https://theconversation.com/beyond-the-backlash-what-evidence-shows-about-the-economic-impact-of-dei-252143

Few issues in the U.S. today are as controversial as diversity, equity and inclusion – commonly referred to as DEI.

Although the term didn’t come into common usage until the 21st century, DEI is best understood as the latest stage in a long American project. Its egalitarian principles are seen in America’s founding documents, and its roots lie in landmark 20th-century efforts such as the 1964 Civil Rights Act and affirmative action policies, as well as movements for racial justice, gender equity, disability rights, veterans and immigrants.

These movements sought to expand who gets to participate in economic, educational and civic life. DEI programs, in many ways, are their legacy.

Critics argue that DEI is antidemocratic, that it fosters ideological conformity and that it leads to discriminatory initiatives, which they say disadvantage white people and undermine meritocracy. Those defending DEI argue just the opposite: that it encourages critical thinking and promotes democracy − and that attacks on DEI amount to a retreat from long-standing civil rights law.

Yet missing from much of the debate is a crucial question: What are the tangible costs and benefits of DEI? Who benefits, who doesn’t, and what are the broader effects on society and the economy?

As a sociologist, I believe any productive conversation about DEI should be rooted in evidence, not ideology. So let’s look at the research.

In the corporate world, DEI initiatives are intended to promote diversity, and research consistently shows that diversity is good for business. Companies with more diverse teams tend to perform better across several key metrics, including revenue, profitability and worker satisfaction.

Businesses with diverse workforces also have an edge in innovation, recruitment and competitiveness, research shows. The general trend holds for many types of diversity, including age, race and ethnicity, and gender.

A focus on diversity can also offer profit opportunities for businesses seeking new markets. Two-thirds of American consumers consider diversity when making their shopping choices, a 2021 survey found. So-called “inclusive consumers” tend to be female, younger and more ethnically and racially diverse. Ignoring their values can be costly: When Target backed away from its DEI efforts, the resulting backlash contributed to a sales decline.

But DEI goes beyond corporate policy. At its core, it’s about expanding access to opportunities for groups historically excluded from full participation in American life. From this broader perspective, many 20th-century reforms can be seen as part of the DEI arc.

Consider higher education. Many elite U.S. universities refused to admit women until well into the 1960s and 1970s. Columbia, the last Ivy League university to go co-ed, started admitting women in 1982. Since the advent of affirmative action, women haven’t just closed the gender gap in higher education – they outpace men in college completion across all racial groups. DEI policies have particularly benefited women, especially white women, by expanding workforce access.

Similarly, the push to desegregate American universities was followed by an explosion in the number of Black college students – a number that has increased by 125% since the 1970s, twice the national rate. With college gates open to more people than ever, overall enrollment at U.S. colleges has quadrupled since 1965. While there are many reasons for this, expanding opportunity no doubt plays a role. And a better-educated population has had significant implications for productivity and economic growth.

The 1965 Immigration Act also exemplifies DEI’s impact. It abolished racial and national quotas, enabling the immigration of more diverse populations, including from Asia, Africa, southern and eastern Europe and Latin America. Many of these immigrants were highly educated, and their presence has boosted U.S. productivity and innovation.

Ultimately, the U.S. economy is more profitable and productive as a result of immigrants.

While DEI generates returns for many businesses and institutions, it does come with costs. In 2020, corporate America spent an estimated US$7.5 billion on DEI programs. And in 2023, the federal government spent more than $100 million on DEI, including $38.7 million by the Department of Health and Human Services and another $86.5 million by the Department of Defense.

The government will no doubt be spending less on DEI in 2025. One of President Donald Trump’s first acts in his second term was to sign an executive order banning DEI practices in federal agencies – one of several anti-DEI executive orders currently facing legal challenges. More than 30 states have also introduced or enacted bills to limit or entirely restrict DEI in recent years. Central to many of these policies is the belief that diversity lowers standards, replacing meritocracy with mediocrity.

But a large body of research disputes this claim. For example, a 2023 McKinsey & Company report found that companies with higher levels of gender and ethnic diversity will likely financially outperform those with the least diversity by at least 39%. Similarly, concerns that DEI in science and technology education leads to lowering standards aren’t backed up by scholarship. Instead, scholars are increasingly pointing out that disparities in performance are linked to built-in biases in courses themselves.

That said, legal concerns about DEI are rising. The Equal Employment Opportunity Commission and Department of Justice have recently warned employers that some DEI programs may violate Title VII of the Civil Rights Act of 1964. Anecdotal evidence suggests that reverse discrimination claims, particularly from white men, are increasing, and legal experts expect the Supreme Court to lower the burden of proof needed by complainants for such cases.

The issue remains legally unsettled. But while the cases work their way through the courts, women and people of color will continue to shoulder much of the unpaid volunteer work that powers corporate DEI initiatives. This pattern raises important equity concerns within DEI itself.

People’s fears of DEI are partly rooted in demographic anxiety. Since the U.S. Census Bureau projected in 2008 that non-Hispanic white people would become a minority in the U.S by the year 2042, nationwide news coverage has amplified white fears of displacement.

Research indicates many white men experience this change as a crisis of identity and masculinity, particularly amid economic shifts such as the decline of blue-collar work. This perception aligns with research showing that white Americans are more likely to believe DEI policies disadvantage white men than white women.

At the same time, in spite of DEI initiatives, women and people of color are most likely to be underemployed and living in poverty regardless of how much education they attain. The gender wage gap remains stark: In 2023, women working full time earned a median weekly salary of $1,005 compared with $1,202 for men − just 83.6% of what men earned. Over a 40-year career, that adds up to hundreds of thousands of dollars in lost earnings. For Black and Latina women, the disparities are even worse, with one source estimating lifetime losses at $976,800 and $1.2 million, respectively.

Racism, too, carries an economic toll. A 2020 analysis from Citi found that systemic racism has cost the U.S. economy $16 trillion since 2000. The same analysis found that addressing these disparities could have boosted Black wages by $2.7 trillion, added up to $113 billion in lifetime earnings through higher college enrollment, and generated $13 trillion in business revenue, creating 6.1 million jobs annually.

In a moment of backlash and uncertainty, I believe DEI remains a vital if imperfect tool in the American experiment of inclusion. Rather than abandon it, the challenge now, from my perspective, is how to refine it: grounding efforts not in slogans or fear, but in fairness and evidence.

Lincoln issued the preliminary Emancipation Proclamation in the midst of the Civil War on September 22, 1862, declaring that if the rebels did not end the fighting and rejoin the Union, all slaves in the Confederacy would be freed on the first day of the following year.  On January 1, 1863, Lincoln issued the final Emancipation Proclamation, declaring that all slaves in the Confederate States of America in rebellion and not in Union hands were freed.

More isolated geographically, planters and other slaveholders had migrated into Texas from eastern states to escape the fighting, and many brought slaves with them, increasing by the thousands the enslaved population in the state at the end of the Civil War. Although most lived in rural areas, more than 1,000 resided in both Galveston and Houston by 1860, with several hundred in other large towns. By 1865, there were an estimated 250,000 slaves in Texas.

Enforcement of the Proclamation generally relied upon the advance of Union troops. Texas, as the most remote state of the former Confederacy, had seen an expansion of slavery because the presence of Union troops was low as the Civil War ended.  Despite the surrender of Confederate General-in-Chief Robert E. Lee at Appomattox Court House on April 9, 1865, the western Confederate Army of the Trans-Mississippi did not surrender until June 2.  On the morning of June 19, 1865, Union Major General Gordon Granger arrived on the island of Galveston^] to take command of the more than 2,000 federal troops recently landed in the department of Texas to enforce the emancipation of its slaves and oversee Reconstruction, nullifying all laws passed within Texas during the war by Confederate lawmakers. The order informed all Texans that, in accordance with a Proclamation from the Executive of the United States, all slaves were free:

“The people of Texas are informed that, in accordance with a proclamation from the Executive of the United States, all slaves are free. This involves an absolute equality of personal rights and rights of property between former masters and slaves, and the connection heretofore existing between them becomes that between employer and hired labor. The freedmen are advised to remain quietly at their present homes and work for wages. They are informed that they will not be allowed to collect at military posts and that they will not be supported in idleness either there or elsewhere.”

Longstanding urban legend places the historic reading of General Order No. 3 at Ashton Villa; however, no historical evidence supports such claims. Although widely believed, it is unlikely that Granger or his troops proclaimed the Ordinance by reading it aloud: it is more likely that copies of the Ordinance were posted in public places, including the Negro Church on Broadway, since renamed Reedy Chapel A.M.E. Church.  Although this event has come to be celebrated as the end of slavery, emancipation for the remaining enslaved in two Union Border States (Delaware and Kentucky), would not come until several months later, on December 18, 1865, when the Thirteenth Amendment was ratified. 

Former slaves in Galveston rejoiced after General Order No. 3. One year later, on June 19, 1866, freedmen in Texas organized the first of what became annual commemorations of "Jubilee Day". Early celebrations were used as political rallies to give voting instructions to newly freed African Americans. Other independence observances occurred on January 1 or 4.

In some cities, Black people were barred from using public parks because of state-sponsored segregation of facilities. Across parts of Texas, freed people pooled their funds to purchase land to hold their celebrations. In 1872, Black leaders in Texas raised $1,000 for the purchase of 10 acres of land, today known as Houston's Emancipation Park, to celebrate Juneteenth.  The observation was soon drawing thousands of attendees across Texas. The Black community began using the word Juneteenth for Jubilee Day early in the 1890s. The Current Issue, a Texas periodical, used the word as early as 1909, and that year a book on San Antonio remarked, with condescension, on "June 'teenth'".

In the late 1970s, when the Texas Legislature declared Juneteenth a "holiday of significance ... particularly to the blacks of Texas”, it became the first state to establish Juneteenth as a state holiday. The bill passed through the Texas Legislature in 1979 and was officially made a state holiday on January 1, 1980. Before 2000, three more states officially observed the day, and over the next two decades it was recognized as an official observance in all states, except South Dakota, until becoming a federal holiday on June 17, 2021. In New York, it was first officially observed in 2004, but did not become a paid state holiday until 2020.