Diversity, equity, and inclusion is under siege. Like critical race theory and gender-neutral bathrooms, DEI is now the new battleground where broader societal grievances against social progress are being challenged. While the efforts to undermine DEI principles and goals are not novel, recent victories among opponents raise serious questions about its future across all aspects of American life, particularly in employment and entrepreneurship.
Growth of Anti-DEI Efforts
The coordinated growth of anti-DEI efforts is evident in recent calls for the demise of DEI. This push aligns with a broader movement aiming to dismantle race-conscious policies and the acknowledgment of the historical and present-day impact of institutional racism.
The most recent and notable challenge to this acknowledgment materialized in the lengthy battle against race-conscious college admissions. The culmination of these efforts was the June 29, 2023 Supreme Court ruling, strategically coordinated by Edward Blum, a conservative activist advocating for "race neutrality." Blum, although not the sole advocate of so-called "race-blind" policies, stands as a prime example of how the principles of fairness and equality have been co-opted and weaponized by the political right. Blum's vision of fairness deviates significantly from the intentions behind the Equal Protection Clause of the 14th Amendment and the affirmative action policies initiated in 1964. Essentially, what Blum successfully fought for in the case of affirmative action was an ahistorical approach to the policies and systems governing access and opportunity.
While envisioning a world where race holds no significance seems ideal, it doesn't reflect our reality. In our current world, a small group holds the majority of wealth, and the racial wealth gap continues to expand. We live in a world where parental income stands as a powerful determinant of success[1], and individuals in the top 0.1 percentile of incomes have double the admission likelihood into selective schools compared to equally qualified students from less affluent backgrounds[2]. The repercussions of Black exclusion from economic parity reverberate across various success metrics; Black households possess a fraction of the wealth of their white counterparts[3], have significantly lower property ownership rates[4], and face challenges in passing down wealth to their children through inheritance[5].
The playing field has never been and remains wholly unequal. The idea that now - when inequities across racial lines are only widening - is the time to establish a new, supposedly fair, ahistorical starting point, is an insidious perversion of the goals of the Equal Protection Clause of the Fourteenth Amendment. Instead, it represents a coordinated effort to ensure the maintenance of the status quo where “race neutrality” simply defaults to whiteness. This has been the case in the states where race conscious admissions were banned before the June 2023 Supreme Court ruling. In California, when affirmative action was outlawed in 1999, there was a decrease in the number of enrolled Black and Latinx students[6]. Similar trends were seen in Michigan[7].
From College Admissions to Employment & Funding
Blum and his group, American Alliance for Equal Rights, have now set their sights on the workplace, recently filing lawsuits against the FreedomFund, a Black women led VC fund in Atlanta, and two law firms, Perkins Coie LLP (Perkins) and Morrison & Forester LLP (MoFo). Blum and his group are suing these organizations for alleged violations of Section 1981 of the Civil Rights Act of 1866 (Civil Rights Act).
The FreedomFund is under fire due to its accelerator programs designed to offer capital access to Black women entrepreneurs. The two law firms face legal action because of their diversity fellowship programs for summer associates, prioritizing groups "historically underrepresented in the legal profession, including students of color, students identifying as LGBTQ+, and students with disabilities.”[8]
Both lawsuits seek to curtail or entirely eliminate initiatives aimed at narrowing racial disparities in employment and entrepreneurship. Despite significant growth in Black entrepreneurship in recent years, securing external funding, especially private capital from VC funds, remains notably elusive for them.
Suraj K. Gupta, President & CEO of Rogue Insight Capital, underscores this issue, highlighting that although white men constitute 30% of the population, they represent 58% of all VC investors and manage a staggering 93% of VC dollars [9].
In contrast, as of 2023, Black individuals receive less than 2% of venture capital funds, and Black women receive less than 1%[10]. Funds like FreedomFund were established to address this substantial gap in capital access, a recognized crucial factor influencing the success rates of emerging businesses.
Similar racial disparities persist within the legal profession. According to the American Bar Association's 2020 data, 86% of all lawyers were non-Hispanic whites[11]. People of color remain significantly underrepresented in the legal field compared to their representation in the broader U.S. population. In 2020, Black Americans comprised only 5% of all lawyers, a proportion unchanged for a decade. Similarly, Latinx individuals accounted for 5% of all lawyers, while Asian representation stood at just 2%[12].
Why we should be worried
The implications of Blum's assault on DEI initiatives within the legal profession are clear. The systematic use of the legal system to dismantle social progress reverberates across nearly all aspects of our lives, affecting reproductive rights, LGBTQ rights, and racial and ethnic diversity. The potential consequences of this attack on employment and entrepreneurship are equally severe.
Entrepreneurship, akin to education, stands as a pivotal avenue not only towards autonomy and independence but also wealth creation. Studies show that Black business owners tend to be wealthier than their non-business-owning counterparts, with business ownership leading to accelerated wealth accumulation among Black entrepreneurs compared to wage employment[13]. Despite the potential of entrepreneurship, Black founders encounter systemic hurdles hindering growth and sustainability, foremost among them being limited access to capital. The mere fact that Black entrepreneurs receive a meager 2% share of venture capital funds or that BIPOC communities face extensive underrepresentation in the legal field underscores the core of the racism and anti-Blackness driving Blum and his associates' endeavors.
So what can investors, funders, and other stakeholders supportive of an inclusive and equitable economy do? Beside supporting the legal efforts to challenge Blum’s legal efforts, we must be proactive in the messaging to challenge these lawsuits and the broader challenges to DEI. Blum was successful in co-opting the values of fairness and equality in his challenge against affirmative action. We must study his use of scarcity and zero sum framing and be ready to tell a better story that is grounded in history, equity, and a desire for a better future.
In the coming weeks, we will be sharing a series of tips for how to champion a proactive and compelling narrative about a just economy and the centrality of diversity, equity and inclusion.
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Work Cited
[1]See, Born to win, schooled to lose: Why equally talented students don’t get equal chances to be all they can be - CEW Georgetown. (2021, August 13). CEW Georgetown. https://cew.georgetown.edu/cew-reports/schooled2lose/
[2] See, Bhatia, A., Miller, C. C., & Katz, J. (2023, August 14). Study of elite college admissions data suggests being very rich is its own qualification. The New York Times.
[3] See, Examining the Black-white wealth gap | Brookings. (2022b, March 9). Brookings. https://www.brookings.edu/articles/examining-the-black-white-wealth-gap/
[4] See, U.S. Homeownership Up, but Black-White Gap Persists. (2023, March 2). www.nar.realtor. https://www.nar.realtor/newsroom/more-americans-own-their-homes-but-black-white-homeownership-rate-gap-is-biggest-in-a-decade-nar
[5] See, Receiving an inheritance helps white families more than black families. (n.d.). Economic Policy Institute. https://www.epi.org/publication/receiving-an-inheritance-helps-white-families-more-than-black-families/#:~:text=White%20families%20are%20twice%20as,white%20families%20who%20inherit%20wealth.
[6] Ross, J. (2023, July 1). The ‘Infamous 96’ know firsthand what happens when affirmative action is banned. TIME. https://time.com/6291241/affirmative-action-infamous-96-ucla-supreme-court/
[7] Povich, E. S. (2023, July 17). Campus diversity will be a struggle without race-based admissions, history shows. Michigan Advance. https://michiganadvance.com/2023/07/17/campus-diversity-will-be-a-struggle-without-race-based-admissions-history-shows
[8] (2023, October 24). Top Ten Things to Know Regarding American Alliance for Equal Rights’ Lawsuits Challenging Law Firm Diversity Fellowships | Foley & Lardner LLP. Foley & Lardner LLP. https://www.foley.com/insights/publications/2023/08/top-ten-american-alliance-equal-rights-lawsuits/
[9] Gupta, S. (2022, May 26). Diversity: the holy grail of venture capital. Forbes. https://www.forbes.com/sites/forbesbusinesscouncil/2022/05/26/diversity-the-holy-grail-of-venture-capital/?sh=17150ae14178
[10] Fonrouge, G. (2023, February 3). Venture capital for Black entrepreneurs plummeted 45% in 2022, data shows. CNBC. https://www.cnbc.com/2023/02/02/venture-capital-black-founders-plummeted.html
[11] American Bar Association. (2023). Lawyer Demographics. Young Lawyers Division - American Bar Association. Retrieved from https://www.americanbar.org/groups/young_lawyers/about/initiatives/men-of-color/lawyer-demographics/
[12] Ibid.
[13] Bradford, W. D. (2014). The “Myth” That Black Entrepreneurship Can Reduce the Gap in Wealth Between Black and White Families. Economic Development Quarterly, 28(3), 254–269. https://doi.org/10.1177/0891242414535468
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