PHILADELPHIA – The excesses of Wall Street may be big news, but behind the headlines is another major story. When it comes to men and women stockbrokers, men take home bigger paychecks.

New published research by Janice Madden, professor of regional science, sociology and real estate at the University of Pennsylvania, shows that female stockbrokers can earn as much as 20 percent less than their male counterparts.

“Stockbrokers are among the highest paid workers, yet they have the greatest gender inequality among all sales worker jobs,” Madden said.

Her paper “Performance-Support Bias and the Gender Pay Gap Among Stockbrokers” will appear in the June issue of Gender & Society. The study is the first to show that bias can affect performance-based pay.

Madden reviewed data collected from two of the largest commercial brokerage houses in the U.S. after women at both firms sued over wage disparity, claiming sexual discrimination. Madden is the first researcher to gain access to this type of in-depth brokerage data. She analyzed the data after being retained as an expert witness for the plaintiffs in their class-action lawsuits.

The firms provided Madden records on more than a billion individual customer account transactions that occurred from 1994 to 1996 as well as employment histories of brokers from each company. Nearly 90 percent of the employees were men.

At both firms, men and women were paid entirely by commission, using an algorithm that was the same for everyone and could not be changed by managers. Madden found that the women stockbrokers were not paid – or given raises -- based on subjective performance reviews by their managers.

The women brokers claimed the differences in their earnings stemmed from unequal treatment, stating that they were given less support than men and assigned inferior accounts. The brokerage houses blamed “sales capacities” for the disparity in pay.  Madden, however, found there was no difference in the ability of women to make sales compared with their male colleagues.  Both lawsuits were eventually settled – before trial -- on terms that the media regarded as “favorable to the plaintiffs.” As part of the settlement, both firms revised their procedures for distributing accounts to brokers, allowing for less management discretion. They also put more standardized criteria in place.

“Stock brokerages are less hierarchical than most organizations in that they have a relatively small number of job levels,” Madden said. “Stockbrokers, in particular, are all in the same job — there’s no hierarchy — and their pay is based entirely on commissions generated from their sales of securities, not on supervisors’ more subjective evaluations of their performance.”

Is it possible that some customers discriminated against female stockbrokers? Madden said yes, but overall the evidence points to the fact that the firms assigned women “inferior sales opportunities” in the first place.