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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 PDF

264 Pages·1999·11.9 MB·English
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Preview 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

A W»'/i C/(/.2: Racial and Ethnic Tensions American Communities: in and Poverty, Ineqyuality, UNIV OFMDMARSHALLLAWUBRARY Discrimination 3 1428 03477 Volume The New York Report VI: of:..apyland u?-!r-.RS 1 > SCHOOL LIBRARY \JK\N MiVR 3 - 2000 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 (202) 376-8110. 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 vm

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