View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

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 .





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102