Black employees held a lower share of top US financial services jobs in 2018 than they did more than a decade earlier, according to new research by the Financial Times, underlining the shortcomings of Wall Street’s long-running efforts to improve racial diversity.
The FT analysed the most recently available anonymised data on the demographics of 3.6m staff across 13,000 financial services employers in the US from 2007 to 2018. All companies with more than 100 staff were required to submit the information to the Equal Employment Opportunity Commission from 2007.
Black staff account for 13 per cent of all finance staff and are the sector’s biggest ethnic minority. But in the most senior jobs, they are the only demographic whose share fell from 2007 to 2018, the research found.
The drop — from 2.87 per cent to 2.62 per cent — comes against the backdrop of multiple initiatives by financial services firms designed to improve racial diversity by identifying, training and mentoring talent from ethnic minorities.
“It begs the question of all of the efforts and all of the energy that was put into this: ‘what are they doing and why is none of this working?’” said Dee Marshall, chief executive of Diverse & Engaged, a diversity consultancy that focuses on financial services.
“If you’re wondering why there is no progress [for black staff], look at hiring, look at pay, look at performance appraisal process.”
Overall the EEOC data showed that black employees have only seen significant growth in the most junior roles in finance, a group that accounts for 42 per cent of the sector’s total workforce. Black employees now make up 18.9 per cent of those more junior jobs, versus 17.4 per cent in 2007.
Separately, the FT compiled figures from 20 big US financial services firms that publish their EEOC submissions, including Citigroup, JPMorgan Chase and American Express. This research found that several institutions had made far faster progress than the overall trend.
Of the 20 companies whose data the FT analysed, PayPal had the highest percentage of non-white workers in senior roles, at 33.7 per cent. Goldman Sachs had the highest percentage of non-white workers in mid-level roles, at 44.1 per cent. PayPal’s 58.8 per cent of non-white workers in professional roles was also the highest non-white representation in that category.
BNY Mellon had the highest percentage of black staff in senior roles, at 11.8 per cent; PNC had the highest percentage of black staff in mid level roles, at 9.5 per cent; and insurer MetLife had the highest percentage of black staff in professional roles.
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Insurer Travelers was the worst for non-white representation across all three categories, and its figures were significantly worse than the picture across the financial services industry.
Diversity and inclusion is a “business imperative,” said Travelers. “While the EEO-1 data only paints a limited picture, we understand that we and the business community have a responsibility to improve representation.”
The industry-wide picture showed that while non-white staff increased their share of all seniority levels over the 11-year period, progress has been very uneven. White employees continue to enjoy an outsize percentage of the most senior jobs.
Across the sector, progress at the senior, mid and professional levels was overwhelmingly in favour of Asian workers, finance’s third biggest minority after black and Hispanic workers.
As a result, there are now more Asian senior managers and executives than there are black ones, even though there are about 50 per cent more black workers than there are Asians across the whole of the US financial services industry.
“The internationalisation of Asia and Latin America and the financial opportunities there breed an easier path for Hispanic Americans and Asian Americans to have a place in this industry,” said Martin Davidson, professor of business administration at the University of Virginia's Darden School of Business, who also consults with Wall Street firms on diversity.
Davidson added: “That’s not to say that things are wonderful for Latinos and wonderful for Asian Americans, because there are significant challenges for those folks as well.”
Asians are the only ethnic group who have the smallest representation in the most junior category, the analysis found. For every other ethnic group, their highest representation is at companies’ most junior level.
Several companies told the FT they did not disclose their EEOC data because the categories it uses do not give an accurate representation of their workforces.
Investors said the data was an important metric because it offered a comparable view of how companies were faring relative to one another. They were increasingly pushing companies to publish details of the demographics of their workforces.
“Without that comparability, investors have a hard time understanding who’s a leader and who’s a laggard,” said Adrienne Monley, head of investment stewardship for the Americas at $7.1tn asset manager Vanguard.
“We believe that asking you to report EEO data is a rational ask, it’s not a huge amount of additional resource required and it’s a great first step . . . Companies who withhold the information will probably feel more pressure from investors in the coming year.”
Lobbyists said it was impossible to tackle the issue of underrepresentation without properly measuring the scale of the problem. “We’re talking about why we’re not getting anywhere, but we don’t know where we’re going, because you are not tracking,” said Diverse & Engaged’s Marshall.
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