(Bloomberg) -- The idea that it’s a good thing to focus on diversity, equity and inclusion — or DEI — is under fire in the US. That’s the case in business, where anti-DEI activists such as Robby Starbuck and Edward Blum have attacked US companies for their support of DEI, causing many of them to scrap related initiatives.
And it’s the case in politics, where Republicans have labeled the Democratic Party’s nominee for the presidency, Vice President Kamala Harris, a “DEI” hire, implying that her race and gender, rather than her intellect and capabilities, made her ascent possible. Tesla Inc. Chief Executive Officer Elon Musk — who backs the Republican nominee, ex-President Donald Trump — has even shared a fake ad on his social network, X, in which doctored audio of Harris’ voice calls her “the ultimate diversity hire” because she’s both a woman and a person of color.
What does DEI really mean?
Initially, the term was used to promote the idea of increasing diversity in recruitment and hiring, but it’s broadened in scope as institutions discover that simply employing more women and non-white people doesn’t mean they will succeed or climb the leadership ranks.
In the workplace and beyond, disagreements over what the acronym means have made DEI easier to attack. The Society of Human Resource Management recently drew fire when it encouraged HR executives to deprioritize “equity” because it’s a confusing concept and instead focus on diversity and inclusion.
Some companies have started emphasizing the “I” for “inclusion,” sometimes using terms such as “belonging” and “allyship” in an effort to stress that their initiatives are meant for everyone, not just certain groups. Others have changed the way they refer to these initiatives, using terms such as culture or human capital management.
How did DEI become controversial?
The 2020 murder of George Floyd by police prompted a backlash against racial inequity in corporate America. Companies made hundreds of pledges to add non-White employees to their workforce and hired a record number of chief diversity officers. By 2022, many large companies were paying executives an added bonus for their efforts in meeting diversity goals.
But momentum shifted early that year amid rising criticism of ESG – an approach to investing and finance centered around understanding risks from environmental factors, social issues and questions of corporate governance. Conservative groups said funds such as BlackRock Inc. were pushing an “extreme” social agenda. Prominent Republicans such as former Vice President Mike Pence and Florida Governor Ron DeSantis began pushing anti-ESG initiatives.
In 2023, the Supreme Court ruled that so-called affirmative action programs at college campuses amounted to discrimination and would no longer be permitted. Until then, under Title VI of the 1964 Civil Rights Act, schools were long allowed to factor in characteristics such as race and gender when admitting students.
The ruling didn’t directly implicate companies: Title VII of the same act bars employers from choosing one candidate over another on the basis of race, gender, age, disability and veteran status, with limited exceptions, and a 2020 Supreme Court ruling extended the same protections to LGBTQ workers. But the affirmative action decision invigorated legal activists including Blum and former Trump staffer Stephen Miller, who’ve filed lawsuits and issued complaints to the US government around corporate hiring that they say unfairly favors non-White workers.
The war between Israel and the Palestinian group Hamas, which the US designates a terrorist organization, has raised the temperature of public discourse around DEI. Republican donors and politicians have blamed university DEI departments for promoting ideas that have radicalized pro-Palestinian demonstrators and for failing to protect Jews from antisemitism on campus.
Have DEI initiatives made a difference?
White men have lost just a little of their dominance in the workforce. There’s been a small, steady shift from White male executives to non-White and female leaders, but White men still control about 60% of the top leadership roles while making up about 30% of the US workforce, according to federal workplace data.
Numbers from the US Bureau of Labor Statistics between 2019 and 2023 showed the share of all management roles held by Black people increased to 9.2% from 7.8%. Black people, who are about 14% of the overall US population, make up about 13% of the US workforce.
Does diversity boost the bottom line?
Many advocates for diversity emphasize the business case for it, arguing that a workforce full of people with different backgrounds helps a company avoid group-think. Even many opponents of DEI policies agree with the benefit of a broader pool of insights, though they may disagree about how to obtain them.
A series of McKinsey & Co. studies between 2015 and 2020 found a statistically significant correlation between public company earnings and the racial diversity of their executives, but more recent research has questioned the durability and magnitude of those findings.
Executives including JPMorgan Chase & Co. CEO Jamie Dimon have sought to frame DEI as an effort to tap new markets, develop new sources of talent, and invest in high-growth opportunities in ways that will boost profits. He wrote in April that programs to train and hire local talent in Detroit had helped the bank gain market share there.
How has corporate America responded?
Companies have become increasingly cautious about promoting their diversity programs, striking words from public filings, canceling or modifying internships that favor a specific minority group and eliminating programs that reward executives for hiring more workers of color.
Starbuck’s social media attacks on what he calls “woke” corporations have led Tractor Supply Co., Deere & Co., Polaris Inc. and Harley Davidson Inc. to scale back or change their DEI policies; Jack Daniel’s whiskey maker Brown-Forman Corp. also dropped its DEI programs shortly before Starbuck said he was planning to start a campaign against the Kentucky company, as has Lowe’s Cos. Several of the companies agreed to end participation in the Human Rights Campaign’s corporate equality index, which measures business support for LGBTQ employees. Since supporting the lawsuit that led the Supreme Court to overturn affirmative action, Blum has also targeted Southwest Airlines Co., Fearless Fund and more with his American Alliance for Equal Rights.
A majority of companies still say they plan to pursue DEI in a broad way, but employment lawyers say the companies are also taking a second look at their programs to make them more immune to legal challenge.
What do critics of DEI say?
Mainly, they claim DEI policies in the workplace have prompted companies to prioritize recruiting women and certain people of color because of their race or gender, at the expense of candidates who are better qualified. For example, they point to companies that have adopted diversity hiring targets they say resemble quotas — something that’s long been illegal in American employment law. Or they say fellowship and internship programs open only to certain groups offer an unfair advantage.
Some of DEI’s detractors say they want a more diverse workforce but think policies targeting specific groups are the wrong way to get there. They claim DEI has provoked racial animus in and out of the office, and allege that people of color are being stigmatized as “diversity hires.” For his part, Starbuck has said the quick retreats shows customers and companies would rather see business focus on making and selling products and be neutral on social issues.
In a recent survey from Bentley University and Gallup, the majority of respondents said that companies shouldn’t take a stance on current events.
What do supporters say?
Many proponents characterize these attacks as efforts by White men to hang onto power they’ve traditionally wielded in American society, pointing to still-dramatic disparities in pay, wealth and assets between White men and disadvantaged groups. They argue that targeted efforts are still crucial to level the playing field for people of color and women.
A majority of employees are supportive of efforts to increase diversity, equity and inclusion at work. An April Washington Post-Ipsos poll showed 61% of adults think corporate DEI programs are “a good thing”— virtually unchanged from the same survey in 2023. Human Rights Campaign has said companies are responding to right-wing bullies such as Starbuck at the expense of their employees and long-term profits.
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