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F o r Release o n D e l i v e r y W e d n e s d a y , M a y 2 2 , 1968 9:30 a . m . , E . D . T . E M P L O Y M E N T P A T T E R N S A N D THE Q U E S T F O R E Q U A L O P P O R T U N I T Y IN BANKING A Paper Presented By A n d r e w F . Brimmer Member Board of G o v e r n o r s of the Federal Reserve System Before a C o n f e r e n c e o n Bank E m p l o y m e n t P r a c t i c e s Sponsored by U. S. Treasury Department and the Michigan Human Relations Commission Civic Center Lansing, Michigan M a y 2 2 , 1968 E M P L O Y M E N T P A T T E R N S A N D THE Q U E S T F O R E Q U A L O P P O R T U N I T Y IN BANKING by Andrew F . Brimmer* In the m o v e m e n t to expand e m p l o y m e n t o p p o r t u n i t i e s for m e m b e r s of m i n o r i t y g r o u p s , the record of the n a t i o n ' s b a n k s is fair-to-middling. W h i l e a n u m b e r of banks (particularly the largest b a n k s in our leading u r b a n areas) h a v e b e e n among the p a c e - s e t t e r s in the e f f o r t , the p e r f o r m a n c e of b a n k s as a group h a s fallen c o n s i d e r a b l y short of that for A m e r i c a n industry g e n e r a l l y . More- o v e r , although striking gains h a v e b e e n achieved in r e c e n t years (again e s p e c i a l l y among large b a n k s ) , the p a r t i c i p a t i o n of N e g r o e s and o t h e r m i n o r i t y groups in b a n k i n g h i s t o r i c a l l y h a s b e e n so low that the total p i c t u r e has not changed appreciably. F o r t u n a t e l y , h o w e v e r , since the v a s t m a j o r i t y o f the jobs in banks falls in m i d d l e - g r a d e , clerical categories -- and given the favorable o u t l o o k for b a n k e m p l o y m e n t g e n e r a l l y -- a significant e x p a n s i o n in the e m p l o y m e n t of m i n o r i t y group m e m b e r s could b e achieved r a t h e r rapidly -- if a b r o a d - s c a l e , systematic and informed c a m p a i g n w e r e launched and p u r s u e d w i t h v i g o r . I am aware of the fact that several groups in the industry are a t t e m p t i n g to do just this (including the A m e r i c a n Bankers A s s o c i a t i o n and a special section ^ M e m b e r , Board of G o v e r n o r s of the F e d e r a l R e s e r v e S y s t e m . I am indebted to several persons for assistance in the p r e p a r a t i o n of this p a p e r , I p a r t i c u l a r l y w a n t to thank M i s s M a r y A n n G r a v e s , m y A s s i s t a n t at the Board and D r . Phyllis W a l l a c e , D i r e c t o r of E c o n o m i c R e s e a r c h at the E q u a l E m p l o y m e n t O p p o r t u n i t y C o m m i s s i o n . -2of P l a n s for P r o g r e s s ) , and a n u m b e r of n o t e w o r t h y have been reported. accomplishments N u m e r o u s individual b a n k s -- w o r k i n g alone in some cases -- h a v e gone a long w a y in o p e n i n g e m p l o y m e n t roles to m i n o r i t y groups on the b a s i s of e q u a l i t y . Nevertheless, very few of the 13,000-odd commercial banks in this country h a v e d e v e l o p e d p o s i t i v e programs to a t t r a c t , train and u p g r a d e such e m p l o y e e s in s i g n i f i c a n t n u m b e r s . In f a c t , it appears that m a n y b a n k s (along w i t h m a n y firms in other industries) simply do not k n o w h o w to fashion r e c r u i t i n g techniques w h i c h w o u l d enable them to tap the reservoir of talent (some of it already fashioned into skills) that can be found among N e g r o e s and other m i n o r i t y groups r e s i d i n g n o t only in g h e t t o sections of large m e t r o p o l i t a n areas but also in smaller cities and towns in m o s t regions of the c o u n t r y . C o n s e q u e n t l y , an e x c h a n g e of v i e w s and e x p e r i e n c e among b a n k e r s , g o v e r n m e n t officials and e x p e r t s in h u m a n r e l a t i o n s appears to be a p r o m i s i n g v e h i c l e for the d e v e l o p m e n t of p o s i t i v e programs to achieve this g o a l . But let m e h a s t e n to say that I , p e r s o n a l l y , h a v e no illusions about the d i f f i c u l t i e s involved in a t t e m p t i n g to enhance job o p p o r t u n i t i e s in b a n k s for m i n o r i t y groups: the experience in F e d e r a l R e s e r v e Banks illustrates amply just h o w h a r d is the task e v e n w h e n m a n a g e m e n t p o l i c i e s are p o s i t i v e and clearly annunciated and w h e n the g e n e r a l e n v i r o n m e n t is h o s p i t a b l e . W h i l e the F e d e r a l R e s e r v e Banks as a g r o u p h a v e m o r e than twice the p r o p o r t i o n of m i n o r i t y g r o u p m e m b e r s among their employees as do all firms in — -3the b a n k i n g i n d u s t r y , some Reserve Bank B r a n c h e s fall short of the ratios found in the p u r e l y private sector. This is true although in m o s t cases R e s e r v e Bank offices are located in cities w h e r e m i n o r i t y groups (especially Negroes) constitute a substantial p r o p o r t i o n of the total p o p u l a t i o n . It seems quite evident that the e x t e n t to w h i c h e n e r g y and imagination are devoted to the e x p a n s i o n of equal e m p l o y m e n t varies greatly among Federal R e s e r v e Banks -- despite the clarity of the policies adopted by the Federal R e s e r v e Board and the Boards of Directors of the d i f f e r e n t B a n k s . B u t , in a d d i t i o n to having to overcome problems of developing and implementing p o l i c i e s to identify and a t t r a c t m i n o r i t y group e m p l o y e e s , m a n y commercial banks seem to be encountering a particu l a r l y d i f f i c u l t obstacle: a Federal statute aimed at p r e v e n t i n g the e m p l o y m e n t b y insured b a n k s of persons w i t h criminal records m a y b e interferring -- in an unintended m a n n e r -- w i t h the efforts of b a n k s to recruit among ghetto residents. A recent interpretation o f this statute by the F e d e r a l Deposit Insurance C o r p o r a t i o n shows clearly that the p r o h i b i t i o n applies only to p e r s o n s who have b e e n convicted of a criminal o f f e n s e involving dishonesty or a b r e a c h of t r u s t . It does n o t apply to many misdemeanors and m i n o r offenses -- such as offenses u n d e r the various Youth Offender A c t s or juvenile deliquency laws. Since a g r e a t many of the arrest records encountered b y b a n k s trying to r e c r u i t in ghettos fall into these latter c a t e g o r i e s , such records do not pose a legal obstacle to the e m p l o y m e n t of persons w h o h a v e h a d m i n o r e n c o u n t e r s w i t h law enforcement institutions. I w i l l comment on each of these m a i n points m o r e fully in the rest of this paper. Patterns of Minority Group Employment in American Industry In speaking of equal opportunity for m i n o r i t y groups in b a n k i n g , for practical purposes w e are really talking about widening job horizons for N e g r o e s . Except for a few regional concentrations of other groups (Puerto Ricans in N e w Y o r k , Mexican-Americans in the Southwest and in California and Orientals in Hawaii and on the W e s t C o a s t ) , Negroes constitute over 90 per cent of all m i n o r i t y groups in the population. T h u s , the analysis which follows is focused primarily on employment patterns of Negroes in the banking industry. Other than the last decennial census (which is n o w almost a decade o l d ) , little information is readily available on the basis of which one can appraise the racial patterns of employment in banking. To overcome this handicap, I requested the Equal Employ- m e n t Opportunity Commission (EEOC) to prepare several special tabulations using the data reported to the Commission under Title V I I of the Civil Rights A c t of 1964 or under Executive Order 11246.^ M o s t of the tabulations relate to employment during the first quarter of 1966; at that time, firms (including banks) with fewer 1 7 T y p i c a l l y , reports are required from employers subject to the A c t w i t h 100 or more employees and from holders of Federal Government contracts and depositaries of Federal funds subject to the Executive Order with 50 or m o r e employees. -5than 100 e m p l o y e e s o r d i n a r i l y were not required to r e p o r t . Conse- q u e n t l y , s t a t i s t i c a l coverage in terms of number of firms w a s rather n a r r o w in m a n y industries (including b a n k i n g ) . H o w e v e r , in terms of the n u m b e r of e m p l o y e e s , the coverage of the reports was quite adequate. T h i s is e s p e c i a l l y true for banking w h e r e e m p l o y m e n t is h e a v i l y c o n c e n t r a t e d in large establishments.Statistical d a t a o b t a i n e d from the special EEOC tabulations are summarized in the tables attached to this p a p e r . In e a r l y 1 9 6 6 , N e g r o e s constituted 4.4 per cent of the total e m p l o y m e n t in b a n k i n g . (Table 1.) This p r o p o r t i o n w a s slightly m o r e than o n e - h a l f the 8.2 per cent found in A m e r i c a n industry as a w h o l e . O n the other h a n d , the ratio in b a n k i n g w a s somewhat h i g h e r than in other major financial s e c t o r s . For e x a m p l e , N e g r o e s r e p r e s e n t e d 2.4 per cent of the total e m p l o y m e n t in credit agencies and in stock exchanges and securities f i r m s . The ratio w a s 3.3 per cent in i n s u r a n c e . 1/ For the b a n k i n g i n d u s t r y , this can be seen by comparing the E E O C d a t a w i t h a l l - i n d u s t r y statistics compiled by the Bureau of C e n s u s , U . S . D e p a r t m e n t of C o m m e r c e , for 1966: Source: Total Employment Under 100 Employees Size of F i r m 100 to 250 to 250 E m p . 500 E m p . Over 500 Emp. Census 799,521 287,823 110,796 81,482 319,420 EEOC 509,214 22,503 103,191 71,824 311,696 64 8 93 88 Per cent of Census 98 -6The overall pattern of e m p l o y m e n t of N e g r o e s in b a n k i n g is n o t a p p r e c i a b l y different from that o b s e r v a b l e in a n u m b e r of other industries in w h i c h white collar o c c u p a t i o n s are d o m i n a n t . T h u s , in a d v e r t i s i n g , Negroes h e l d 3.7 per cent of the jobs in 1 9 6 6 , w h i l e in communications they held 4.3 per c e n t . In c o n t r a s t , N e g r o e s r e p r e s e n t m u c h higher p r o p o r t i o n s of total e m p l o y e e s in those industries w h e r e jobs are typically b l u e collar or service t a s k s , performed in factory or w o r k s h o p settings rather than inside offices. In manufacturing i n d u s t r i e s , N e g r o e s m a d e u p from 4 to 20 per cent of total employment, w i t h a h e a v y c o n c e n t r a t i o n in the n e i g h b o r h o o d of 10 per cent. Their share of the total jobs tended to be e v e n h i g h e r in service o c c u p a t i o n s -- in some cases m o r e than five times the proportion found in b a n k i n g . A l t h o u g h it m a y come as a surprise to m a n y , a substantial n u m b e r of firms (including some of substantial size) e m p l o y no N e g r o e s at a l l . On the basis of the E E O C d a t a covering about 117,600 e s t a b l i s h m e n t s , about 55,400, or 47 per c e n t , employed no N e g r o e s in 1 9 6 6 . The proportion w a s greater for the smaller f i r m s , b u t even among those with 500 or m o r e e m p l o y e e s , 7 per cent had no N e g r o e s on their p a y r o l l s . A m o n g the 1,700 banks w h o s e reports w e r e included in the EEOC tabulations, 32 per cent had no Negro employees. Since the v a s t m a j o r i t y of the 13,000-odd banks w e r e n o t included in the EEOC reports (because the total n u m b e r of their employees fell below the m i n i m u m cut-off l e v e l ) , it is n o t p o s s i b l e to p r e s e n t a full picture for the b a n k i n g industry in this r e g a r d . -7H o w e v e r , if the smaller banks w e r e included they p r o b a b l y w o u l d show a m u c h h i g h e r p r o p o r t i o n w i t h no Negro employees -- thus raising the ratio for the industry as a w h o l e . In m a n y instances, banks m a y not h a v e employed Negroes because they are located in sections of the country w h e r e few N e g r o e s l i v e . B u t , in v i e w of the fact that N e g r o e s are scattered so w i d e l y in the United States (despite their h e a v y concentration in the South and in large n o r t h e r n c i t i e s ) , the failure of m a n y banks and other types of b u s i n e s s e s to h i r e them probably can be traced m o r e d i r e c t l y to m a n a g e m e n t policies than to the absence of N e g r o e s in the particular area. E m p l o y m e n t P a t t e r n s in the Principal Sectors of the Banking Industry C o m m e r c i a l b a n k s , which provide the great b u l k of the jobs in the b a n k i n g f i e l d , offer p r o p o r t i o n a t e l y fewer jobs to Negroes than does any one of the smaller sectors of the i n d u s t r y . (Table 2.) In the commercial b a n k i n g sector, N e g r o e s constitute 4.1 per cent of total e m p l o y m e n t . The h i g h e s t ratio of N e g r o - h e l d to total jobs (9.0 per cent) w a s found among F e d e r a l Reserve B a n k s . Negroes represented 5.9 per cent of total e m p l o y m e n t in trust companies and 5.4 per cent in m u t u a l savings b a n k s . The same p a t t e r n is o b s e r v a b l e w i t h r e s p e c t to white collar e m p l o y m e n t , the d o m i n a n t type of jobs found in b a n k i n g institutions. In every sector of the i n d u s t r y , N e g r o e s tend to lag b e h i n d in white collar o c c u p a t i o n s . W h e r e a s w h i t e collar jobs (clerical w o r k e r s , -8t e l l e r s , etc.) accounted for 94 per cent of total employment in the b a n k i n g industry in 1966, only 66 per cent of the jobs held by N e g r o e s w e r e in this c a t e g o r y . The lowest ratio of N e g r o - h e l d w h i t e collar to total Negro-held jobs (52 per cent) w a s found in the F e d e r a l R e s e r v e B a n k s . W h i l e R e s e r v e Banks generally seem to h a v e a somewhat larger proportion of their total employment in b l u e collar and service activities than do other segments of the b a n k i n g i n d u s t r y , N e g r o e s in these Banks tend to be found even m o r e frequently o u t s i d e the w h i t e collar a r e a . N e g r o e s , far m o r e than bank employees g e n e r a l l y , are likely to find job o p p o r t u n i t i e s in large institutions (Tables 3 and 4)- In early 1 9 6 6 , there were about 390 commercial banks w i t h total deposits e x c e e d i n g $100 million; these banks accounted for m o r e than half of the 737,200 jobs in commercial banks in that y e a r . In c o n t r a s t , the 9,700-odd banks w i t h deposits u n d e r $10 m i l l i o n accounted for o n l y o n e - s e v e n t h of the total e m p l o y m e n t . W h e n the size of the b a n k s is m e a s u r e d by number of total e m p l o y e e s , the same p a t t e r n e m e r g e s . In the first quarter of 1 9 6 6 , there w e r e 216 b a n k s w i t h 500 or m o r e employees; in these institutions w e r e found 62 per cent of the total b a n k e m p l o y m e n t reported in the EEOC tabulations. T h e s e same banks accounted for an even larger p r o p o r t i o n (69 per c e n t ) of the total number of N e g r o e s e m p l o y e d . Only 5 of these b a n k s (2.3 per cent) had no N e g r o e s on their payroll. In the r e s t of the size s c a l e , the p r o p o r t i o n s of banks w i t h no Negro e m p l o y e e s w e r e : under 100 e m p l o y e e s , 61 per cent; 100-250 e m p l o y e e s , 21 per c e n t , and 251-500 e m p l o y e e s , 10 per c e n t . -9The same situation can be described positively as w e l l . It w i l l be recalled that Negroes in 1966 accounted for 8.2 per cent of total employment in all industries. the size of firm increases. This ratio varies little as In the smallest u n i t s , Negroes make up 7.0 per cent of total employment in industry generally, and the largest firms show 8.1 per cent. In b a n k i n g , however, the pattern appears to be strongly influenced by the size of the institution. A s the size of the bank increases, Negroes tend to be hired in greater numbers relative to total employment. A g a i n , it will be recalled that Negroes accounted for 4.4 per cent of the total employment in the banking industry in 1966. The smallest banks shown in the EEOC data (those with fewer than 100 employees) reported only 3.0 per cent of their workers as N e g r o e s . The proportion climbed to about 3.7 per cent in the next two size categories, and rose further to 5.0 per cent in banks w i t h 500 or more employees. Employment Patterns in Banking by Major Occupations Until n o w , w e have been looking at overall figures for total and white collar employment in the banking industry. A closer look at the principal occupations in w h i c h Negroes are employed is also p o s s i b l e . A s I mentioned several times above, white collar jobs account for 94 per cent of all banking jobs. As shown in Table 5 , of the r e m a i n d e r , 1 per cent are blue collar w o r k e r s , and 5 per cent are service w o r k e r s . Blue collar workers include craftsmen (typesetters, electricians, r e p a i r m e n , engravers, -10e t c . ) , o p e r a t i v e s (chauffeurs, c a r p e n t e r s , some e l e c t r i c i a n s , m a c h i n i s t s , e t c . ) , and laborers (garage l a b o r e r s , g r o u n d s k e e p e r s , car w a s h e r s and g r e a s e r s , etc.)- Service w o r k e r s include charwomen and c l e a n e r s , c o o k s , g u a r d s , janitors and the l i k e . The p i c t u r e is strikingly d i f f e r e n t w h e n N e g r o e m p l o y m e n t p a t t e r n s are e x a m i n e d . Of Negro b a n k i n g e m p l o y e e s , 30 per cent are service w o r k e r s , compared to 5 per cent for all b a n k i n g e m p l o y e e s . F i v e per cent of the N e g r o w o r k e r s are in b l u e collar j o b s , compared to 1 per cent for all b a n k e m p l o y e e s . T h e d i f f e r e n c e s become even m o r e striking w h e n m a l e employm e n t o n l y is e x a m i n e d . For all m a l e b a n k i n g e m p l o y e e s , 90 per cent are classified as w h i t e c o l l a r , compared w i t h o n l y 43 per cent of Negro m e n . In the b l u e collar c l a s s i f i c a t i o n , 2 per cent of all m a l e e m p l o y e e s w o r k in this area, compared to 8 per cent for N e g r o e s . W h e r e a s o n l y 9 per cent of all m a l e employees are service w o r k e r s , 49 per cent of the N e g r o m a l e w o r k e r s are classified as s u c h . E v e n after h e o b t a i n s a w h i t e collar job in a b a n k , it seems e v i d e n t that a N e g r o m a n has a p a r t i c u l a r l y h a r d time p r o g r e s s i n g into b e t t e r p a y i n g p o s i t i o n s . O f all m a l e b a n k i n g e m p l o y e e s , 38 per cent are officials and m a n a g e r s . of N e g r o m a l e s are in these senior p o s t s . for 4 per cent of total m a l e e m p l o y m e n t . O n l y 3 per cent Professionals account A m o n g N e g r o m a l e s , pro- fessionals r e p r e s e n t less than 1 per cent of their total e m p l o y m e n t . In the l a r g e s t c a t e g o r y , o f f i c e and c l e r i c a l , the Negro m a n just b e g i n s to a p p r o a c h h i s o w n . T h i r t y - n i n e per cent of all Negro m a l e -11employees are classified as office and clerical, compared to 46 per cent for all m a l e employees. But the same relatively small representation of Negro men is noticeable among technicians. The Negro female seems to fair slightly better than her Negro brother does in the banking industry. Although 14 per cent of all Negro women in banking are classified as service workers (compared to 2 per cent of all women employees), the differentials in other categories do not appear as large. Two per cent of the Negro women employed in banking hold blue collar jobs, compared to less than 1 per cent for all women employees. A b o u t 84 per cent of the Negro women employed in banks are in white collar occupations. A l l women white collar workers account for 97 per cent of their employment. W i t h i n the white collar group, 82 per cent of the Negro women employees w o r k as office and clerical w o r k e r s , compared to 93 per cent of all women workers. Similar differences hold for the remaining white collar jobs. Within the banking industry, jobs are fairly evenly divided between the sexes; 58 per cent are female and 42 per cent are m a l e . The division for Negro banking employment is nearly the same; 55 per cent female, 45 per cent m a l e . But from the analysis in the preceeding paragraphs, it seems obvious that it is more difficult for a Negro m a n to get a well-paying, middle level job in banking than it is for his Negro sister (although it seems hardly "easy" for either of them). -12Employment Outlook in Commercial Banking A s mentioned at the o u t s e t , commercial banks have a particularly promising prospect of expanding job opportunities for m i n o r i t y groups. While employment in finance generally is not expected to grow appreciably over the next decade, it is anticipated that banking will register rapid gains through 1980. In the first quarter of 1967, there were about 800,000 persons employed in commercial banks. The Bureau of Labor Statistics (BLS) has estimated f f that during the rest of the 1 9 6 0 s and through the 1 9 7 0 s , some 70,000 new jobs per year will be generated in commercial b a n k i n g . These openings will arise from a combination of employment growth, r e t i r e m e n t s , deaths and other separations. (Table 6.) This estimate suggests a rough placement rate just under 10 per cent per y e a r . In contrast, in insurance (where about 1.2 million workers w e r e employed in 1967), BLS estimates that about 50,000 new jobs per year w i l l arise over the next decade -- suggesting a placement rate of only 4.2 per cent. A sizable proportion of the new jobs in banks will be derived from the growth in demand for banking services. However, in banking (as in other types of financial activity) the spreading use of electronic data processing equipment will enable banks to economize on their manpower needs. Nevertheless, banks will still require substantial numbers of employees in job categories for which the skill and other requirements can be m e t with only m o d e s t investment in recruitment and training efforts. -13For e x a m p l e , over the next d e c a d e , BLS estimates that c o m m e r c i a l banks w i l l h a v e openings for about 25,00 b a n k clerks per y e a r . In early 1 9 6 7 , some 400,000 w o r k e r s y o u n g w o m e n ) w e r e found in this category. (predominantly Since turnover among such employees is h i g h , the banks will have considerable scope to attract m e m b e r s of m i n o r i t y groups into cLerical o c c u p a t i o n s . A similar o p p o r t u n i t y will exist w i t h r e s p e c t to b a n k tellers. In early 1 9 6 7 , about 180,000 tellers w e r e employed in commercial b a n k s , and BLS estimates roughly 18,000 teller positions w i l l b e c o m e available each y e a r through 1980 -- suggesting a placem e n t rate of 10 per c e n t . M a n y of these positions are held by w o m e n o n a part-time b a s i s , and (while accuracy, good judgment and p e r s o n a l appearance are important) the level of skill n e e d e d can be acquired in a fairly short time. T h u s , b a n k teller positions seem p a r t i c u l a r l y w e l l - s u i t e d as entry points for m e m b e r s of minority groups. M o r e o v e r , since tellers are the b a n k employees w i t h m o s t contact w i t h the p u b l i c , an institution can use such p o s i t i o n s to d e m o n s t r a t e quickly and directly (to the general public as w e l l as to m i n o r i t y groups) that it does in fact follow a p r o g r a m of equal o p p o r t u n i t y . O v e r the next d e c a d e , according to B L S , commercial banks w i l l also h a v e about 10,000 n e w jobs per year for b a n k officials through 1 9 8 0 . O n the basis of the 140,000 senior p e r s o n n e l in banks in 1 9 6 7 , this implies a placement rate of over 7 per c e n t . G i v e n the p r e s e n t rather h i g h average age among b a n k o f f i c i a l s , -14retirements over the next decade will be especially n u m e r o u s . the need for replacements also will be strong. So, M o r e o v e r , the grow- ing complexity of many bank operations (stemming in large part from the application of EDP equipment) will require an expanding number of senior personnel familiar with computer technology. A fairly large number of minority group members have already acquired such skills and their ranks will undoubtedly increase rapidly in the future. Here also commercial banks will find a fertile ground for recruiting. Equal Opportunity in the Federal Reserve System A s mentioned above, the Federal Reserve Banks have m a d e considerable strides in expanding job opportunities for m i n o r i t y groups. H o w e v e r , despite a strong endorsement by policy officials in the System, the performance is uneven among Reserve Banks. A t the Federal Reserve Board, minorities (all except a few of w h o m are Negroes) represent almost one-fifth of total employm e n t . (Table 7.) They constituted about one-seventh of the office and clerical staff -- but less than 10 per cent of the white collar group as a w h o l e . In contrast, Negro employees make up nearly three- quarters of the blue collar and service w o r k e r s . In fact, a fairly large number of blue collar workers began even lower down the occupational ladder (e.g., as messengers) and were promoted to semi-skilled jobs. On the other h a n d , considerable progress has been achieved in recent years in the employment of Negro clerical -15w o r k e r s and t e c h n i c i a n s . This improvement is the result of systematic r e c r u i t i n g efforts supported by a strong positive employm e n t policy developed b y the F e d e r a l R e s e r v e B o a r d . A m o n g F e d e r a l R e s e r v e Banks a l s o , considerable progress in the e m p l o y m e n t of m i n o r i t y group m e m b e r s h a s b e e n a c h i e v e d . Negro e m p l o y m e n t in the Banks increased from 9 per cent in 1966 to 11 per cent in 1 9 6 7 . By e a r l y 1 9 6 8 , the R e s e r v e Banks employed m o r e than 2,200 N e g r o e s , r e p r e s e n t i n g n e a r l y 12 per cent of their total w o r k f o r c e . H o w e v e r , the p a t t e r n is quite u n e v e n from o n e b a n k to another — and e v e n b e t w e e n the head officies and its branches. For e x a m p l e , in the F e d e r a l R e s e r v e B a n k of N e w Y o r k , m i n o r i t y e m p l o y m e n t r e p r e s e n t s 18.5 per cent of the total (the h i g h e s t for all B a n k s ) . Y e t , the ratio at its Buffalo b r a n c h w a s o n l y 9.5 per c e n t , slightly b e l o w the 11.6 per cent in the Banks taken as a g r o u p . of the other B a n k s . T h e d i f f e r e n c e s are e v e n m o r e striking at some In P i t t s b u r g h , D e t r o i t , and O m a h a , the ratio of m i n o r i t y group to total e m p l o y m e n t is w e l l b e l o w that at their head o f f i c e s in C l e v e l a n d , C h i c a g o and K a n s a s C i t y , r e s p e c t i v e l y . M o r e o v e r , in each of these c a s e s , the b r a n c h e s h a v e as large (if n o t larger) p o o l of p o t e n t i a l m i n o r i t y group employees o n w h i c h to draw. C l e a r l y , even in the F e d e r a l R e s e r v e S y s t e m , a positive p r o g r a m of active r e c r u i t i n g is n e c e s s a r y to t r a n s l a t e a firm policy of equal o p p o r t u n i t y into a c t i o n . T h i s is e s p e c i a l l y true if any -16h e a d w a y is to b e m a d e in e x p a n d i n g e m p l o y m e n t for m i n o r i t y groups in w h i t e collar o c c u p a t i o n s . A t the R e s e r v e Banks (as at the F e d e r a l R e s e r v e B o a r d ) , a d i s p r o p o r t i o n a t e n u m b e r of Negroes is concentrated in the less skilled j o b s . (Table 9.) E m p l o y m e n t P a t t e r n s in Banks in M i c h i g a n and N e i g h b o r i n g States The b a n k i n g industry in M i c h i g a n h a s a slightly h i g h e r p e r c e n t a g e of total Negro e m p l o y m e n t than the average for the nation. In early 1 9 6 6 , N e g r o e s m a d e u p 5.1 per cent of total b a n k e m p l o y m e n t in this s t a t e . (Table 10.) similar employment p a t t e r n s . The surrounding states show For the region as a w h o l e , 4.7 per cent of the b a n k e m p l o y m e n t w a s N e g r o . But a g a i n , w e l l over 90 per cent of the total w o r k i n g force w a s w h i t e collar w h i l e o n l y two thirds of the N e g r o w o r k i n g force w a s w h i t e c o l l a r . The pattern is again evidenced in city d a t e . O f the 29 r e p o r t i n g b a n k s in D e t r o i t , 6.6 per cent of their total e m p l o y m e n t was Negro. B u t o n l y two thirds of the N e g r o e s w e r e in w h i t e collar j o b s , compared to 93 per cent for all w o r k e r s . The two other cities of comparable size in the region show o n l y m i n o r v a r i a t i o n s o n the same t h e m e . In the 8 r e p o r t i n g b a n k s in C l e v e l a n d , 7.5 per cent of the employment w a s N e g r o . Their p r o p o r t i o n of w h i t e collar jobs w a s less than the a v e r a g e , 87 per c e n t , b u t o n l y h a l f of the N e g r o e s w o r k e d in w h i t e collar j o b s . The 40 r e p o r t i n g banks in Chicago showed a h i g h e r p r o p o r t i o n of their Negro w o r k e r s in w h i t e collar j o b s , 89 per cent compared to 92 per cent for their total w o r k i n g f o r c e . F i v e per cent of their e m p l o y m e n t w e r e N e g r o e s . -17A r r e s t R e c o r d s and B a n k R e c r u i t m e n t in C e n t r a l C i t i e s A s I m e n t i o n e d at the o u t s e t , m a n y b a n k s h a v e b e e n u n d e r the i m p r e s s i o n that an arrest of a p o t e n t i a l e m p l o y e e precluded h i s c o n s i d e r a t i o n for b a n k e m p l o y m e n t . A c t u a l l y this is not d i s s i m i l a r from the p o l i c i e s of m a n y other i n d u s t r i e s , for according to the R e p o r t of the C o m m i s s i o n o n C i v i l D i s o r d e r s , n u m e r o u s firms in d i v e r s e sectors of A m e r i c a n industry h a v e established p e r s o n n e l p o l i c i e s w h i c h a u t h o m i c a l l y exclude from further consideration any a p p l i c a n t w h o s e record shows any kind of arrest by law enforcement officials. In m a n y c a s e s , such e x c l u s i o n applies to e v e n arrest for the m o s t m i n o r infraction -- such as juvenile d e l i n q u e n c y , o f f e n s e s u n d e r v a r i o u s youth m i s d e m e a n o r s lapses in family s u p p o r t , e t c . statutes, W h i l e m a n y ghetto r e s i d e n t s , p a r t i c u l a r l y n o n - w h i t e y o u n g m e n , h a v e at o n e time or another had d i f f i c u l t i e s w i t h law e n f o r c e m e n t o f f i c i a l s , u s u a l l y these encounters r e s u l t e d in arrest o n l y and n o t c o n v i c t i o n . In the case of commercial b a n k s , the situation is even m o r e serious b e c a u s e of section 19 of the F e d e r a l D e p o s i t Insurance A c t , the p e r t i n e n t section of w h i c h reads as follows: " E x c e p t w i t h the w r i t t e n consent of the C o r p o r a t i o n no p e r s o n shall serve as a d i r e c t o r , o f f i c e r , or e m p l o y e e of an insured b a n k w h o has b e e n c o n v i c t e d , or w h o is h e r e a f t e r c o n v i c t e d , of any criminal o f f e n s e involving d i s h o n e s t y or a b r e a c h of t r u s t . For each w i l l f u l v i o l a t i o n of this p r o h i b i t i o n , the B a n k involved shall be subject to a p e n a l t y of n o t m o r e than $100 for each day this p r o h i b i t i o n is v i o l a t e d , w h i c h the C o r p o r a t i o n m a y recover for its u s e . " -18A c t u a l l y , the above section is frequently m i s r e a d and m a n y b a n k s a p p a r e n t l y i n t e r p r e t it to m e a n that they are p r e c l u d e d from p u t t i n g o n their p a y r o l l s p e o p l e w h o h a v e simply b e e n arrested -e v e n for m i n o r infractions — a l t h o u g h no c o n v i c t i o n and c e r t a i n l y no " c r i m i n a l " c o n v i c t i o n -- actually r e s u l t e d . This m i s r e a d i n g o f the law h a s caused serious p r o b l e m s for b a n k e r s in some cities (particularly in N e w Y o r k ) w h o are a t t e m p t i n g to m o u n t r e c r u i t m e n t p r o g r a m s o n a m a j o r scale to a t t r a c t m i n o r i t y group m e m b e r s into their i n s t i t u t i o n s . A g a i n s t this b a c k g r o u n d , the F e d e r a l R e s e r v e asked the F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n a few m o n t h s ago to r e v i e w the statute and indicate the w a y the C o p o r a t i o n w o u l d itself i n t e r p r e t the s t a t u t e . T h e F D I C has p r o v i d e d a p r e l i m i n a r y r e s p o n s e — while c o n t i n u i n g to give further a t t e n t i o n to the b a s i c issues i n v o l v e d . In its reply the C o r p o r a t i o n pointed o u t that the section applies s p e c i f i c a l l y to " c r i m i n a l conviction" for d i s h o n e s t y or b r e a c h of trust. It said that the statute w a s aimed e x c l u s i v e l y at prevent- ing the e m p l o y m e n t of any p e r s o n as a d i r e c t o r , o f f i c i a l , or staff m e m b e r in any insured b a n k if that p e r s o n h a s b e e n " c o n v i c t e d " o f crimes such as l a r c e n y , f o r g e r y , r o b b e r y , and tax e v a s i o n . The F D I C w e n t o n to p o i n t o u t e x p l i c i t l y that the section d o e s n o t cover m i n o r m i s d e m e a n o r s such as j u v e n i l e d e l i n q u e n c y , i n f r a c t i o n of y o u t h c o d e s , d i s o r d e r l y c o n d u c t , — fact h a v e r e s u l t e d . a l t h o u g h conviction m a y in M o r e o v e r , the C o r p o r a t i o n stressed that m e r e arrest w i t h o u t c o n v i c t i o n certainly is n o t covered by the A c t . -19U n d e r the law the FDIC m u s t clearly b e concerned w i t h e m p l o y e e ' s actions involving a possible breach of trust or d i s h o n e s t y . T h e C o r p o r a t i o n w i l l continue to review the section w i t h such crimes in m i n d . In the m e a n t i m e , I see no reason w h a t s o e v e r w h y this FDIC statute should h a m p e r a commercial b a n k in its r e c r u i t m e n t efforts in u r b a n areas so long as the bank itself proposes to w a i v e m i n o r m i s d e m e a n o r s as a r e a s o n for exclusion from b a n k e m p l o y m e n t . Thus, I w o u l d p e r s o n a l l y u r g e b a n k s to reexamine their o w n e m p l o y m e n t p o l i c i e s to see that they screen out those persons w h o s e e m p l o y m e n t w o u l d p o s e serious risks w h i l e not excluding a r b i t r a r i l y p o t e n t i a l l y u s e f u l e m p l o y e e s w h o somewhere along the line (perhaps w h i l e they w e r e j u v e n i l e s ) h a d some k i n d of trivial d i f f i c u l t i e s w i t h law enforcement officials. Table 1. N e g r o Employment in Selected I n d u s t r i e s , F i r s t Q u a r t e r Selected I n d u s t r i e s Negro Employment as per cent of Total Employment All Industry 1966 P e r c e n t a g e of Firms with No Negro Employees 8.2 47.1 1.9 - 11.8 4.4 3.3 2.4 2.4 11.8 1.9 31.9 - 77.8 31.9 77.8 75.5 71.3 39.0 68.0 Advertising 3.7 60.2 Communication 4.3 40.9 12.7 47.0 4 . 0 - 19.7 11.1 4.8 12.3 9.1 4.3 5.4 22.2 - 52.7 39.0 32.7 23.5 27.7 37.4 26.0 8.0 25.5 Air Transportation 4.2 50.3 E l e c t r i c , G a s , S a n i t a r y services 3.8 48.4 Wholesale Trade 6.5 62.5 G e n . Merchandise Stores 7.4 33.4 Eating, Drinking places 23.3 28.4 H o t e l s , L o d g i n g places 25.3 13.4 M e d i c a l , Health Services 16.4 17.8 B a n k i n g and F i n a n c e Banking Insurance Securities Dealers/Exchanges Credit Agencies Real Estate Other F i n a n c e , I n s . & Real Estate Construction Manufacturing Food/Kindred prod. P r i n t i n g and P u b l i s h i n g Primary Metals Transportation Equip. Machinery, non-electrical Electrical Machinery Railroad Source: Transportation S p e c i a l T a b u l a t i o n by Equal E m p l o y m e n t O p p o r t u n i t y Commission. Table 2. E m p l o y m e n t P a t t e r n s in the P r i n c i p a l Sectors of the B a n k i n g I n d u s t r y , B y R a c e , First Q u a r t e r , 1966 C a t e g o r y of Banking Industry F e d e r a l Reserve B a n k s and Branches N u m b e r of Banks Total Employment W h i t e Collar Total Number P e r cent Employment of T o t a l Employment N e g r o E m p l o y ment White Collar Total Employment N u m b e r P e r cent of N u m b e r P e r cent of Industry Industry Total Total P e r cent of Negro Employment 36 19,149 15,840 82.7 1,727 9.0 891 5.6 51.6 1,588 473,424 446,173 94.2 19,562 4.1 13,069 2.9 66.8 Mutual Savings Banks 58 8,484 7,502 88.4 465 5.4 346 4.6 74.4 Trust Companies^/ 12 5,851 5,422 92.7 347 5.9 227 4.2 65.4 O A r Banking ~, ^ K tab I ishment s — 16 1,952 1,911 97.9 83 4.2 72 3.8 86.7 1,711 508,861 476,848 93.7 22,184 4.4 14,603 3.1 65.8 C o m m e r c i a l Banks—'' Total Source: 1/ 2/ 3/ Tabulation by Equal Employment Opportunity Commission. Including stock savings b a n k s . N o t engaged in d e p o s i t b a n k i n g . P e r f o r m i n g functions closely related to b a n k i n g . Table 3. E m p l o y m e n t in C o m m e r c i a l B a n k s , By Size o f B a n k , F i r s t Q u a r t e r , 1966 Size o f Bank (Total D e p o s i t s ) N u m b e r of Banks Number Per cent of Total Employment Number Per cent of Total All Banks 13,800 100 737,200 100 53 Under $10 m i l l i o n 9,700 70 103,200 14 11 $10 - $100 m i l l i o n 3,708 27 250,700 34 68 392 3 383,300 52 97 $100 m i l l i o n and o v e r Sources: Federal R e s e r v e Board; U . S . D e p a r t m e n t o f C o m m e r c e , Bureau of the Census; U . S . D e p a r t m e n t o f L a b o r , B u r e a u of L a b o r Statistics. Employees per bank (Average) Table 4 . E m p l o y m e n t P a t t e r n s in B a n k i n g b y Race and Size of B a n k , F i r s t Q u a r t e r , 1966 Total N u m b e r of F i r m s Number with no N e g r o employees P e r cent of Total Total employment P e r cent distribution Negro employment Per cent distribution N e g r o e m p l o y m e n t as P e r c e n t of T o t a l Source: \J Size of f F i r m (Number of E m p l o y e e s ) U n d e r lOOi' 100-250 500 and o v e r 251-500 1,710 621 667 206 216 546 381 139 21 5 31.9 61.4 20.8 10.1 2.3 509,214 22,503 103,191 71,824 311,696 100.0 3.9 20.5 14.1 61.5 22,581 684 3,787 2,564 15,546 100.0 3.0 16.7 11.3 69.0 4.4 3.0 3.7 3.6 5.0 Special Tabulation by Equal Employment Opportunity Commission. T h i s c o l u m n is derived as as a r e s i d u a l — other three size c a t e g o r i e s ) . ( i . e . , total less s u m of Table 5. P e r c e n t a g e D i s t r i b u t i o n of Banking E m p l o y m e n t A c c o r d i n g to P o s i t i o n , by R a c e and Sex 1966 Male Total Female Total Negro Total Negro Total Negro Total E m p l o y m e n t 100.0 100.0 100.0 100.0 100.0 100.0 W h i t e Collar 93.8 65.4 89.2 42.8 97.0 83.9 17.3 2.1 0.7 0.3 73.4 1.5 0.4 1.1 0.1 62.4 37.6 4.4 1.2 0.5 45.6 2.6 0.7 0.7 0.1 38.7 2.8 0.6 0.5 0.5 0.1 93.1 0.1 1.4 81.8 Blue Collar 1.3 4.5 2.3 8.0 0,6 1.7 Service W o r k e r s 4.9 30.1 8.5 49.2 2.4 14.4 O f f i c i a l s and M a n a g e r s Professionals Technicians Sales W o r k e r s O f f i c e and C l e r i c a l Source: Special Tabulation by Equal Employment Opportunity Commission. Table 6. E m p l o y m e n t O u t l o o k in C o m m e r c i a l B a n k i n g and I n s u r a n c e , 1967-80 T y p e of E m p l o y m e n t Employment First Quarter, 1967 New Jobs Per Y e a r . 1967-801' P l a c e m e n t Rate—' (Per c e n t ) A l l occupations 800,000 70,000 8.8 B a n k clerks 400,000 25,000 6.3 Tellers 180,000 18,000 10.0 B a n k officials 140,000 10,000 7.2 80,000 17,000 21.2 1,200,000 50,000 4.2 Commercial Banks Other employees Insurance Source: U . S . D e p a r t m e n t of L a b o r , B u r e a u of L a b o r S t a t i s t i c s ; Occupational Outlook Handbook. B u i . N o . , 1550, 1968-69 E d i t i o n , ( 1 9 6 8 ) , p p . 7 0 7 - 7 2 1 . JL/ P o s i t i o n s arising f r o m e m p l o y m e n t g r o w t h , r e t i r e m e n t s , d e a t h s , and other s e p a r a t i o n s . 2/ N e w jobs per y e a r as percentage of e m p l o y m e n t during first q u a r t e r , 1 9 6 7 . Table 7. E m p l o y m e n t P a t t e r n s at the F e d e r a l Reserve B o a r d , B y O c c u p a t i o n and R a c e , F i r s t Q u a r t e r , 1968 N u m b e r Employed Total Negro N e g r o as Per cent of T o t a l Total Employment 771 140 18.2 White Collar 655 56 8.6 61 235 13 346 1 3 2 50 1.6 1.2 15.4 14.5 Blue Collar 67 49 73.5 Service W o r k e r s 49 35 71.5 O f f i c i a l s and M a n a g e r s Professionals Technicians O f f i c e and c l e r i c a l Source: Federal Reserve Board. Table 8. E m p l o y m e n t in F e d e r a l Reserve Banks and B r a n c h e s , B y R a c e , F i r s t Q u a r t e r , 1968 Federal Reserve Bank and B r a n c h e s Boston New York Buffalo Philadelphia Cleveland Cincinnati Pittsburgh Richmond Baltimore Charlotte Atlanta Birmingham Jacksonville Nashville New Orleans Chicago Detroit S t . Louis Little Rock Louisville Memphis Minneapolis Helena Kansas City Denver Oklahoma City Omaha Dallas El Paso Houston San Antonio San Francisco Los Angeles Portland Salt Lake City Seattle A l l Federal Reserve Banks Source: 1/ Total Employment Negro Employment Number P e r cent of T o t a l 1,203 3,786 246 899 709 315 357 901 302 250 599 195 282 158 255 2,077 536 742 127 176 131 657 68 669 159 178 158 549 86 183 159 657 599 191 168 251 68 702 24 85 58 30 14 151 84 45 94 26 32 17 44 209 24 136 14 28 17 6 13 18,978 2,210 - 37 7 20 5 47 9 15 7 56 76 10 - 5.6 18.5 9.7 9.4 8.1 9.5 3.9 16.7 27.8 18.0 15.6 13.3 11.3 10.7 17.2 10.0 4.4 18.3 11.0 15.9 12.9 0.9 - 6 97 0.5 2.4 - - - - 2 0.3 - - - - - - - 1 4 - 2 - 1 36 - 0.4 0.7 - 0.7 - 0.4 1.7 - - - - - - - - - 1 - - 0.1 - 5.1 7 8 4 2 7 20 4 13 94 105 3 4 8 1.0 5.0 2.2 1.3 1.3 23.2 2.1 8.1 14.2 17.2 1.5 2.2 3.0 11.6 419 2.2 5.5 4.4 11.2 3.1 8.5 10.4 8.1 4.4 8.5 12.6 5.2 mm Federal Reserve Board. I n c l u d e s S p a n i s h - A m e r i c a n s , Orientals and A m e r i c a n I n d i a n s . Other Minorities-' Number P e r cent of T o t a l Table 9. E m p l o y m e n t P a t t e r n s in F e d e r a l Reserve B a n k s B y O c c u p a t i o n and R a c e , First Q u a r t e r , 1968 Occupation Percentage Distribution of Employment Total Negro Negro Employment as P e r cent of each Occupation Total Negro Total Employment 18,978 2,210 100.0 100.0 11.6 White Collar 15,480 1,321 81.6 59.8 6.9 * 1,629 1,290 326 2 12,233 1 12 17 8.6 6.8 1.7 0.5 0.8 1,291 64.4 58.4 11.6 959 127 5.0 5.7 13.2 2,539 762 13.4 34.5 30.0 O f f i c i a l s and M a n a g e r s Professionals Technicians Sales W o r k e r s O f f i c e and c l e r i c a l Blue Collar Service Workers Source: * Federal Reserve Board. L e s s than 0 . 1 per c e n t . - - * 0.9 5.2 - Table 10. Banking Employment P a t t e r n s . i n Selected Geographical A r e a s F i r s t Q u a r t e r , 1966 N e g r o Employment as a Per Cent of Total Employment Total, U.S. W h i t e Collar E m p l o y m e n t as a Per Cent of Total Employment Total Negro 4.4 93.8 65.4 Michigan 5.1 93.3 65.6 E a s t North Central Statesl/ 4.7 91.9 66.7 6.6 93.2 66.9 Cleveland Chicago 7.5 5.0 87.1 91.7 52.2 88.7 Grand R a p i d s 0.8 95.3 100.0 States: 1 S M S A s :2/ Detroit 1/ I l l i n o i s , I n d i a n a , M i c h i g a n , O h i o , W i s c o n s i n 2/ D a t a are for c o m m e r c i a l b a n k i n g o n l y .
@FedFRASER