Between the height of America’s financial bubble in 2007 and 2013, black representation in Chicago’s finance industry fell by more than 20%.
And if the industry doesn’t change anything about the way it hires and promotes minorities, those numbers are going to get even worse, according to a recent research report from the Financial Services Pipeline Initiative (FSP), a consortium of Chicago banks and asset management firms formed in 2013 to increase the ranks of black and Latino workers in finance, as well as the Federal Reserve Bank of Chicago.
It’s worth focusing on Chicago because, while New York is home to many of the nation’s largest investment banks and has greater cultural association with finance, the Windy City is historically important to a lot of commodities markets, setting the prices for many of the underlying goods that comprise everything from the food you eat to the house you eat it in.
The biggest takeaway from the 203-page report, which was put together by consultants at Mercer, is that the industry has mostly hired minorities for low-level jobs and kept them there, which left them especially exposed to layoffs and general attrition.
Rick Guzzo of the Mercer Workforce Sciences Institute, one of the researchers who worked on the study, said the report looks beyond static data like the EEO-1 employment data reports that typically form the basis of companies’ diversity reports in order to better capture the career paths of black and latino employees over time. In this sense, its finding and approach could hold wider application to the finance industry.
“We’re trapped in the headcount era, and we need to get into the flows and the way that people experience things on the inside,” he told Quartz.
Speaking of headcounts, it’s not so dire across the board. Hispanic finance workers actually saw their representation increase in the industry. However, representation among both them and black workers were coming off low bases, and both groups are still underrepresented among senior levels compared to their presences in the field as a whole.
Granted, some of this is because there were lots of layoffs after the recession, and, as the chart notes, blacks and Latinos are more heavily employed in the lower-level fields that tend to bear the brunt of cuts.
For all their research, Guzzo and his colleagues came back with some (sadly) unsurprising findings about the ways black and Hispanic folks in finance interact with their field:
- Like women, black and Hispanic finance workers (a group that includes women, of course) tend to see fewer opportunities to advance to the top.
- They tend to spend less time at the top once they get there.
- They’re more skeptical than their white peers of their companies’ commitments to diversity and inclusion.
That said, there were some less obvious findings as well:
- Black and Hispanic finance workers tend to start thinking about the field in high school instead of college, unlike their white coworkers.
- They’re more likely to have non-profit experience than their white colleagues, with financially oriented positions at groups like churches providing a pathway into the industry. The outsiders amongst them tend to come from the retail world.
- They tend to have a higher opinion of the financial services industry than their white coworkers (considering the types of headlines that typically live at the intersection of race and finance).
The recommendations the report gives for turning things around are pretty straightforward: Hire from within for management jobs; give minority workers more support in their careers; and increase hiring to battle attrition. And though the report’s authors take a second to back-pat Chicago’s finance community, they also note that none of their work will mean much if FSP’s members don’t work to actually break down the barriers they’ve highlighted.
“Although the industry can productively act in concert to facilitate progress, success ultimately will depend on the actions implemented by individual employers,” they wrote.