Racial and ethnic tensions in American communities : poverty, inequality, and discrimination-Los Angeles hearing : volume VI : the New York report : a report of the United States Commission on Civil Rights

264 Pages·1999·11.9 MB·English

by  United States Commission on Civil Rights

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Racial and Ethnic Tensions
American Communities:
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Poverty, Ineqyuality,
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DEPOSIT
December 1999
A Report of the United States Commission on Civil Rights
U.S. Commission on Civil Rights
The U.S. Commission on Civil Rights is an independent, bipartisan agency first estabhshed
by Congress in 1957 and reestabhshed in 1983. It is directed to:
• Investigate complaints alleging that citizens are being deprived oftheir right to vote by
reason oftheir race, color, rehgion, sex, age, disability, or national origin, or by reason
offraudulent practices;
• Study and collect information relating to discrimination or a denial ofequal protection
of the laws under the Constitution because of race, color, rehgion, sex, age, disabihty,
or national origin, or in the administration ofjustice;
• Appraise Federal laws and pohcies with respect to discrimination or denial of equal
protection of the laws because of race, color, rehgion, sex, age, disabihty, or national
origin, or in the administration ofjustice;
• Serve as a national clearinghouse for information in respect to discrimination or denial
of equal protection of the laws because of race, color, religion, sex, age, disabihty, or
national origin;
• Submit reports, findings, and recommendations to the President and Congress;
• Issue pubhc service announcements to discourage discrimination or denial of equal
protection ofthe laws.
Members of tiie Commission
Mary Frances Berry, Chairperson
Cruz Reynoso, Vice Chairperson
CarlA. Anderson
Christopher F. Edley, Jr.
Yvonne Y. Lee
Elsie M. Meeks
Russell D. Redenbaugh
Ruby G. Moy, StaffDirector
This report is available on diskette in ASCII and WordPerfect 5.1 for persons with visual
impau-ments. Please call [phone].
Racial and Ethnic Tensions
American Communities:
in
and
Poverty, Inequality,
Discrimination
Volume The New York Report
VI:
December 1999
A Report of the United States Commission on Civil Riglits

Letter of Transmittal
The President
The President ofthe Senate
The Speaker ofthe House ofRepresentatives
Sirs:
The United States Commission on Civil Rights transmits this report to you pursuant to
P.L 103-419. The New York Report is the sixth volume of a series of Commission reports on
Racial and Ethnic Tensions in American Communities: Poverty, Inequality, and Discrimina-
tion. The report is based on hearings held in New York City in 1994 and 1995 and significant
updates from research and media accounts. This report examines, among other topical areas,
immigrants in New York City ana low-skill labor markets; the representation of people of
color and women in the finance industry; the impact of securities industry rules on people of
color and women securities professionals; and the role of community reinvestment in the
overall economic development and revitalization of low-income areas. This report is based
upon the sworn testimony of numerous hearing witnesses, large volumes of documents sub-
mitted to the Commission in compliance with subpoenas duces tecum, an expert's breakdown
of the statistical data in those documents, and substantial staff research conducted before
and after the hearings. The staffresearch efforts were facilitated, in part, by the cooperative
assistance of several Federal agencies and representatives of the securities industry who
provided additional information to the staffto update and clarify portions ofthis report.
The report presents a significant number offindings and recommendations addressing is-
sues ofracial tensions, discrimination, and inequality in New York City. The report finds, for
example, that workplace exploitation of low- and unskilled immigrants, particularly among
undocumented immigrants, is commonly manifested in the form ofsubminimum wages, over-
time work without appropriate pay, unsanitary working conditions, and abuse or harass-
ment. It further finds that there are no targeted actions by Federal and State labor depart-
ments to address worker exploitation in the restaurant industry which, in effect, exacerbates
the abuse oflabor laws.
In looking at the representation ofpeople ofcolor and women in the finance industry, the
report finds some promising evidence since the Commission conducted its hearings in New
York City, that firms have adopted measures or made commitments to increase the inclusion
and advancement ofwomen and people ofcolor in prominent roles in the securities industry.
Still, the report recommends that strong measures must continue to be enacted to counteract
industry forces that may reduce opportunities for economic equality and diversity in the fi-
nance industry which has long been a large, prominent, and well-paying industry. The report
also points out that although the obligation to arbitrate is no longer coupled with the duty to
register at the exchanges, the goal of providing the most fair and cost-efficient arbitration
forum remains important to the resolution ofemployment discrimination disputes.
The report also examines the important role of capital and lending to community devel-
opment and considers the specific ways in which the enforcement of the Community Rein-
vestment Act (CRA) affects the economic revitalization of underserved communities. The re-
port notes that the CRA has played a crucial role in ensuring credit to residents of low- and
moderate-income areas and in encouraging banks to open new branches and expand services
in these communities. The report finds, however, what appears to be grade inflation by the
four CRA regulatory agencies in the CRA composite performance evaluations. It is recom-
mended that because of this possible grade inflation, the CRA regulatory agencies should
111
delay the awarding of overall "outstanding" ratings until they conduct enough evaluations
throughout the industry to determine what a "normal" or "average" CRA evaluation reveals.
The report is replete with significant other findings and recommendations that we urge
the executive branch and the Congress to consider in the pursuit ofracial and ethnic recon-
ciliation and economic equahty in this land ofopportunity.
Respectfully,
For the Commissioners,
^^
Mary Frances Berry
Chairperson
iv
Contents
1. Introduction 1
Section I: Background 1
Section II: Overview ofNew York City 2
Size and Geography 2
Government Structure 2
Demographics 3
Socioeconomic Characteristics 6
Overall Economy ofthe City 9
Economic Opportunity for Minorities 10
Political Structure 12
Section III: Origins ofIntergroup Conflict 13
Perceptions ofthe Police 14
City Politics 15
The Media and Intergroup PoUtics 15
Section IV: Recent Manifestations ofRacial and Ethnic Tensions 16
Section V: Resolutions ofRacial and Ethnic Tensions 17
Section VI: Preventing Intergroup Conflict 18
Section VII: Topical Summary 20
Immigrants in New York City and Low-skill Labor Markets 21
Minorities and Women in New York City's Finance Industry 21
Impact ofSecurities Industry Rules on Minority and Women Securities Professionals ....21
The Role ofCommunity Reinvestment ,21
2. Immigrants in New York City and Low-skill Labor Markets 22
Immigration in New York City 24
Historical Demographics 24
Present Demographics 24
Section I: Working Conditions for Immigrants in Low-skill Industries ....26
The Sweatshop Phenomenon 26
The Restaurant Industry 28
The Apparel Industry 29
Government Responses to the Sweatshop Problem 31
INS and Employer Sanctions 31
U.S. Department ofLabor and Federal Labor Laws 34
New York State Department ofLabor 36
Interagency Cooperation 37
Section II: Executive Order 124 and the Immigration and Welfare Reform 40
Section III: Immigration's Effect on Wages, Jobs, and Racial and Ethnic Tensions 43
Immigration FactorsAffectingJobs and Wages 44
Supporters ofCurrent Immigration Levels 44
Opponents ofCurrent Immigration Levels 46
Geographic Distribution ofImmigrants and Native Minorities 46
Substitutability ofNative Minorities 46
Immigrant Entrepreneurialism and Ethnic Recruiting 48
Immigration Pohcy: Family Reunification 50
Community Responses to Ethnic Diversity 53
3. Minorities and Women in New York City's Finance Industry 55
Section I: Background ofthe Study 55
The Prominence ofNew York City's Finance Industry 56
Concerns about Minorities and Women in the Finance Industry 57
Design ofthe Study 58
EEOCData 59
Subpoenaed Documents 59
The Study 60
Section II: Overview ofNew York City's Finance Industry 61
The Finance Industry's 1994 Employment Profile 61
Representation ofMinorities and Women 61
EmploymentbyJob Classification 61
Differences among Job Classifications 64
Differences among Industry Segments 64
Dynamism within the Finance Industry 64
The 1987 Stock Market Readjustment and After 65
A Major Downsizing in Banking 66
Diversification ofBank Services 67
The Revolution in Computer Technology 68
Demographic Changes in New York City 69
Section III: Recruiting and Hiring 69
Race and Gender ofApplicants and Persons Hired 69
Job Qualifications 72
—
Job Qualifications, Procedures, and Policies Subpoenaed Depository Institutions
and Securities Firms 76
QuaUfications by Job Classifications 77
Industry Testing and Certification 86
General Test Development and Vahdation 87
Test Development and Vahdation ofSecurities Industry Examinations 89
Policies, Programs, and Activities Promoting Opportunities for Minorities
and Women 92
Recruiting, Hiring, and Promoting Staff 92
Training Programs 93
Recruiting Diversity 94
Equal Employment Opportunity and Affirmative Action 96
Diversity Training 97
Career Development Strategies 97
Mentoring Program 98
Recruitment, Hiring, and Promotion Techniques 101
Recruiting Personnel 101
Hiring and Promoting Personnel 102
Policy-related Documents 105
Section IV: Dynamics within Banks and Firms 105
Employment Patterns within Depository Institutions and Securities Firms 105
The Employee Pool: How Does the Subpoenaed Sample Compare with Its Peers? 105
Establishment Size: Does It Influence Gender or Race ofthe Employee Pool? 113
SectionV: Determining Representation 135
Benchmarks for the Racial and Gender Composition ofthe Qualified Work Force 136
The Civihan Labor Force 136
Education 136
Specialized Education, Certification, and Experience 140
VI
Comparing the Finance Industry's Employment Rates with Benchmarks ofthe
Quahfied Work Force 153
Education as a Job Qualification 158
-
Section VI: Changes in the Finance Industry's Employment over Time 160
Overall Changes in Employment 160
Changes in the Employment ofMinorities and Women 161
4. Impact of Securities Industry Rules on Minority and Women
Securities Professionals 174
Section I: The Mandatory Arbitration Requirement 175
Predispute Mandatory Arbitration Requirement 177
SRO Sponsored Arbitration Process 179
Alleged Inadequacies ofDiscovery Procedures in SRO SponsoredArbitration 181
Composition ofArbitration Panels 182
The Pool from which Arbitrators are Selected 182
Racial and Gender Composition ofthe Pool 182
Professional Background and Knowledge ofArbitrators in the Pool 183
Composition ofIndividual Arbitration Panels 184
Rules Governing the Selection ofArbitrators for Individual Cases 184
Composition ofIndividual Panels 185
Consideration ofArbitrators' Expertise 185
ArbitrationAwards in Employment Discrimination Cases 186
Awards Finding Employers Liable 186
AmountsAwarded to Victorious Claimants 187
Institutional Responses to Concerns 188
The Future ofMandatory Arbitration 190
Section II: Rule G-37 191
Origins ofRule G-37 191
The Impact ofRule G-37: Minority- and Women-owned Firms 193
The Impact ofRule G-37: Minority and Women Candidates , 194
SEC Response to Complaints from Industry 195
5. The Role ofCommunity Reinvestment 196
Section I: Federal and State Community ReinvestmentActs 196
Federal Community ReinvestmentAct 196
Lending Test 197
(1)
InvestmentTest 198
(2)
(3) Service Test 198
The New York State CRA 202
Section II: CRA as Catalyst to Economic Development 204
Economic Development as the Driving Engine 204
Availability ofDeposit Facihties and Services in Low-income Areas 206
Community Development Financial Institutions 208
Section III. CRA as Catalyst to Small Business Enterprise 210
Small Business Lending 210
Venture Capital Funds 211
Microlending 211
The Role ofImmigrants 213
Statistical Scoring and Small Business Loans 213
Small Business Administration 214
Section IV: CRA as Catalyst to Affordable Housing 215
Home Mortgage Lending and Affordable Housing Initiatives 215
vii
Home Mortgage Disclosure Act 217
Fair Lending Enforcement by the Department ofJustice 218
Low-income Housing Tax Credit 219
Section V: Conclusion 220
6. Findings and Recommendations 222
Additional Statement of Chairperson Mary Frances Berry and
Vice Chairperson Cruz Reynoso 232
Dissenting Statement of Commissioner Russell G. Redenbaugh and
Commissioner Carl A. Anderson 233
Appendices 236
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