Is Wall Street Getting Less Diverse?

Recently, I wrote about the improving work/life balance and work hours on Wall Street. To recap: based on Vault's latest Banking Survey of 3,000 investment banking professionals, respondents rated their work/life balance and satisfaction with respect to work hours much better than they did last year. In fact, nearly across the board, in 19 of 20 quality of life categories in which we asked bankers to rate their own firms, scores were higher this year versus last. However, when it came to diversity, scores were down in all five of our diversity categories. And they were down significantly in a very important one: racial/ethnic minority diversity.

See the below table for the scores that bankers gave their firms in our annual Banking Survey when it came to hiring, promoting, and mentoring in various diversity categories since 2010. Note that bankers are asked to rate their firms on a scale of 1 to 10, with 10 being the highest.

What's perhaps most discouraging about the fall in scores is they follow a several-year trend of rising scores. From 2010 to 2014, female diversity scores had risen by 8.1 percent, racial/ethnic minority diversity scores had risen by 7.7 percent, and LGBT diversity scores had risen by 12.1 percent. What these numbers pointed to was this: Wall Street, long known as an industry dominated by white males, was getting more diverse and more open when it came to its thinking about whom to let into its doors. Or at least, it was enacting policies that was moving in that direction.

In recent years, it was no secret that banks were focusing on diversity, creating affinity groups and networking groups with the specific goal of attracting more diversity candidates such as women, veterans, minorities, and LGBT individuals. Also, firms were increasing their benefit offerings for working women with children, which helped retain more female bankers (perhaps not incidentally, "benefits" was the one quality of life category that saw a score decline this year). In addition, the passing of laws legalizing gay marriage brought a wider acceptance of the LGBT community, which in turn helped Wall Street open its doors to more LGBT individuals.

As for the fall in scores this year, they seem at a glance to point to either a stall in progress or a reversal. However, other than the fact that the percentage of survey respondents identifying themselves as white/Caucasian increased slightly this year (73 percent versus 71 percent; the percentage identifying as African American was 3 percent this year and last), there was nothing else concrete to point to that might be responsible for the fall in scores. That is, nothing other than the fact that diversity, especially racial diversity, has become a hotly debated topic in the past year. I'm thinking about the Black Lives Matter movement as well as the tragedies in Ferguson and Charleston and other cities. Not to mention polls that say race relations are getting worse in the U.S.

And so, perhaps it's not that Wall Street grew less diverse in the past year, but that, in light of recent current events, banking professionals have been rethinking the way they see their firms in terms of diversity. Perhaps the acts of police brutality in Ferguson, Charleston, Cleveland, Baltimore, and New York City have altered how some employees are looking at their firm's diversity efforts. And through an altered lens, they're not as pleased as they were last year with their firms' progress.

That said, even though the quantitative data in this year's survey points to a downward shift in diversity, the qualitative comments don't; they were similar to last year's. Like last year, several bankers who took our survey this year told us that racial diversity is "nearly nonexistent" at their firms, and that their firms "still have a lot of work to do with respect to female and racial diversity among the more senior professionals." But also like last year, there were just as many or more who told us that their firms are "doing a good job at promoting diversity across all levels" and even place an "incredible focus on hiring minorities."

In any case, to see which Wall Street firms rated the best in diversity this year, check back here one week from today, on September 9, when we'll be releasing our 2016 Banking Rankings. In addition to our Diversity Rankings, we'll be releasing the Vault Banking 50, the Banking Prestige Rankings, the Banking Quality of Life Rankings, and, new this year, a Best Banking Firms for Technology Professionals Ranking.

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