Pushed on by President Donald Trump and public pressure by some, several large companies are doing away with DEI (diversity, equity and inclusion) programs.
Many of the programs started in 2020 in the wake of the George Floyd murder with businesses pledging to create more diverse workplaces. However, some have recently canceled or reduced those efforts, including Amazon, Meta, Target, McDonald’s, Walmart and Boeing.
Trump revoked the Equal Employment Opportunity Act of 1965 on Jan. 21, which was designed to combat workplace discrimination. The president said the law was contributing to a culture of DEI and getting rid of the act was “ending illegal discrimination and restoring merit-based opportunity.”
Critics were quick to point out the Equal Employment Opportunity Act passed by Congress in 1972 was still in place and the president’s move was mostly symbolic. However, he also suspended DEI staff across many government agencies.
Some business leaders have said removal of the programs did not make economic sense. Vista Equity Partners CEO Robert Smith told Forbes “diversity is a great thing in business,” stating diverse teams are more productive.
Question: Is it a good move for companies to follow the federal government’s lead and roll back DEI programs?
Economists
Caroline Freund, UC San Diego School of Global Policy and Strategy
NO: DEI programs should be considered in the interest of the company’s own needs and goals. For many companies, they have been effective at increasing the bottom line, expanding opportunities, and improving the well-being of staff. These programs should remain intact. For others, where they have been ineffective and costly, rolling them back makes sense. This decision should be made without pressure from the federal government.
Kelly Cunningham, San Diego Institute for Economic Research
YES: Building a colorblind society requires being truly colorblind. We should try our very best to treat people without regard to race in either personal life or public policy. There may be strategic reasons for having a diverse workforce, especially to reflect the firm’s customer base, but imposing government requirements on anything but merit and the interests of the company is counterproductive. The ideal remains for equal treatment of all people regardless of race or class.
James Hamilton, UC San Diego
YES: Pressure from the government and threats of lawsuits led many employers to require DEI training for all their workers. There was never any evidence that this training was effective, and I think it can be counterproductive. Companies do need to make sure that all employees and customers are treated fairly and with respect. I think a key part of that is to avoid putting people into boxes based on race.
Norm Miller, University of San Diego
NO: While less regulation is generally a good thing, firms with policies to hire diversity in all possible senses of the word are able to innovate and outperform those that do not. There is no reason DEI can’t coexist with a qualified-only hiring policy and a merit-based reward system for performance. We only need to make it easier to fire those who fail to perform, something which is especially difficult within the government and school systems.
David Ely, San Diego State University
NO: Following the federal government’s lead would mean abruptly eliminating all of the company’s DEI programs. Companies will want to be cautious about taking such a step. Many companies will react to the backlash against DEI initiatives and end controversial programs to retain favor with customers, employees, and the public. But programs that emphasize recruiting and promoting from a broad and diverse group of candidates to attract and keep the best talent yield organizational benefits.
Ray Major, economist
YES: The DEI pendulum swung way too far to one side. Companies should follow the federal government’s lead. They must have the ability to hire the best person regardless of race, ethnicity, gender or any other qualifying criteria. DEI went way too far resulting in individuals being placed in positions for which they were unqualified. Furthermore, DEI programs introduced more, not less racism and divisiveness into the workforce leading to hostile work environments and reduced productivity.
Executives
Phil Blair, Manpower
NO: Forget the law. DEI is the right thing to do. We are a very diverse world now and we need to reflect it. Companies need to encourage all their employees and applicants to stretch their boundaries, learn new skills and prepare themselves for the jobs of the future.
Gary London, London Moeder Advisors
NO: I fundamentally believe in merit: if you are good, you will succeed. However, I also believe that DEI is a worthwhile entry criterion. Getting access to the job is the biggest role of DEI. After that, your success should be based on merit. I am frankly skeptical that this is even a real issue in most workplaces vs. a trumped up, political nonsense debate.
Bob Rauch, R.A. Rauch & Associates
YES: The theory is that diversity, equity and inclusion initiatives foster a more innovative workplace, improve employee satisfaction, and enhance a company’s reputation. I am committed to diversity, but the jobs that were created in the name of DEI created an industry based on identity politics. Each of our diverse team members is treated equally and feels included in all respects. Use common sense, hire a diverse team, but hire the best.
Chris Van Gorder, Scripps Health
NO: California has its own array of regulations and laws regarding diversity, equity and inclusion and President Trump’s executive order does not eliminate federal law yet and certainly not state laws. Regardless, treating all with respect and fairness to build an environment of belonging is what is important. Corporate policies that address both is just good business and the right thing to do.
Not participating this week:
Austin Neudecker, Weave Growth
Jamie Moraga, Franklin Revere
Haney Hong, San Diego County Taxpayers Assoc.
Alan Gin, University of San Diego
Have an idea for an Econometer question? Email me at phillip.molnar@sduniontribune.com. Follow me on Threads: @phillip020