Lumped together, the representation of African Americans, Latinos, Asians and others in lower-, mid- and senior-level management positions in the financial sector increased from 17 percent to 21 percent in the period.
Before diversity advocates cheer, they should read on.
While overall diversity increased, the percentage of black managers dropped. Meanwhile, at 48 percent, women were close to parity with men in lower- and mid-level management slots. But among the top positions, the glass ceiling largely prevailed. Upward mobility to senior-level management remained stagnant for women, at about 29 percent over the eight-year period.
The GAO drew from Equal Employment Opportunity Commission (EEOC) data. The agency collects information annually from private employers with at least 100 staffers, including federal contractors. In a report on financial sector diversity seven years ago, the GAO found that “without a sustained commitment among financial services firms to overcoming challenges to recruiting and retaining minority candidates, limited progress would be possible in fostering a more diverse workplace.”
But even limited progress escaped black people seeking power within the financial sector.
“Since 2007, Asians had the largest gains, increasing their representation among managers from 5.4 percent to 7.7 percent,” the GAO reported. “Hispanics made smaller gains. In contrast, the proportion of African-Americans in management positions decreased from 6.5 percent to 6.3 percent.”
The report was requested by three top Democrats on congressional panels that oversee the financial sector. Each was upset with the findings.
“The report very troublingly shows that representation of African Americans actually decreased at various management levels, despite the increasingly diverse racial and ethnic demographic makeup of the American population,” said Rep. Maxine Waters (Calif.), the ranking Democrat on House Committee on Financial Services. “This is unacceptable. Diverse representation in the management of these institutions is essential in order to ensure that all consumers have fair access to credit, capital and banking and financial services.”
“The GAO report is troubling,” said Sen. Sherrod Brown (Ohio), the ranking on the Senate Committee on Banking, Housing and Urban Affairs. “Improving diversity in these positions, particularly senior-level positions, is critical to ensure all communities are well-served. American prosperity succeeds when everyone has access to financial services tools and are able to fully participate in the economy.”
Rep. Al Green (Tex.), the ranking Democrat on the House Financial Services subcommittee on oversight and investigations, said he was “deeply concerned that representation of African-Americans at various management levels has decreased. To continue to meet the challenge of improving workforce diversity, I strongly support making firm-level diversity data publicly available. As a major source of U.S. economic growth, the management should indeed reflect the consumers they serve.”
Trade associations for the financial services industry that were contacted did not respond to requests for comment.
Beyond being asked for the research by the Democratic legislators, why did the GAO, a congressional watchdog agency that generally focuses on federal agencies, look at the financial services sector? The agency examines a wide variety of subjects “so long as there is some connection to a federal oversight role or federal dollars,” said GAO spokesman Chuck Young.
“Firms of a certain size are required to supply workforce information annually to the EEOC,” added Daniel Garcia-Diaz, the GAO’s director of financial markets and community investment. “In addition, Dodd-Frank Act requires financial regulators to promulgate standards for assessing diversity among regulated financial institutions. And finally, such firms can serve as federal contractors — some fulfilling regulatory requirements for federal business with minority- and women-owned businesses. So, it’s an area with multiple federal connection.”
This is one of several recent GAO studies looking at private-sector issues with federal implications. This month, the Federal Insider covered a GAO report on how federal agencies could do more to improve diversity in the high-tech industry. Other studies have looked at the need for the Labor Department to provide soft-skills training in areas such as customer service and time management to on-demand or “gig” workers; poverty among low-wage workers; and working conditions for adjunct faculty members, who teach about half of all college courses.
While “diversity” is widely touted these days, that is not enough. The report points out that inclusion is key. That means power in top-level, decision-making positions.
For more than a decade, “researchers and the federal government have recognized that a focus on inclusion in the workplace is an important component of creating and sustaining a diverse workforce,” the GAO report said. “For example, the Office of Personnel Management notes that optimal performance is based on both diversity and inclusion.”