Can We Move Beyond Class Signals?

We’re late comers to the Wall Street world. Steve stumbled into his job after a decade in academia. He never had a business or economics class. He doesn’t have a MBA or a JD. Then we both left the insular world of grad school and met people with real jobs. Many jobs in this area center around Wall Street and finance. So, between Steve’s job and chatter with neighbors, we were thrown into a new culture.

Because we’re horrible eggheads, we like to dissect this new culture like an anthropologist in Java. Steve used to discuss his observations with his officemates, until they started calling him  “professor” and rolling their eyes. Now, he saves his observations for the dinner table. Last week, we were talking about front office Wall Street and back office Wall Street.

There are two types of workers in the finance world. There are the polished Ivy League guys (and they are mostly guys). They tend to have the big money jobs and interact directly with clients. Blond WASPs with the house in Connecticut.

The other type is the crazy smart person (more women in this group), who came from working class or immigrant backgrounds. The Italian guy from Brooklyn who, by an unholy amount of  brains and determination, got himself into Cooper Union and now creates the computer systems that run the company. The Irish dude from Staten Island. The Jamaican woman who worked too hard to ever get married. They tend to work in the back office in operations or IT or documentation. They don’t have the pedigree to interact with clients. They always hit a glass ceiling after a while.

Because Steve and I love the underdogs, we admire the crazy smart, ambitious people in the back office and refer to the others as “Third Basemen,” as in “Born on Third Base.” The backroom types aren’t perfect. Many have chips on their shoulders. A few aren’t exactly nice people. But you have to admire them for their grit. Scrappy fighters all of them.

Don Peck has an interesting article in the Atlantic about the use of data to evaluate workers, and the gradual movement away from using a fancy college degree as a signal in the labor market.

One of the tragedies of the modern economy is that because one’s college history is such a crucial signal in our labor market, perfectly able people who simply couldn’t sit still in a classroom at the age of 16, or who didn’t have their act together at 18, or who chose not to go to graduate school at 22, routinely get left behind for good. That such early factors so profoundly affect career arcs and hiring decisions made two or three decades later is, on its face, absurd.

But this relationship is likely to loosen in the coming years. I spoke with managers at a lot of companies who are using advanced analytics to reevaluate and reshape their hiring, and nearly all of them told me that their research is leading them toward pools of candidates who didn’t attend college—for tech jobs, for high-end sales positions, for some managerial roles. In some limited cases, this is because their analytics revealed no benefit whatsoever to hiring people with college degrees; in other cases, and more often, it’s because they revealed signals that function far better than college history, and that allow companies to confidently hire workers with pedigrees not typically considered impressive or even desirable. Neil Rae, an executive at Transcom, told me that in looking to fill technical-support positions, his company is shifting its focus from college graduates to “kids living in their parents’ basement”—by which he meant smart young people who, for whatever reason, didn’t finish college but nevertheless taught themselves a lot about information technology. Laszlo Bock told me that Google, too, is hiring a growing number of nongraduates. Many of the people I talked with reported that when it comes to high-paying and fast-track jobs, they’re reducing their preference for Ivy Leaguers and graduates of other highly selective schools.

This isn’t good news for the Third Basemen, but awfully good news for our Back Office friends.

45 thoughts on “Can We Move Beyond Class Signals?

  1. “isn’t good news for the 3rd basemen”… It’s also dreadful news for Princeton, Haverford, Stanford etc., which have been riding the gravy train from parents’ desperately shovelling money at them to get their kids credentials. If the kid has to actually perform, and if performing is well measured, well, why pay Stanford $200K?


  2. My spouse is “corporate guy” in a profession traditionally populated by third basemen. He’s the scrappy Jewish immigrant kid who is the son of an orphaned scrap metal dealer. Not your usual background.

    He’s at the top now having “stayed on the f**ing bus” (google “Helsinki Bus Theory”).

    We were at a dinner party last weekend and my how things have changed. The hosts were first generation South Asian and the guests were also first generation Jewish, Asian, Italian and English. All scrappy, smartypants who a generation ago would NEVER have gotten in the door, let alone up the ladder to where they are now.

    He puts on his “third basemen” persona at work as do the others. And consistently hires the backroom types.

    Diversity is good news.


      1. It would be interesting if some success relies partly on being able to use money as a simple measure of performance (i.e. how much does your fund earn?). We know, though, that results in all kind of negative consequences as a performance measure (i.e. the number of traders who have been convicted of insider trading, overly risky investments, . . . . .).

        (I’m not saying that anyone is guilty of malfeasance, merely that hope for a theoretically perfect performance measure may get rid of biases of various sorts, but replace them with perverse incentives).


      2. Of course I’m speaking from a Canadian experience – we don’t have an Ivy League up here. A few business schools (Rotman and Schulich) are up there in status but most are middle of the road.


    1. Yes, the drunken stupor made us all realise that we NEED Ivy League…

      But to bring it into the discussion, funny how class affects that as well. Three martini lunch back in the day? That’s fine if it’s a corporate-y environment. 3 beer lunch a la Rob Ford? Scandalous…


      1. I’ve seen the videos. He’s had way more than three beers even if he’s drinking those Canadian superbeers that I see at some bars (e.g. La Fin du Monde at 9% alcohol).


  3. “In my experience, the first generation South Asian and Jewish guys are the ones with the Ivy League degrees.”

    Yes, mine, too. Which adds a point about the signalling of class via the college degree — those super-smart backroom types who do break the glass ceiling? a bunch of them also have the elite college degree. We know a fair number of people who have used the meritocracy to break into the big time (concretely, say, people who have a lot more money than their parents ever dreamed of). They are all very smart, persistent people. But, they also almost all degrees, from Princeton, MIT, Stanford, . . . .

    So, 1) college is actually the way that they signal to those born on 3rd base that they are of the same “class”. 2) they learned class signals in college, even when they chose not to follow them. 3) they met people in college and 4) just maybe, they learned something in those colleges.

    I don’t think the value of the super-elite colleges is going to go away any time soon. (The mid tier, and maybe even top tier liberal arts schools, I don’t know for sure about those).


    1. I agree about the class signals – you definitely need to know them and use them when in those circles. Funnily enough, the third basemen often don’t realise that these signals exist – for them it’s just the way things are.

      When you come from any minority group, there’s the way you act when you are with the majority group and the way you act within your own group. And there are also signals to other minority group members that are subtle enough to fly over the heads of the majority group. A nod, a vague reference – a way of being seen while still “passing” for a third baseman.


  4. What MH said. There seems to be some misconception about who attends Yale and Harvard these days. More broadly, people seem to be conflating two issues. First, that our current system may overreward those who are ambitious, successful, and “well-rounded” during their high school years, as opposed to late bloomers, self-absorbed geeks, etc. That may be true. Second, that HYP are full of blond, brainless WASPs. That isn’t true.


  5. This conversation is mostly focused on the hiring process, but I look forward to the day we can use actual performance data in support of promotion and leadership decisions as well. I personally believe the glass ceiling for women would be gone tomorrow if such decisions were made on real performance.


  6. Rather than well-rounded, I’d say the current college system (and whatever that ends up signalling) rewards kids who reach high levels of achievement early, and, potentially earlier than their peers. And one of hte biggest rewards is the opportunity to reach even higher levels of achievement (i.e. getting into MIT, not just because getting in is an achievement, but because getting in gives access to labs, etc.). That reward ripples backward, with the high achieving 6th graders getting access to the higher level math classes, the great 4th grade basketball player getting access to better teams and coaches, . . . .

    So, the system undermines those who don’t take a straight and focused path towards achievement (because of their own class, or parents class, because they are late bloomers, in either ability or in focus, because they face trauma and barriers, . . . .).


  7. ” I personally believe the glass ceiling for women would be gone tomorrow if such decisions were made on real performance.”

    That’s premised on some absolute way of measuring performance that at least 1) separates performance from the performance of those around you (i.e. how do value an individuals contribution to a team effort?) 2) measures performance in terms that aren’t significantly influenced by prior biases 3) has a clear measurable outcome. 4) doesn’t result in gaming (i.e metrics that are known then become a measure of performance that separates them from their measurement value, like the SAT).

    I’ve always used the running race as a gold standard of a performance measure that might meet ideal standards, but, the use of performance enhancing drugs means that even that measure can be “gamed” (in the sense of measuring something different from what we intended).


    1. There’s the performance and there’s the intangible social part that is class specific.

      Here’s an example. A real life example. Super star performer at a high level in a firm. Has the ability to deliver services to clients. Great relationship guy. Everything you’d ever want.

      But he’s a person of colour and doesn’t drink. Prefers to spend time with his family. The dinner party scene doesn’t fit either him or his wife.

      Peers at his level in his group at the firm all socialize after hours with a lot of drinking. Dinner parties that go late into the evening.

      Result? He’s rewarded for his top notch performance but he’s shut out of a lot of decision-making.

      In my opinion things will really change when the percentage of high level staff from subordinate groups increases. Then the culture changes.


      1. …or he sucks it up and starts going to dinner parties.

        I don’t see what’s “class-based” about your story. There are smart, high performers of all backgrounds who are shut out of higher levels because they are unable or unwilling to do the social side.

        His peers are doing the job. He can identify precisely the part of the job he’s not doing. From your description, you and your husband are going to dinner parties.

        On the hiring front, note that Snowden was a community college graduate. The pool of people skilled in technology (I mean really skilled) is not nearly large enough to fill all the tech jobs. Thus, hiring managers have to look for talent in unusual places. Stanford has a great computer science department, but they only graduated 143 computers science majors in 2012.

        There aren’t that many Ivy League graduates to go around. The pool of Ivy League computer science graduates is tiny, compared to the worldwide demand for tech-savvy people.


  8. BJ, your comment implies you believe people are trying to set up biased metrics – ginning up “evidence” that they’re actually really performing well. (“He’s got a 90% rating for not getting picked off on third base!”) Has this been your experience?

    I will say that the average executive is not going to advocate for a system that would have drummed him out.


    1. Regardless of the intention of the person setting up the system, I don’t understand where these non-biased metrics are supposed to come from in most fields.

      In finance, I do see where you could get a very clear non-biased metric, but I’d be concerned that the clearest metrics would reward the kind of behavior that is most dangerous to the economy.


  9. Yes, I believe people in power will come up with biased metrics (without necessarily trying — they just value what they already are). But, I also believe there is no such thing as an unbiased metric, and that even better metrics skew behavior in ways that result in outcomes that the metric was not trying to reward.

    In MH”s example above, finance metrics that reward short term gain, that in turn, lead to behavior that damages the economy. In some cases, the behavior people come up with in order to maximize their metric performance is technically against the rules (cheating on tests, insider trading, scientific fraud). But a lot of the time, it’s just an unpredicted effect on behavior (core standards resulting in the dropping of art, music, and sometimes, science from the curriculum, time spent learning to fill in bubbles, time spent studying for the SAT, instead of reading).

    My reading about the specifics of performance metrics is on teacher evaluation (though student evaluation is a clear parallel), and many of these kinds of issues arise, even after you’ve tried to come up with a metric that tries to extract the performance from of the individual from all the other things that effect outcomes. One big issue is that when these metrics are high stakes, they become even less useful, as people modify their behavior to improve their metric, and not the outcomes. To avoid this, sometimes the metrics are very complicated, but then, those being evaluated see the metric as something of a lottery.


  10. BJ: It’s class/culture-based. It’s the old school style of socializing that has been the norm. An analogy would be the weekly golf game – works well when everyone golfs but is exclusionary once the workforce becomes more diverse.

    The dominant culture needs a shift to finding other ways to hang out and socialize that are inclusive once there is more diversity. And in much of that particular firm those changes have been made. This group is a holdout.


    1. But the overwhelming majority of people do have cocktail parties and small talk, along with golf, as their primary forms of “hanging out and socializing.” Personally, I would be happier if social life revolved around study groups, but it doesn’t, among people of any race or sex. I don’t claim that I should get paid more than the people who are willing to go to the hundreds of deathly boring client parties and golf outings, however; they are doing work that I don’t want to do.


      1. But it can change and it has changed. It’s possible. Road cycling here in Vancouver has replaced a lot of the golf. Younger staff neither have the big block of 6 hours nor want to be away from their families as much as the older generation.

        Or Friday drinks that start at 4pm so those needing to zoom off to families can get out in time and won’t feel obligated to stay late.

        Another example is combining charity work with the networking – one team worked together for an afternoon with an innercity daycare.

        Or a cultural event.

        I’m not saying that someone should get paid more for the boring dinner parties and golf (although wouldn’t that be great – “boring” pay rather than “danger” pay), but rather that a lot of subtle relationship-y interactions occur during that golf game that the non golfers miss out on.

        So to use a cliche, thinking out of the box to be more inclusive and try new things.


  11. So BJ where does that leave you? If all metrics are biased, then an argument could be made we should simply continue judging people by where they went to college?


  12. OK, I didn’t meant that to sound harsh. I genuinely want to hear what BJ thinks is a good alternative. (And I agree that the obsession with measurable metrics in education has brought significant bad side effects. I’d say the same about policing.)


  13. I think ultimately there’s no quantitative method that can replaced the qualitative methods of evaluating people (which are certainly prone to bias).

    To try to mitigate the negative effects of qualitative bias, I think we have to diversify the groups making decisions. That means, diversity of class, race, income, gender, . . . . on hiring bodies, judging panels, admissions committees. Next, I think we have to judge blindly where we can (i.e. if you’re looking at cv’s, and it’s possible to look at them without knowing gender/race/etc, try to do that, if you’re judging music, judge by sound).

    To mitigate negative effects of quantitative metrics (and I do think we should have them, and in any case, we will, since we’re not going to hide our heads in the sand about information that exists), we need to think hard about how closely the metrics are tied to outcomes, and think through how they could produce maladaptive behavior. I think the second is my bigger worry for quantitative metrics. Not so much that they won’t, when first used, help us pick people who have/will perform better, but that they will cause everyone to behave differently in ways that are detrimental to the goals we want to reach.


  14. I told the story earlier, but I’ll repeat it here, as it’s an interesting example of broader, non-pedigree based recruitment.

    This summer, totally out of the blue, my husband got an invitation to apply for a job doing some sort of tech stuff in Silicon Valley for a major cell phone/electronics company. My husband’s most relevant educational experience was back in high school in the 1980s, when he took a single electronics class and learned to do stuff like soldering. However, he is an essentially self-taught hobby programmer. During the especially hot times (like the launch of the Kindle Fire), he was making $1,000 a month from downloads of programs he’d done (he had a very highly rated app), and even right now, we’re still getting $400 in royalties just about every month with essentially no ongoing effort. He’s also given away 2 million of one of his free downloads. So, it was on the strength of that online presence that he got an invitation to apply for a Silicon Valley job. I don’t know that they knew anything about him aside from his output.

    Given our particular circumstances, it was not an inviting offer (I know exactly how much it costs to live in that part of the country), but for a single guy or an unemployed married guy, it could have been a golden ticket.


  15. Doing work on spec (photography sites, blogs in general, cooking sites, you tube videos, free apps, . . . .) are clearly becoming a big part of marketing one’s self.


  16. Google recently made some news by revising their hiring policies. They discovered that basically every tool they used (resumes, transcripts, schools, their famously hard questions, etc.) were basically useless. They had one guy who did a great job hiring, and he turned out to be one of the two or three greatest experts in his subject in the world – and his hires worked directly in his area of expertise. So I guess he could tell who really was going to fit, and who was blowing smoke. In any event, they say they are focusing on behavioral interviewing now.

    The more sophisticated the signal, the harder it is to send. I went to a good school and got good grades is fine for the signal “I’m reasonably sharp and work hard”. Even if it’s an MBA or JD or PhD in a relevant subject it turns out to be pretty weak for “I’m a great candidate for this precise job”. I’d say that especially with the JD and MBA (and maybe the PhD, I don’t know so many of those) it often just means “I really thought I wanted this kind of career, and was willing to work hard for it, before I knew what it actually entailed.”


  17. I thought that business insider article was fascinating, but was disappointed that Google doesn’t actually publish articles showing their result:

    “”How much should you charge to wash all the windows in Seattle?” and “Why are manholes round?” It now admits that those questions were useless.”

    But, I guess they’re in the business of search and not of research, ultimately and that they want to hold their information and results close.

    I think one reason the brain teasers fail is that they might work, to some extent, for some job. If the brain teaser reflected the fact that the individual was someone who does those brain teasers innately and without practice, they might reflect a certain kind of person. But once there are books and the teasers are known to be used for evaluation the connection between the “test” and the ability is broken, because everyone learns how to do the teaser (especially when it’s the same teaser)).


  18. I never thought much of Palin’s degree, which seemed like the classic example of getting a degree for the sake of a degree. Walker’s explanation, that he went to college to get a job and not to get an education seems reflective of a certain philosophy which is not mine. So, it means that he’s not my kind of people. But the fact that he didn’t finish so that he could work doesn’t bother me at all.

    The saddest stories about unfinished college degrees are the ones where people lied because they had to deal with the class signalling — the MIT admissions director, who seemed like a good worker, is a good example.


  19. BTW, it’s also a big mistake to assume that you know, among your casual business acquaintances, who was born on third base and who was not. My father was the son of a policeman and went to Yale on a scholarship, but he always acted as if he were to the manor born, and most of his acquaintances have always taken him at face value. Some people have nostalgie de la boue, and some have the reverse.

    Correlatively, I have a friend who is a West Indian immigrant, but his grandfather was the Lord Chief Justice of Trinidad. What base was he born on?


    1. “BTW, it’s also a big mistake to assume that you know, among your casual business acquaintances, who was born on third base and who was not.”

      Yes. I just learned that one of my husband’s colleagues (who is a very earnest, humble, eager-to-help) person is from a very wealthy family.

      Conversely, if you’re from a REALLY rough background, you tend to keep your mouth shut about it unless among intimates.


  20. Y81 – Affirmative action was put into place at a time when “negro” was a plausible proxy for “disadvantaged”. It survives in part because of a general presumption that this remains true. When I was a TA at Harvard, I got some sense for the class background of the African-American kids in my section, and they were third base people pretty much uniformly.


  21. BTW, it’s also a big mistake to assume that you know, among your casual business acquaintances, who was born on third base and who was not.

    Hmmm….yes and no. Sometimes, you’ll meet people who can successfully create a different class image, but in all likelihood those people will be men. There is such a wide and deep chasm of class signals for women, that women are almost never able to pull this off (especially taking into account the trajectory of alternative paths for working-class women and what motivates working-class women to follow those alternative paths).


    1. “There is such a wide and deep chasm of class signals for women, that women are almost never able to pull this off (especially taking into account the trajectory of alternative paths for working-class women and what motivates working-class women to follow those alternative paths).”

      I’d argue that women put more effort into social camouflage, are better at it, and need to be. (See the discussion in the other thread about female culture and conformity.)

      I have a female relative roughly my age who moves back and forth between two very different worlds every week. One world is our blue collar hometown (which my old high school English teacher said is the only place she’s ever seen anybody get thrown through a plate glass window) where my relative runs several businesses. The other world is the suburb full of tech families where her son goes to school. I’m pretty sure my relative keeps her lips zipped about the more colorful chapters of our mutual history when she’s in the suburb. And you really have to. There was a weird episode a while back where their family had to spend a night in a motel as part of a complicated move. Anyway, that information (“motel!”) ran through the suburban middle school like wildfire and my relative’s son was teased and generally put through the social wringer for having stayed in a motel and having been (as the middle school gossips thought) practically homeless. (Geeze–I guess somebody needs to watch more afterschool specials. I’m sure it was a really psychedelic experience to go through that in an uber-liberal suburb where everybody pays lip service to really, really caring about poor people.) My relative and I shook our heads at that–when we were kids, staying in a motel was a big deal (in a positive way). Who wouldn’t want to spend a night at a motel?

      I think regional culture enters into this, also. Once you leave your own region, the nuances are suddenly lost. It’s no longer possible for casual acquaintances to pigeonhole you when they don’t have the necessary background information.


  22. Yes, the name of a college is a lousy indicator of a person’s character, intelligence, background, potential for hardwork, and all that. And that’s the point of this blog post and the Atlantic article. The only thing that an Ivy League degree tells you is that the graduate likely came from a wealthy family. (Of course, someone is going say that I know so and so and his mom sold fish at the supermarket and HE went to Harvard. Listen, it’s just a matter of statistics. Most of the graduates from Ivy League colleges come from wealthy families.) Wealth is a fair, if not a 100% accurate, assumption about a person with an Ivy League degree.

    Frankly, I don’t care much more about how this system will affect Ivy League degrees. I want to even the playing field. I want the Brooklyn guy to have an equal shot at the front office jobs.


    1. And one of the ways to do that is to question what the dominant culture believes to be “normal” or “standard” in how things are done. Many of those ways of acting are in fact barriers to entry to those from subordinate cultures.


  23. I’m pretty skeptical of the claim that women can’t (a) move up the class structure or (b) if they wish, conceal their origins. There were plenty of female scholarship students at Yale. If anything, one would expect that those who are more attuned to relationships and social context would be more likely to “fit in” with their new surroundings. A brilliant trader can get away with saying “dese” and “dose,” but a Westport matron cannot.

    Just to be clear, I’m not saying that class mobility is high in America, only that you can’t detect it among people you don’t know very well.


    1. Right.

      As we saw in a previous thread, men can be fairly obtuse about the social undercurrents and nuances within female society, so white collar men are not going to be that good at sniffing out a female arriviste of blue collar origin. (That obtuseness is not a moral or intellectual failing–it is a different culture, and requires study to master or even to get by in. I expect that the only reason Y81 gets as much of it as he does is that he’s 1) been married to one woman for a million years and 2) has one and only one daughter.)

      I’ve read a fair bit on autism and girls, and the consensus is that high-functioning autistic girls are often very good at social camouflage and often carefully study how to fit in in their particular social environments, a reaction which is much less common among high-functioning autistic boys.

      From Tony Attwood:

      “Girls who have Asperger’s Syndrome (AS) are primarily different—not regarding the core characteristics of autism spectrum disorder (ASD) but rather in their reaction to being different. Girls often use constructive coping and adjustment strategies to effectively camouflage their confusion in social situations and may achieve superficial social success by imitating others or avoiding engagement in interpersonal situations. A girl with AS can become an avid observer of other children and intellectually determine what to do in social situations: learning to imitate other girls, adopting an alternative persona, and acting as someone who can succeed in social situations (in effect becoming a social chameleon).”


  24. One of the routes to the front office for the Brooklyn guy (or the Hispanic girl from the Bronx, raised in the housing projects by a widowed mother) is through the Ivy League. It’s not an opportunity available to many, but it is a route for some.

    What are other methods of providing access to the front office for the guy from Brooklyn?


  25. The “front office access” in the financial world explains youth sports leagues.

    I don’t see it as a “dominant” vs. “minority” culture issue. I mean, golf? Nah. The financial world seems to love sporty types–mountain biking, running, extreme marathoning, all seem to be well represented. A quick online search showed that bicycles are more expensive than golf clubs. I predict that the “customer men” of all genders will continue to present an affluent body type, best associated with lots of leisure time.'s+man

    The guy from Brooklyn could start his own shop. Aren’t a lot of hedge funds founded by smart guys?


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