An Elegy for DEI

An essay inspired by the second episode in our podcast, “An Elegy for the DEI Boogeyman.”

Between Trump’s executive order and the number of private companies that are pulling back on their own efforts, we are quite possibly at the end of the Diversity, Equity, and Inclusion (DEI) movement.

What’s amazing to me, thinking of DEI truly in retrospect, is how much we failed to learn from it. Or, as I said in the show, “the two things we didn’t learn from DEI that we should talk about at its funeral.”

A note: I’m going to present this essay using black-white gaps in our labor market as the emblematic example of why DEI was needed and how people reacted to it. When it comes to discrimination in the United State, black people, sadly, come first. If I were talking about male-female, straight-gay, cis-trans, native-immigrant, the supporting evidence would be different, but the conclusion would be the same.

First, What We Already Knew

If there were a way to sum up the motivation for DEI in one figure, it would be this one: the unemployment rate of black and white workers since 1972. What you’ll notice is that the average black unemployment rate—in good times or bad, in past decades or the present—is twice the white unemployment rate, or higher.

Source: Bureau of Labor Statistics

Economists have used ‘resume audit studies’ to understand how much of the differential success that black workers have in finding a job comes down to discrimination in the labor market. The audit methodology was actually pioneered to study housing discrimination, which you can read about here. In a resume audit study, fake resumes are sent out in response to job openings that are identical except that some resumes have a black sounding name at the top and some resumes have a white sounding name at the top. Are the black resumes called back less?

Yes. One seminal audit study that showed this was “Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination,” published back in 2004. It’s not an isolated finding. It’s been replicated in numerous audit studies since. Sociologist Devah Pager showed that white men with felonies were more likely to be called back by prospective employers than black men without them. Economist Dania Francis showed in an experiment with fake high school transcripts that black girls were the least likely to be recommended to take AP classes. One group of researchers even showed that people are less likely to respond to an email if a black person sends it.

So are we all just closet racists? It’s not that blunt. We are all subject to the biases we are conditioned to throughout our lives, both positive and negative. We like the familiar. We are more inclined to like people who look like us, sound like us, went to our school, are from our hometown. We don’t easily like the unfamiliar, in part because we fill in the gap of unfamiliarity with the negative biases, the subtle stereotypes, the latent prejudices that we probably don’t know or realize that we have.

And since we—men, women, black, and white—are not randomly distributed in positions of power or economic gatekeeping, that has consequences for the labor market and the outcomes of workers in it.

The labor market is just the start. These dynamics have consequences for income, wealth, and more. I wrote about this—and how inequality and discrimination can compound—while I was still working full-time at RAND.

But back to DEI.

Let’s look at unemployment rates by race again, but this time show 1) just men and 2) look by educational attainment. In our labor market there is a basic fact that the more education you have, the easier it is to find a job. High school dropouts have the highest unemployment rate, individuals with an advanced degree have the lowest. This is always true at the group level, i.e. the unemployment rate for college graduates has never been higher than the unemployment rate for high school graduates within any group of workers.

Here are the unemployment rates since 1977 of the six male race-by-education groups. Within race, the pattern holds and the degrees predict the unemployment rate well. But across race, they’re mismatched. The unemployment rate of each education group should be the same (i.e. the two ‘high school’ lines should be hugging each other). But they’re not. Instead, the unemployment rate of the black high school graduate hugs the unemployment rate of the white high school dropout. It happens again for college: The black college graduate has a similar unemployment rate as the white high school graduate.

Source: Economic Policy Institute, State of Working America

Just to drive this home, here’s the usual weekly earnings of full-time workers by their race, gender, and educational attainment. White men earn more than everyone else, with the exception of highly educated Asian men.

Source: Bureau of Labor Statistics

The labor market is overlooking people and undervaluing them. DEI was intended to counteract this, to take as a given the differential treatment and try to correct for it.

The Things We Learned Part 1: Identifying with the Edge of Inclusion

DEI became a scapegoat for all kinds of economic frustrations. You’ve probably heard this as “No one wants to hire a white guy right now.” If someone had a hard time getting a job, it became DEI’s fault. And other things became DEI’s fault too: DEI is why it was hard to contain the historic California wildfires and DEI causes planes to crash.

Because of this narrative, the actual lesson here is easy to miss.

Say Bank of America decides that it will hire 1,000 tellers this year. In a typical hiring cycle, five tellers are black, but spurned on by DEI, they aim to have 20 black tellers. It’s still an incredible underrepresentation given black people make up 15% of the population, but an acknowledgement that they are missing out on talent.

What DEI taught us was just how many people identify with those 15 lost spots: If Bank of America hires more black people, then I won’t get hired.

This says less about black people, or hiring, and more about the economic insecurity people feel and the precariousness of their economic lives. So many people see themselves as the marginal person, that any change to the system threatens their economic livelihood. In the podcast, we kept coming back to the feeling that people are living “on the bubble.”

It’s an indictment of our economy—not DEI—that this was the sentiment DEI evoked. We’ve got all kinds of indicators that try to measure how secure Americans’ financial lives are. One popular one is the share of Americans who have enough cash on hand to meet an unexpected $400 expense. But the vulnerability Americans feel at the prospect of DEI is so much deeper than cash on hand.

And maybe it’s vulnerability mixed with a pervasive sense of unfairness: okay you want to fix unfairness for black workers but what about all the unfairness I have to deal with? My scummy landlord? My monopoly of a grocery store that is jacking up prices? My awful health care plan that costs me a fortune? My kids’ school that is always in a massive budget hole? My job that keeps adding responsibilities to my plate but never adding raises? You want to help them, but why can’t you help me?

You poke at the status quo, you’ll hit more than what you’re aiming for.

This is a vital lesson, because it’s a mandate for policy. There is work to do.

The Things We Learned Part 2: We Don’t Know How to Talk About Zero-Sum Game in an Abundant World

Are white people worse off when black people are equal? Does elevating black people require demoting white ones? Or, brass tacks: does DEI hurt white people?

The answer is a clear no. Our economy is not a zero-sum game; we don’t have a fixed set of jobs, or promotions, or raises, but rather a growing number of those and more in an economy that is constantly expanding. It’s a positive feedback loop: the more people who benefit from jobs, and promotions, and raises, the stronger and bigger our economy becomes.

That’s not just pretty talk. Our economy is a direct function of the number of people working in it and how much money they have to spend. Get more people working, increase earnings, and the economy expands.

Yet, people rejected this abundance they can’t see for the zero-sum game that they could. Applying for work is not a zero-sum game, but applying for a specific job is. Or, anyone who wants to go to college can go to college in the United States (abundance) but very few people get into Harvard (zero-sum).

DEI and efforts like it led to a zero-sum myopia, or even a zero-sum fixation. Certainly the scapegoat argument blossomed here. Did you not get into Harvard because you weren’t good enough or because you’re white? The latter is certainly tempting.

But the lesson is not that people’s reaction is wrong but rather that DEI proponents did not have as effective of a narrative to talk about it. It’s easy to sell someone on being slighted. It’s harder to sell that someone else deserved it more. Or harder to sell that we are better off when the economy is fairer, because fair in the economy and fair in a person’s life can clash.

I don’t have a good answer, the winning narrative or sell that will fix it all.

I didn’t talk about this in the show, but I’ve thought way too much in life about Abigail Fisher. She’s a Houston suburb girl, like myself, who grew up dreaming of going to UT Austin, just like me. I got in, but she didn’t. She became the lead plaintiff in Fisher v Texas, suing that she was denied admission because she was white and became the face of a multi-decade effort to remove race from college admissions.

The harsh truth is: she simply wasn’t good enough. As UT admissions officers argued again and again in court, she did not have the grades or the SAT scores to get in to UT. This is in part because Texas public universities are bound by a law passed by the legislature in 1997 called The Top 10% Rule, which guarantees admission if you graduate in the top of your class. It’s to make sure that all high schools, especially ones from rural areas, can send students to the flagships. Over time, given population and preference, UT Austin’s admission is now the top 6%.

It’s a remarkably fair policy, but she failed it. She wasn’t in the top 10%, so she had to compete for the slim slim slim number of spots for UT admissions outside the top 10%, which has a higher rejection rate than Harvard.

It’s a reminder that fair is subjective. She didn’t get what she wanted, so the world became unfair to her. Lawsuit unfair. Supreme Court unfair. I don’t think many people would read about her and think, yeah that’s me! Nevermind my grades, it’s because they prefer black people! And yet, that was the tenor of the reaction to DEI efforts: it’s unfair to not let me have it.

Perhaps, similar to the extent of economic insecurity, DEI teaches us just how unfairly treated most people feel in the economy.

Optimism

The pervasiveness of racial disparities—and our collective rejection of fixing them—doesn’t exactly inspire confidence. But it’s not as if we walked away from a solution. We walked away from a weak attempt. DEI wasn’t a success in the aggregate; it didn’t move the needle on big metrics like unemployment rate.

There’s a “sly smirk of optimism” in that people against DEI lost much more at its end than its proponents. They lost the fall guy. They lost the poster child of their culture war. They’ve got a vacuum in rhetoric. And in six months or a year or two years when the same economic problems eat at Americans, we just have to be there, saying loudly, that DEI wasn’t to blame after all, and is further proof that they don’t have solutions, just empty rhetoric.