Why DEI is under attack

So back in 2023, 8 out of 10 companies in the United States reported having formal DEI initiatives, and these are, uh, commonly called diversity, equity, and inclusion initiatives. And, uh, they were designed to, well, bring more kind of of those things into the workplace. But in 2024, uh, something's happening. You're seeing big corporations— Ford, Tractor Supply, other folks all under fire and scaling back those efforts. And Walmart just announced they were canceling a $100 million-plus initiative around DEI. And it's not just corporations. Workers' attitudes towards DEI is changing as well. In October 2024, Pew study into worker attitudes showed a 30% increase in people saying that DEI programs do more harm than good in the workplace. So what's going on? How did we get here? And what does this mean for business and CEOs? That's what this video is about. Hi, I'm Michael. I'm a 20-year-plus CEO. I've incubated dozens of businesses, hired hundreds of people, and I love to make videos talking about the world of business and what's going on. So let's talk about how we got here. For most of us, DEI kind of feels like a relatively new thing, right? It wasn't something that, that has existed all of our lives. In fact, it's only recently become a big thing in the past 10 years. But the root of DEI is all the way back in the 1950s and 1960s with the civil rights movement. And look, this started a kind of 2 or 3 decade process of America figuring out the right way to handle all this stuff. Affirmative action, by and large, meant to some people that you need to have quotas. Well, that went to the Supreme Court. The Supreme Court said that quotas were inherently discriminatory. In how it approached filling of different positions and jobs and that sort of thing. But it did allow people to include race and those sort of things as a factor in hiring folks. And it created this just jumble of things that for business were kind of confusing. And on top of this, you have the Civil Rights Act of 1964 that provides all of these different things and protections for people of various kind of backgrounds, colors, and creeds. And so fast forward to the early 2000s, a new narrative starts. And that new narrative isn't that businesses should do diversity or diverse hiring because it was the right thing to do, which, by the way, I think it is the right thing to do. You should do it because it's more profitable. And look, the folks who started to promote this idea, they may be right. For example, there are lots of scientific studies to kind of back up what they're saying around the profitability of basically diverse teams, both, you know, having men and women, people of all different types of backgrounds. There's famous studies where they looked at teams who were doing research, and the diverse teams were much more likely to develop and publish patents than the ones that, well, were just kind of monochromatic. And another study that was done by a DEI consulting firm— you'll notice the pattern here— and backed by Amazon Web Services showed that diverse teams made better decisions on average. And the big consulting shop, the management consulting shop McKinsey, They put together a study that showed diverse teams make decisions better 87% of the time on average. How they figured out it was exactly 87%, uh, you got me, but that's what the study says. And look, who was behind all these studies and who was doing them? You'll notice a pattern. Lots of DEI consultants and people who, well, want to make a lot of money from DEI initiatives being a thing. Well, two things happened in the early 2000s, and, uh, one of those was the rise of the internet and social media. And that caused two things to be very interesting. The first one of those things is that people who got the internet were suddenly behaving differently than people without it. And so an early 2000s study showed that the increase in broadband from 2001 to 2008 led to an increase in hate crimes. So in other words, when the internet got immediately available to more people, that increased the number of hate crimes in that area. And this is a study by NYU and University of Minnesota. And basically, like, so people get the internet and then suddenly that radicalizes some people in a pretty interesting way. And that particular study found that people— the number of national hate crimes would have increased by 865 if there was internet across the entire United States. Remember, from 2001 to 2008, Like some people still only have dial-up, which right now seems kind of crazy, 'cause well, like I'm at a drainage ditch on the internet and it totally works. That's the causation side of people being discriminatory. Then there's the other side of it, which is the reporting side. So the victim side of it and people who experience it. And what another study showed that in the early 2000s, people who were on Facebook and Twitter were much more likely to report being victims of discrimination or hate. So you can see now in the early 2000s, we have kind of a, well, a ripe opportunity. You suddenly have people on both sides of discrimination, uh, and the radicalization of people being much more pronounced because of, well, something that's transformed all of American society: the internet and social media. Then in the early 2010s, something else happened, and that's when DEI really went into overdrive. And what happened at that time was a lot of the big consulting and small consulting shops, they saw an opportunity. And again, this is America. So if somebody can figure out a way to make money, they will do it. And that's the starting about the time you start to see McKinsey and Bain and BCG, and all these different folks start to roll out these big DEI programs to consult with businesses to help them put together DEI initiatives. And so fast forward to the end of the 2010 decade. Right? By the year 2020, we look up and the DEI industry is $97 billion from basically nothing over the span of a decade. And it fast forwards to where we are today, which is DEI is a pretty big business. Like most things in the US, when things happen to big businesses and big businesses do stuff, eventually the same stuff starts to happen to little businesses and small businesses like ours. And by 2020, we had reached a point where 8 in 10 small businesses reported having DEI initiatives. And that went on to grow 13 more percent by 2021. And the second thing that happened in the early 2020s is the same thing that created the DEI boom is the same thing that's killing it: social media and the internet. And remember, what allowed DEI to get so much focus was anecdotes and virality of posts that were in social media of people's bad experiences. Well, now doesn't, doesn't a week go by that I don't see some sort of horror story from people who are feeling marginalized or mistreated or even wronged by DEI initiatives? I was researching this video and ran across a guy reporting on social media that he had been part of a DEI training where the trainers had decided to out a person, otherwise expose them as gay despite being closeted. In front of everybody in the company against their will. So the same thing that helped DEI become a thing is now turning against it. So where does that leave business owners and CEOs now? Well, we're kind of in a tough spot. You know, one thing that I saw recently was a friend who's a business owner was having a conversation with one of their customers, and the business owner was talking about their process to go and hire somebody for a role and was hoping to be able to get a diverse candidate for that and had definite initiatives to do around that. And the customer said, "Look, I don't care about your DEI stuff, sir. I just want you to give me a good customer service rep and take care of my account." So it creates a situation where business owners are kind of in a rough spot. And just a few years ago, like something like that wouldn't have happened in my experience. Like, You almost had to talk about DEI to be able to be accepted in a room. And the same thing is getting reflected in the actual, like, people working in companies as well, right? The favorability rating— so a recent study by Pew Research in October showed that the favorability rating for DEI initiatives had gone down. And what had gone up was workers saying that they felt like DEI did more harm than good. That number went up almost by a third year over year. Similarly, financing folks are thinking the same way. The mentions of DEI initiatives in big business conference calls for public companies, they're down 70% since 2001. But look, here's where the tension comes in. There is a lot of money in DEI efforts. And that lots of money, well, if you want to know one thing about America, when people figure out a way to make money, they tend to want to keep making money. And if you don't believe me, just go Google DEI rationale and DEI initiatives. On the internet and look at all of the articles that continue to be published in everything from Forbes to Fortune to the random HR journals. Like, there are tons of folks with a big vested interest in the DEI industry continuing. And look, like, they're also super optimistic about their business getting bigger. The one study I saw showed that the size of the DEI industry is expected to grow from $97 billion to over $130 billion in the next 6 years. So what does all this mean for us as smaller business people or CEOs? Well, first is an opportunity, right? If you start to see corporations, uh, giving up on DEI initiatives, potentially there's going to be candidates out there that are going to maybe have been overlooked by hiring practices at some of these bigger corporations. Secondarily, like, if these big corporations now have values that don't align with your market— say you're in California or you're in Massachusetts, this gives you an opportunity to embrace them even further and take advantage of that and meet your market well with what your customers want you to be doing. And the other opportunity is if you're in a red state, right, you should expect the rules to change. And as the great Wayne Gretzky said, you maybe want to think about skating to where the puck is going. And in the end, I think that's another thing we should all expect, right? This has been a shifting sand on business for the past 60 years. Figuring out how we as business owners kind of navigate how America figures out its race relations, equity, inclusion, all that kind of stuff. And frankly, we've been kind of a ping pong ball through the whole fight of, you know, corporations getting shamed or people getting shamed and you having to figure out what the new normal is. And so that's my second piece of advice to folks who are going to be going through running businesses through all this. Like, expect it to keep changing. And I'm a relatively new channel. I do this for fun. So if you want to help out, subscribe and leave a comment below. Thanks.