Diversity, equity, and inclusion (DEI) initiatives have lost momentum in 2023 compared to previous years, as companies increasingly shift resources due to tightening economic conditions, according to Paradigm. The total percentage of American organizations with a DEI budget dropped from 58% in 2022 to 54% in 2023, while the number of organizations with a DEI strategy fell 9 points in that same time frame.
DEI initiatives in the workplace gained significant traction following the death of George Floyd, but now “external forces,” including tightening economic conditions and public and judicial pressure, are pushing back on those efforts.
“After two years of unprecedented investment sparked by 2020’s racial justice movement, this year, global momentum around DEI slowed,” according to the report from Paradigm.
“There are a number of headwinds contributing to this shift: the first is economic uncertainty that not only led to reduced spending across the board, it also firmly shifted the power balance back to employers.”
Despite the decline in funding, there was a 6-point increase in the number of companies that had a senior DEI leader and an 8-point increase in organizations that had goals related to representation for women in leadership from 2022 to 2023. A total of 20% of companies in 2023 had goals related to increasing employment related to race or ethnicity, which is a 4-point increase year-over-year.
The shift follows concerns from companies that the Supreme Court could target DEI and race-based hiring in the workplace the same way it struck down race-based admissions at colleges and universities earlier this year. In June, the Supreme Court ruled that using race as a factor in college admissions is not permissible under the Fourteenth Amendment of the U.S. Constitution in decisions involving Harvard and the University of North Carolina.
“Over the past several months, we’ve heard from a number of HR leaders who are de-emphasizing data and analytics as a part of their DEI efforts, in response to the changing legal landscape and increased scrutiny on DEI efforts,” according to the report from Paradigm.
Only 26% of companies examine the final results of hiring by race or ethnicity, while 33% analyze promotions in the same manner. Around 36% of organizations measured the attrition rate of their employees by race or ethnicity.
Businesses pulled back from hiring in October, adding only 150,000 jobs for the month compared to 297,000 in September, while unemployment ticked up to 3.9% from 3.8%. The Leading Economic Index predicted that 2024 will only see 0.8% growth in the U.S. economy due to a possible recession.
Why It Matters
Folks, it’s about time businesses ditched these so-called “diversity” initiatives. They’re finally seeing the light as economic uncertainty looms large. Companies are cutting back on DEI budgets, and it’s a breath of fresh air. We need to focus on merit, not race or gender. The Supreme Court’s recent decision on race-based admissions is a step in the right direction, and it’s high time companies followed suit.
Don’t get me wrong, diversity is great, but not when it’s forced or comes at the expense of qualified individuals. It’s time to get back to basics and prioritize what really matters: hard work and skill. Let’s leave race and gender out of the equation and focus on what truly makes America great.
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