The assault on diversity, equity, and inclusion (DEI) is not only bad for our economy but is also both racist and shortsighted. Let me be clear: dismantling DEI initiatives will have significant economic consequences for our nation.
DEI represents just one part of racial equity. Advocates at nonprofits Policy Link and FSG contend that advancing racial equity involves a three-pronged approach. They believe that our nation’s corporations must advance racial equity within their own walls, in communities within their footprints, and in society at-large through their communication and lobbying efforts.
Because of book bans, changes on who is admitted to college and other attacks on racial equity, our nation’s corporations are dismantling their DEI efforts. I caution companies, however, that they do so at their own peril.
The data clearly show that diverse companies are more profitable. For example, studies by McKinsey & Company found that companies with more diverse workforces perform better financially, with a direct correlation between a diverse workforce and higher profits. Companies that reduce their diversity, equity, and inclusion efforts may negatively impact their competitive edge.
A 2020 study by Citigroup provides further evidence of the underperformance of this nation’s economy. In fact, Citigroup estimates that the economy lost $16 trillion between 2000 and 2020 due to discrimination against Black Americans.
The study found the economy lost $13 trillion in potential business revenue due to discrimination in lending to Black entrepreneurs, along with the loss of about 6.1 million new jobs per year. The report also showed $2.7 trillion in lost income due to wage disparities involving Black Americans, and a loss to the economy of $218 billion over the past two decades due to discrimination in housing lending. Discrimination in access to higher education resulted in a loss of $90 billion to $113 billion in lifetime earnings, according to the report’s findings.
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Unfortunately, there is a wealth of data showing how this nation is underperforming economically because of discrimination and inequality. And the disparities are not limited to corporate jobs, housing or education.
A study by McKinsey found that Hollywood loses $10 billion a year due to issues of systemic racial inequality throughout the film industry.
These significant disparities and economic losses to our nation’s economy are alarming and detrimental to America’s financial well-being.
The nation’s demographics are changing before our very eyes, and it is happening at a blistering pace. The evolving landscape of this nation should be a wake-up call for corporate and government leaders. For example, as of 2018, most people under 18-years-old are people of color. According to McKinsey’s study, recognition of this fact is crucial, with projections showing that by 2036, 50 percent of high school seniors will be people of color.
Experts predict that in the not-so-far future, white Americans will become the new minority or that the United States will have no racial group as a majority. By 2045, non-Hispanic white people will make up less than 50 percent of the American population, according to census projections by The Hill. By 2050, non-Hispanic white people will make up less than 40 percent of the population under the age of 18, according to those projections.
A University of Chicago study titled “American Face of Insurrection” and published on Jan. 5, 2022, analyzed the Americans who have been charged in connection with the Jan. 6, 2021, breach of the U.S. Capitol. The report concluded that the insurrectionists came from 45 states plus the District of Columbia, “ … with more coming from counties won by Joe Biden than by Donald Trump.” An even more striking finding to me is that “the key county characteristic is that the counties with insurrectionists lost the most non-Hispanic White population,” according to the report.
People of color are a burgeoning new majority in the United States. The legacy of racism and inequality burdens this new majority. A good example is the burden that the wealth gap between Black people and White people places on the nation’s economy. According to McKinsey, the racial wealth gap will ultimately cost the U.S. economy between $1 trillion and $1.5 trillion between 2019 and 2028 — 4 to 6 percent of projected GDP in 2028. The racial educational achievement gap costs $700 billion annually.
It is critical that America addresses these and other disparities to remain economically viable.
The attacks on DEI and other strategies to advance racial equity are foolhardy and could relegate the United States to third-world status. As esteemed Harvard Business School Prof. Micheal Porter once said, “You cannot have a successful business in a failing society.”
Racial inequity has had a profound impact on economic mobility in America. As the browning of America takes place, it is crucial that equity strategies take place with it.
The public sector alone cannot close the racial equity gap in this country; the private sector must partner with the government to make our society more equitable. If the opponents of DEI succeed, America will lose its standing among the world’s wealthiest countries. The attacks on DEI are just bad for our nation’s economy.
Peter M. Williams is an educator at Harvard University and Medgar Evers College, and a 2021 Harvard Advanced Leadership Initiative Fellow. He is former executive vice president for programs for the NAACP and former director of housing and community development with the National Urban League.
