DEI in the Workplace
When corporate and federal DEI programs actually started, the real research on whether they worked, why the current administration says they're economically harmful, and what's actually happened to jobs and specific groups of workers since the 2025 rollback began. Plainly, with sources.
Terms
- DEI
- Diversity, Equity, and Inclusion — the modern label for workplace efforts to recruit, promote, and retain people across race, sex, and other groups, and to remove barriers those groups face. Distinct from, but descended from, legally mandated affirmative action.
- Affirmative action
- The older, narrower, legally mandated practice requiring federal contractors to actively recruit underrepresented groups. Unlike voluntary corporate DEI, it originated in executive orders with the force of federal contract law.
- Disparate impact
- A legal theory holding that a policy can be discriminatory if it disproportionately harms a protected group, even without proof of intent. Central to both the original case for DEI and current lawsuits against it.
When it started
The term "DEI" is recent, but the practice it descends from isn't. President Kennedy's Executive Order 10925 (1961) was the first to use the phrase "affirmative action," requiring federal contractors to recruit without regard to race. The Civil Rights Act of 1964 and President Johnson's Executive Order 11246 (1965) built the legal floor. What's genuinely new is the scale and voluntary, corporate-driven form DEI took starting in the mid-2010s and especially after 2020. This page covers DEI in the workplace broadly; for what the 2023 Supreme Court ruling specifically did to college admissions, see our separate page on DEI and college admissions.
The case for it, and the case against it
The case for it
- McKinsey's 2015, 2018, and 2020 reports found companies with more diverse leadership were more likely to outperform financially — the single most-cited justification for corporate DEI spending.
- Separately, economist Chang-Tai Hsieh and colleagues (2019) found that removing discriminatory barriers after the 1964 Civil Rights Act improved worker-job matching, accounting for 20–40% of U.S. per-capita income growth from 1960–2010.
- A 2026 study found 54.2% of LGBT workers reported increased workplace stigma at companies that rolled back DEI, versus 24.9% at companies that kept it.
- Multiple studies link diversity training and inclusion efforts to higher reported employee satisfaction, retention, and engagement.
The case against it
- An independent replication (Green & Hand, 2024) of McKinsey's own studies found no statistically significant relationship between executive diversity and financial performance — McKinsey's data was analyzed backward and never released for outside review.
- The 2023 Supreme Court ruling ending race-conscious college admissions (SFFA v. Harvard) fueled "reverse discrimination" lawsuits arguing DEI hiring and promotion illegally disadvantages non-minority employees.
- Critics argue DEI substitutes identity for qualifications in hiring and promotion, which the Trump administration's own economists now argue directly reduces productivity (below).
- Implementing and staffing DEI programs costs money and time that could otherwise go to direct business operations.
By the numbers
- Peak U.S. jobs focused on DEI, early 2023
- 20,000+
- DEI-titled jobs eliminated since 2023
- 2,600+
- Black women's unemployment rate, 2026
- 7.3%
Revelio Labs data via NPR; Feminist Majority Foundation analysis of federal labor data (white women's rate is 3.7% over the same period).
What's happened since the rollback began
President Trump's Executive Order 14151 (Jan. 20, 2025) eliminated federal DEI, DEIA, and "environmental justice" offices and Chief Diversity Officer positions government-wide, placed affected employees on immediate administrative leave, and ordered agencies to terminate DEI-related contracts and grants within 60 days. A second order the next day extended pressure to federal contractors and grant recipients. In the private sector, Walmart, Target, Amazon, and Meta are among the major employers that have wound down DEI policies since; Revelio Labs data compiled for NPR found employers eliminated more than 2,600 jobs with "diversity" or "DEI" in the title or description since early 2023, down from a peak of more than 20,000 such roles — more than double the count five years earlier.
The clearest documented harm is concentrated in one group: Black women's unemployment reached 7.3% in 2026, compared to 3.7% for white women, according to an analysis of federal labor data by the Feminist Majority Foundation. The analysis attributes this to two overlapping causes: AI automation hitting administrative, HR, and training roles that disproportionately employed Black women, and the loss of federal and DEI-adjacent positions and advancement pathways that previously helped offset hiring and promotion gaps. This is despite Black women earning 70% of all master's degrees awarded to Black students in 2020–21 — the disparity isn't explained by a credentials gap.
The administration's own economic case
The 2026 Economic Report of the President devotes a full chapter to arguing the opposite: that DEI itself, not its removal, has been the economic harm. Using a statistical proxy for "unexplained" minority-manager hiring after controlling for industry, state, and year, the White House Council of Economic Advisers estimates that industries that "heavily pursued DEI" were about 2.7% less productive by 2023 than those that didn't, putting the aggregate cost at roughly $94 billion a year — about $1,160 annually for a two-earner family. The chapter argues this confirms economist Gary Becker's 1957 theory that discrimination (in either direction) misallocates talent and reduces output.
That specific $94 billion estimate has drawn its own methodological criticism, including from mainstream financial press: the analysis has no actual measure of whether a company adopted DEI policies, no survey data, and no control group of similar firms that didn't — it uses the pace of minority hiring itself as a stand-in for "DEI," then attributes any productivity difference entirely to that. Critics, including the DEI-focused outlet Fair360, argue a consistent reading of the chapter's own framework would actually imply discrimination itself costs vastly more than DEI ever did — though Fair360 has its own institutional stake in that conclusion, the same way McKinsey did in its original findings.
Nonpartisan, plainly
Both headline economic claims in this fight — that DEI boosts profitability, and that ending it does — rest on studies that independent scrutiny has found didn't isolate what they claimed to measure. McKinsey's data was never released for outside replication and, when reconstructed, showed no significant effect. The current administration's own $94 billion figure measures minority hiring rates and calls it "DEI," without any actual record of which companies had DEI programs at all. We're not in a position to referee that statistical fight, and we don't think anyone honestly can with the evidence currently public. What isn't in dispute: real DEI-titled jobs have been eliminated by the thousands since 2023, the federal government's DEI infrastructure has been dismantled by executive order, and Black women's unemployment rate has risen sharply and now sits nearly double white women's — even as their credential levels haven't changed. Whether that's a temporary disruption, a return to a fairer baseline, or a lasting harm depends on the same unresolved causal question at the center of this whole debate.
Talking points
These are the questions we think you should ask those who are running for office and will represent you.
- Do you support restoring federal DEI offices and Chief Diversity Officer positions, and if not, what specifically would you replace them with to address documented hiring and promotion gaps?
- What specific evidence would change your mind about whether DEI programs help or harm economic outcomes?
- Should companies be legally required to disclose whether their diversity hiring practices consider race or sex as a factor, one way or the other?
- What's your plan, if any, for the specific rise in Black women's unemployment documented above?
Read more
- Washington Post: History of DEI: A timeline of affirmative action's rise and fallwashingtonpost.com
The history timeline above.
- Wikipedia: Executive Order 14151en.wikipedia.org
The Jan. 20, 2025 order eliminating federal DEI offices, above.
- Congressional Research Service: Recent Executive Actions on Diversity, Equity, and Inclusion (DEI) in the Federal Governmentcongress.gov
Background on the 2025 executive orders and their federal contractor provisions.
- McKinsey & Company: Diversity Wins (2020)mckinsey.com
The original profitability claims quoted and challenged above.
- Econ Journal Watch: Green & Hand, “McKinsey's Diversity Matters/Delivers/Wins Results Revisited” (2024)econjwatch.org
The independent replication finding no significant relationship, above.
- The White House: 2026 Economic Report of the President, Chapter 10, “The Economic Consequences of DEI”whitehouse.gov
The administration's own $94 billion/2.7%-productivity claim, quoted directly above.
- Fair360: The President's Economic Report Claims That DEI Cost the Economy $1.9 Trillion. Actually, Discrimination Cost $30 Trillionfair360.com
A DEI-focused outlet's rebuttal of the CEA chapter, above; read alongside its own institutional interest.
- NPR: Corporate America's retreat from DEI has eliminated thousands of jobsnpr.org
The Revelio Labs job-loss data above.
- Yahoo Finance: Data suggests Black women are being hit hardest by AI, layoffs, and DEI rollbacksfinance.yahoo.com
The Black women/white women unemployment gap above, per a Feminist Majority Foundation analysis.
- arXiv: The Tech DEI Backlash — The Changing Landscape of Diversity, Equity, and Inclusion in Software Engineeringarxiv.org
The LGBT-worker stigma finding above.