 women and 66 men. A survey of these graduates reported a median salary greater than $70,000, much higher than the $48,821 average salary of all respondents.
“When I look at what our women and men [Middlebury alumni] are being offered, I can tell you there is no difference between men and women in that field. If you’re a man offered a finance analyst job and your starting salary is for $80,000, it’ll be the same if you’re a woman,” Burns said.
Difficult Working Conditions for Women in Finance
The wage disparity appears to stem from the unique challenges women must endure to succeed in a competitive work environment that is dominated by this “bro” culture. A recent New York Times op-ed paints a grim picture of Wall Street’s misogynist culture that “go far beyond exclusion from meetings and golf outings,” i.e. public groping to settle a bet.
“Wall Street is a specific culture. It is a specific culture of men,” said business psychologist Sharon Horowitz who consults Wall Street firms, in an interview with the Huffington Post.
Professor Myers said work interruptions for having a family could also explain the gender-wage gap in general, not just among Middlebury alumni.
“That gender-wage gap widening has been observed in the country. I don’t know if there’s anything unique to Middlebury. Career interruptions for family are disproportionately born by women,” Myers said.
“They’re set back by that. [Taking time off] is something they continue to pay for throughout their working lives. Once you step down a few rungs, there are other people passing you by,” Burns said.
The U.S. is the only country that doesn’t require companies to offer maternity leave. But companies who have experimented with generous family-friendly policies have produced staggering results. Patagonia’s child care program has a 100 percent retention rate for moms returning to workforce in the past five years; the national average is 79 percent. In addition, 50 percent of Patagonia’s managers and senior leaders are women. If the wage gap is perpetuated by the lack of women in higher paying positions on the corporate ladder due to taking time off for family responsibilities, one solution might be to mandate generous child-care and maternity leave policies.
The College’s Role in Changing Wall Street Culture?
Higher education has no legal power to change national labor policies. But could elite private schools like Middlebury, as established pipelines to finance careers, reform Wall Street culture to be more women-friendly?
If students are made more aware of the work-life balance challenges specific to women, this future generation of Wall Street bankers could be more willing to create generous parental leave policies or actively change the hyper-masculine office culture.
Fortune Magazine published an article last year citing multiple studies showing that firms could benefit from hiring and retaining more female investors: women are less stubborn, less impulsive and better at evaluating risk.
One possible idea that the College could implement is requiring a “professional ethics” class that includes a gender studies component for all economics majors. But as the College’s most popular major, that could mean hiring new faculty when the endowment has taken a hit.
Tyler Belmont ‘17, an International Politics and Economics major, thought a mandatory class on gender studies or banking ethics would do little to change Wall Street culture.
“I think the learning that needs to take place is outside the classroom,” he said, “For example, stimulating social discussion by inviting outside faculty and making it mandatory for certain majors or classes. A lot of these conversations take place within a social vacuum and never bleeds out to the people who need to participate.”
This gender disparity is also not limited to jobs in finance. It exists in other sectors like computer science (male-dominated) and education (female-dominated). Some students thought it should be required, or at least offered, to all Middlebury students.
“I think it should be interdisciplinary because you benefit from getting insights from people who are outside your major. You can get different perspectives,” said political science major Nicole Caci ‘17.
While no course on professional ethics currently exists, the closest offering is Economics and Gender taught by professor Tanya Byker.
Salary as a Measure of Professional Success
A mandatory class like this would work to address the wage gap by creating a better environment for women on Wall Street. But should the College be encouraging more women to work in finance at all?
The Center for American Progress’ 2016 report makes a tricky assumption: the success of female graduates can be measured by whether their income matches male peers.
“It’s not a stereotype but it’s certainly a generalization that women tend to go into fields that are lower paid — like education, like nonprofit,” Burns said. “If women are making a choice about pursuing a career path that is about social justice, social impact, affecting change in the world and it pays less, then god bless them for doing that.”
Moreover, getting women to pursue male-dominated careers might not translate to higher wages in the long run, according to gender studies professor Laurie Essig.
“Whether something is more paid or prestigious is who’s working in that field, not about that field in itself,” said Essig. “The more likely the job is likely to be women dominated, the less we pay. ” She cited computer science, bank-telling and gynecology as jobs varying in pay and prestige within the last fifty years.
“At least historically, there’s nothing innate about certain fields that make them higher compensated or worthwhile. We make a social decision. Wall Street is valuable. Teaching 4th grade is not,” Essig said.