Gender Pay at a Tipping Point on Wall Street
On Martin Luther King Jr. Day this year, women and minorities got a raise at Citigroup, one of Wall Street’s biggest banks. And while the bank’s gesture might be surprising given its record of opposing pay equity shareholder proposals, the commitment did not come overnight. Arjuna Capital began engaging six Wall Street banks and credit card companies in 2016 and 2017, asking them to disclose and close their gender pay gaps. This year we expanded the campaign to nine.
Citigroup’s action was more than symbolic. It was a tipping point for an industry that has struggled to attract and retain female talent, where Mercer finds female executives are 20 to 30 percent more likely to leave a career in financial services than any other career. It’s clear we have a problem.
In the span of four weeks, four banks (Citigroup and then Wells Fargo, Bank of America and Bank of New York Mellon) committed to analyze, report and close their gender pay gaps. And while Citi announced a mere 1 percent gender pay gap in the U.S., U.K., and Germany, it committed to expand its equal pay efforts globally. The banks took action not only because it was the right thing to do, but because pay equity is a key component for attracting and retaining top talent.
Citi’s move in 2018 is much like that of Intel in 2016, when it became the first tech company to report gender pay equity in response to Arjuna’s engagement. After Intel, tech firm after tech firm began to disclose their pay gaps and commit to close them in response to shareholder concerns. Wall Street is now following a similar path.
But shareholder pressure, keeping up with peers and a business case for change are not the only motivators. Regulation, albeit international, has a role. By April 4th 2018, companies with U.K. operations will have to report their median gender pay gaps. Reports so far from the financial services industry are reporting gaps as wide as 24 percent, a terrible record. Of course, those gaps are not adjusted for job title or level, like those reported in the U.S. Instead, they represent a structural deficiency at these companies—the fact that men hold the highest paying jobs.
There is no question gender pay equity is a two-step process. First, women need to be paid fairly for the work they are doing now. Second, companies need to attract and retain more female talent and move women into leadership. To do so, pay is a key component. When more women are at the top, paid equally with men, we will achieve true equity.
The pay gap will not close overnight, but for companies that want to expand their talent pool and create more diverse higher performing teams, now is the time to act.
Managing Partner, Arjuna Capital