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The largest U.S. bank employer has been under fire this week after its CEO made excuses for struggling to diversify its workforce.
Wells Fargo chief executive Charles Scharf recently exasperated Black employees in a Zoom ZM, +5.15% meeting this past summer by saying that there aren’t enough qualified minority applicants available to achieve the company’s diversity goals, two participants told Reuters.
Scharf’s remarks come on the heels of a memo sent to Wells Fargo WFC, -1.03% employees also over the summer, where Reuters reports that he implied that the money center bank wasn’t able to find qualified Black talent to fill vacancies at the company. His comments were received against the backdrop of a wave of social unrest in America centered on police brutality that was supercharged by the death of George Floyd, a Black man, who died in May under the knee of a white police officer.
”While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of black talent to recruit from,” Scharf wrote in the June 18 memo, cited by Reuters.
Scharf apologized on Wednesday for what he described as “making an insensitive comment reflecting my own unconscious bias” in a public statement to employees.
However, his earlier remarks were still rippling across social-media platforms like Twitter TWTR, +8.15% on Tuesday and Wednesday, with Democratic Rep. Alexandria Ocasio-Cortez tweeting that, “Perhaps it’s the CEO of Wells Fargo who lacks the talent to recruit Black workers.”
Wells Fargo employs some 233,000 people, making it the largest bank employer ahead of JPMorgan Chase & Co. JPM, -0.41%, with a little over 200,000 employees, according to data firm Statista, as of the end of last year.
Amanda Fischer, the policy director at the Washington Center for Equitable Growth, also pointed out that Scharf’s family Wall Street connections first got him started in banking, which is a luxury that many minority job candidates don’t have while the financial services industry remains predominantly white. Upward of 85% of jobs are filed through networking, according to compensation software company PayScale. And 70% to 80% of jobs aren’t even listed, Matt Youngquist, the president of Career Horizons, told National Public Radio’s “All Things Considered,” in a 2011 broadcast.
“It’s clear to me that, across the industry, we have not done enough to improve diversity, especially at senior leadership levels,” Scharf wrote, before listing the ways he says that Wells Fargo has made progress in this area. This includes hiring two diverse senior leaders within the last few months and reaching out to more diverse job candidates, as well as developing an antiracism training course.
Of course, Wells Fargo is far from the only corporations in the U.S. with a less-than-stellar diversity record. African-Americans made up just 10% of new director appointments in the Fortune 500 last year, even though they represent 13.4% of the population, and new Hispanic directors were even more scarce, according to a 2020 report from executive recruiting firm Heidrick & Struggles. Only four Fortune 500 CEOs are Black. And just 8.6% of personal financial advisers are Asian, 6.9% are Black and 6.3% are Hispanic — compared with 82.2% who are White, according to the Bureau of Labor Statistics data.
And this hurts everyone. A new Citi report warns that racial inequality in wages, education, housing and investment has cost the U.S. economy $16 trillion over the past 20 years.
MarketWatch has been speaking with leaders in business, government and academia about how to racial wealth and income gaps in a series of conversations called The Value Gap. Check them out here.
