Having the privilege to serve on the Queens College Foundation Board, as well as the Business Leadership Council established by our current Chancellor, Matthew Goldstein, and Chairman Herman Badillo, and also having reviewed Benno Schmidt's report The City University of New York: An Institution Adrift, I am pleased to have the opportunity to express a businessmanıs view of the issues facing all of us. I would like to begin my remarks by establishing a premise that as an individual and a major employer in New York, I firmly believe:

The vitality of my firm, my city, my state and my country is heavily dependent on the vitality of our youth.

I firmly believe this premise particularly as it relates to PaineWebber and New York City. We employ in the city 3,416 people, we compete with no less than ten major firms and in todayıs society the competition is not about market share but about people and growth. In an industry that cannot raise prices you must grow or die and in order to grow you must be able to attract quality employees.

The good news is that our country is approaching full-employment. The bad news is that our country, in the services sector, is at full employment. Fully 70% of our services sector is at full employment. Fully 70% of our GDP or Gross Domestic Product is represented by services. This phenomenon is the true definition of Alan Greenspanıs recently coined phrase, the wealth effect. Emerging affluence is creating demand pull for services that are delivered by people who now have scarcity value, from a research analyst whose compensation has tripled in three years to an architect who shuns a $500,000 addition in Greenwich because the project is too small.

Recently I was told by a local contractor that skilled labor is so scarce that competitive builders will drive up to a job site with a briefcase filled with $100 bills. They approach a mason or a carpenter, offer them a $2,000 to $5,000 cash bonus upfront and will increase their current hourly wage by $10.00 an hour if they walk off the job. Hello $400 a square foot.

Would I suggest that we trade off the wealth effect for a slower economy? No, and certainly not as president of a major brokerage firm. But I and others will have to change their traditional perspectives relative to employees if we are to compete in this decade. Our ability to attract and retain key employees will becomes strategic rather than tactical in nature. Our ability to understand the "human resource" and what values they desire from their employers is paramount.

In the past year alone, we have initiated several new human resource policies ­ not by the way due to my management team's creativity ­ but more so as a response to the desires of our younger employees. We instituted a business casual dress policy, changed our pregnancy leave policy, instituted a mentoring program and have established a diversity council that reports directly to me as president.

In the tri-state area, three of every five of tomorrow's replacement employees are today's minorities. Demography is not subjective it is absolute. White male employees as a percentage of the U.S. workforce will remain dominant but their numbers will decline by 4.1% within eight years. African Americans will increase as a percentage by 1.4%, Asian by 2.7% and those of Hispanic origin will increase by 5.5%. In the past decade our issues were gender related. No longer. Women already constitute 46 percent of our labor force and will stabilize at 48 percent. The glass ceilings are beginning to crumble.

Our issues this decade will be two: One, dealing with a much more diverse employee base as minorities replace the old guard and two, the old guard that doesnıt want to retire because of extended life spans. We asked Gallop to conduct a poll of investors. Their findings suggest that the new reality is that after reaching retirement age, the vast majority of investors ­ 85% ­ expect to continue with some kind of work. Of those who expect to work, seven out of ten investors say they will work because they want something to do, not because they think they will need the money. And for non-investors, a stark reality that they will need to be self-reliant as every corporation moves from defined benefit to defined contribution pension plans. Think of a society that resembles a barbell At one end of the barbell is the new, young diverse entrants fueled by the most increase in births from the late 70's through the early 1990's and from the massive migration to the United States that started in the 1970s and continues today. At the other end of the barbell is the fastest growing segment of our population ­ the aging baby boomers from the late 1940's through the early 1960's, their life expectancy approaching 85 years of age and with medical advances on the horizon, will live into their 90's. Willard Scott will need his own show to say happy birthday to those who reach 100 years old.

Are we prepared as a society to deal and manage this demographic shift? Have our managers been given one minute of training in how to deal with a minority, diverse workforce? Should we all trade in our ties for a tee- shirt with an AARP logo and discard our socks and wear loafers so we can as managers fit in. The answers are evolving and they suggest that we as employers need to be more proactive if we are to survive and/or prosper.

We employers in the New York metropolitan area will be even more at risk as we are the intermediaries, smack in the center of the greatest inflow of today's minorities and smack in the center of the most influential financial center of the world. I would like to suggest that we are intermediaries because of where we are, who we are, and because of the opportunity that New York City and state represent to our country and the world.

However, as I suggested with my opening premise, the vitality of all of the above will be directly commensurate with our ability to nurture the vitality of our youth. That is what got us here in the first place! Those aspiring young immigrants whose succeeding generations embraced the opportunities that our country and great city afforded them. The new generation will fulfill the jobs of the new economy and the new generation will be dominated by today's minorities. We have the human resource here today. Just shift our line of sight from Ellis Island to The City University of New York. Of the 200,000 CUNY students enrolled in 1997: 71% were members of minority groups and 62% were women - 200,000 students who will be in demand, who will be given unprecedented opportunities and choice. They will be courted by neighboring states and cities and I can assure you by neighboring competitors.

We as employers must keep them here, inculcate them in our respective firms and prepare them to inherit, maintain and grow our legacy. They can accelerate our entry into a global economy as they can speak more than 100 different languages. They can educate us, define for us and help penetrate the immense economic blocks represented by varying ethnic groups.

They constitute a regional response to the State Department of Labor's report that states that this year-the year 2000-87% of all jobs will require education beyond high school and more than half will require a college degree.

They are and will be the predominant human resource that is assimilated into sectors of the economy demanding educated, intensive work forces. Health services, business services, social services, engineering, management and related services are expected to account for half of all wage and salary jobs added to the economy by the year 2006. And if we are successful at employing and keeping them they will contribute incrementally $700 million a year more in taxes to New York City and State than what would have been contributed if they hadn't earned their CUNY degrees.

They are here, waiting for the opportunity that we as employers, taxpayers, mentors and stated, a wish list for our city and state, ten initiatives that are not about money but more about managing change.

• Engage in the debate for revitalizing our city and state school systems.

• Support the needed increase in salaries for our teachers, professors and college presidents that embarrassingly lag our neighboring states.

• Coalesce with faculty, the student body and the administration of CUNY and SUNY to define the needs of business and to learn the needs of the new generation.

• Establish a diversity effort within your respective firms. Champion a diverse employee base at all levels of your organization. Shift from a defensive posture relative to EEOC to a pro-active, opportunistic posture that suggests diversity and respect in the work place is "Good Business."

• Review and modify, where necessary, archaic policies that impact our employees. Evaluate flex hours, cafeteria benefit plans and dress codes as a 21st century condition.

• Educate your managers as to what is important to a Hispanic, a Jew, an African American and an Asian. How else are they going to be value added to their new employees? Ask CUNY to help you. They have the resources and the will.

• Support our city and state government's initiatives in attracting and keeping business , develop the new and be sensitive to the needs of the old. And be totally intolerant of any remaining pockets of bigotry left in our respective organizations. There is no room in a vibrant society for such nonsense and insensitivity.

• Putting all political rhetoric aside, let's acknowledge the great strides our city has made in providing a safe environment for our employees, tourists and children. Letıs support the on-going initiatives of our mayor and police force.

• And finally, let us business leaders acknowledge the importance of our City University system by demonstrating our support, by interviewing and hiring their graduates and by demanding of our government officials the competitive requirement of having the best college and University system in America. The best city in the world needs the best academic foundation if it is to remain the best.