Corporations often claim to be meritocracies where advancement is based strictly on performance. However, subtle barriers can block advancement for minorities in some settings. One framework of understanding proposed by academics is the “minority vulnerability thesis,” which suggests that meritocratic “ideologies” can mask workplace decisions that — intentionally or not — reinforce historical patterns of discrimination.

A 2012 study from the University of Illinois, Chicago, published in the Annals of the American Academy of Political and Social Science, “Minority Vulnerability in Privileged Occupations: Why Do African-American Financial Advisers Earn Less than Whites in a Large Financial Services Firm?” examines racially based wage disparities in a large financial service firm where salary is (in principle) tied purely to results. The data used are from “publicly available expert witness reports generated in employment discrimination litigation against a large financial services firm” in 2006 and 2007, augmented by the company’s personnel records from 2001 to 2007.

The study’s findings include:

• African-American financial advisors (FAs) at the firm earned “approximately one-third to 40 percent less than their white counterparts, with the size of the disparity depending on years of experience as a financial adviser in the industry.”
• “For any successful stockbroker, a majority of retail clients will almost certainly be from white households. The idea that there was a cost to African-American FAs in accessing social networks of wealthy individuals was a strong theme running through the testimony of company officials.”
• African-Americans were often socially isolated at the firm, in part because so few other African-Americans held similar positions: Only 2% of FAs at the company were African-American, and “more than 85% of the company’s offices had no African-American FAs.” This isolation had an impact on their ability to join brokerage teams, which are crucial for gaining access to accounts, particularly in the early years of a career. While 41.6% of non-African-American financial advisers were able to join broker teams, that was true for just 11.6% of African-American brokers.
• Early inequality tended to build on itself: Broker teams kept key accounts to themselves, further disadvantaging those not on teams. “Because inherited accounts allow financial advisers to qualify for other resources — including additional inherited accounts — this disadvantage to [financial advisers] locked out from this kind of ‘regifting’ is cumulative.”
• Although the firm appointed racial minorities to lead projects when it marketed its services to multicultural communities, “this approach led to racialized jobs and constrained opportunities for African-Americans, and the company’s policies and practices along these lines were perceived as such by African-American [financial advisers].”
• The firm implemented of number of diversity-related programs, both company-wide and within its brokerage division, but did so “in a context of ambiguous, unstable, and diffuse structures of responsibility and authority.” The resulting dynamics supported earlier scholarship that such efforts “typically have little impact on discriminatory workplace barriers and often do more harm than good.”

The researcher notes that “African-Americans who seek to work as financial advisers may in fact encounter obstacles to acquiring wealthy clients that are not faced by their white counterparts.” One suggested remedy is for financial services firms to “proactively manage the distribution of productivity-enhancing resources so as to avoid reproducing institutionalized racism from the outside and perpetuating sources of racial bias arising from the inside.”

Tags: inequality, African-American, race, employment