More Minorities in Tax: Could this be our answer to the current and future manpower shortages in tax?

A shocking 24% fewer Non-White accounting graduates will choose Private Sector Tax. This is 6% of the tax profession's total recruiting pool.

This is in addition to statistics indicating severe, professional level labor shrinkage over the next 20 years. How do we come to this conclusion?

Raw data was gathered from:

• United States Bureau of Labor
  
  
• "Big 4" Public Accounting Firms
  
  
• The Internal Revenue Service

Specifically, data included:

• Degreed individuals in the Civilian Labor Force (CLF), by ethnicity (Chart 1)
  
  
• "Big 4" Partners and employees, by ethnicity (Charts 3 & 4)
  
  
• IRS Revenue Agents & Counsels, by ethnicity (Chart 2)
  
  
• There is no raw data for corporate, in-house tax departments. However, it is reasonable to assume that this group mirrors public accounting since the majority of in-house staff are trained at public accounting firms. Additional data from TaxSearch, Incorporated, the largest recruitment firm in the U.S. dedicated exclusively to the Tax profession, supports the similarity between the public accounting and corporations.

We aggregated the data we collected and developed these four charts:

Whites in both the Public Sector (government) and the Private Sector (public accounting and corporate) generally mirror the Civilian Labor Force. (CLF = 78%, IRS = 76%, Big 4 = 81%, AICPA Accounting Grads = 75%). However, the IRS has a larger concentration of Black candidates, while the Public Accounting firms have a larger concentration of Asian Americans than the Civilian Labor Force as a whole.



Within the Government, Non-White candidates overall are well represented, and the numbers are in line with the Civilian Labor Force statistics. Black candidates seem to gravitate more towards the IRS than to the Private Sector.

The Ethnic/Racial Data for New Graduates compiled by the AICPA (see link below) indicates that the proportion of White to Non-White accounting graduates has remained constant at 75%: 25%.



This being the case, somewhere along the academic/career route, some 6% of graduates (24% of the total Non-White graduate pool) do not make it into the Private Sector Tax Profession.

It is apparent that at all career levels of Public Accounting, Blacks are under-represented, but especially at the senior level (see Chart 4) where the percentage of Black candidates drops to only 1%.



The good news for Public Accounting is that there has been progress in recruiting a more diverse candidate pool at junior levels (see Chart 3 compared to Chart 4).

Another issue facing Public Accounting seems to be retaining that diverse pool so that they move into management level roles. Again, keep in mind we have found that the corporate in-house tax departments closely mirror the demographics found in Public Accounting ("Big 4").

Asian Americans appear to choose careers in the Private Sector, while Blacks gravitate towards the Public Sector. Hispanics seem pretty balanced between the Public and Private Sectors.



Why are 24% of Non-White graduates (6% of the total graduate pool) not entering the Private Sector Tax Profession?

• Is it because we, as a profession, are not actively educating them on the short and long-term benefits of being a tax professional?
  
  
• Are we not actively recruiting them early enough in their educational process (first and second years of undergraduate school)?
  
  
• Are there cultural or perception issues of what tax has or does not have to offer different non-white groups?

At this time one can only speculate - but to get a handle on these issues TaxTalent will conduct a follow-up study using a questionnaire format, combined with focus groups.

We hope to release the results by Fall/Winter 2004. Please respond to http://www.taxtalent.com/taxhtml/followup.cfm if you wish to be sent a free copy.