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--:-- Host: Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Monday, January 27th.
--:-- Host: Jessica Mendoza: For years, President Donald Trump has taken aim at diversity, equity, and inclusion, or DEI. How do you define DEI? Go ahead. How do you define it? Diversity, equity, and inclusion? Okay, yeah, go ahead.
--:-- Host: Jessica Mendoza: These are policies that were absolute nonsense. I will eliminate all diversity, equity, and inclusion programs across the entire federal government. DEI programs are meant to help underrepresented groups at work and in school. And not long ago, DEI policies seemed to be everywhere. Lately, though, DEI looks more like an endangered species. Donald Trump is on the hunt, and he is using every tool that he can to try to really, finally, kill DEI. That's our colleague Chip Cutter.
--:-- Host: Jessica Mendoza: The Trump administration seems to be doing everything it can in its powers to enact sweeping changes in the ways that companies and organizations operate. And it wants to just end what it sees as policies that the Trump administration feels have been discriminatory towards white people.
--:-- Host: Jessica Mendoza: Which is why, as he starts his second term, Trump is rolling out a series of actions cracking down on DEI. And corporations are watching. Many are already ditching their DEI programs. The headline is the Trump administration and how its crackdown on DEI is rippling through companies. This is what HR executives and CEOs are thinking about. It's what lawyers are talking about. For my world, writing about big companies, this is the issue of the moment.
--:-- Guest: Chip Cutter: Yeah, well, DEI is really kind of an umbrella term for policies designed to create more opportunities for minorities or underrepresented groups and to make sure that women could advance in corporate America. And advocates of DEI programs have long said that efforts like unconscious bias training or recruiting from historically black colleges and universities, they're all intended to make personnel decisions more meritocratic by ensuring that someone's identity doesn't end up holding them back.
--:-- Guest: Chip Cutter: And so just to be clear, the argument is that this is going to make the system more merit-based because it opens doors for people who have historically been marginalized. That's exactly right. I mean, it's the idea that there are biases in all sorts of decisions and that these DEI programs are meant to create an environment where people can feel included, that they can sort of all have equal chances to succeed.
--:-- Guest: Chip Cutter: And so what is the counterargument to that? The counterargument is that these programs, first off, have never been that effective and that they've been discriminatory. The critics of DEI say that programs, for example, targeting a certain number of black employees in management ranks by 2025 for example would be discriminatory against other races.
--:-- Guest: Chip Cutter: So these critics are saying that DEI programs and policies actually make systems less meritocratic and that it favors certain groups over others. That's right. And so they claim that the goals of DEI program are actually having an inverse result, that they are discriminating against groups of people, notably white men.
--:-- Host: Jessica Mendoza: While widespread use of the term DEI is relatively new, the concept actually builds on ideas that go back decades. Well, it really dates back to the civil rights movement. And so affirmative action and equal employment laws were enacted in the middle of the 1960s. Lyndon B. Johnson in 1965 signed legislation making it illegal for federal contractors, for example, to discriminate based on race.
--:-- Host: Jessica Mendoza: Let us close the springs of racial poison. Let us pray for wise and understanding hearts. Let us lay aside irrelevant differences and make our nation whole. And so during the 60s, you saw companies starting to develop some of the first diversity training programs. And then for decades, you saw companies continuing to do more and more of this work.
--:-- Host: Jessica Mendoza: At schools, in government and nonprofits, and in the corporate world, these policies focused on recruiting people across races and genders. And for years, affirmative action saw broad bipartisan support. And then, after the murder of George Floyd in May of 2020 in Minneapolis at the hands of a police officer, that sort of really sparked a broader movement.
--:-- Host: Jessica Mendoza: Black lives! Black lives! Black lives! Black lives! And a real reckoning with how companies think about race at work and how DEI programs should be approached. And I think a lot of the DEI programs were sort of built on the backs of affirmative action.
--:-- Guest: Chip Cutter: What is the difference between affirmative action and DEI? They're similar concepts, but there are some differences. Affirmative action was really meant to ensure that discrimination was not taking place and to do whatever was necessary to sort of correct for that and make sure it wasn't happening.
--:-- Guest: Chip Cutter: DEI is broader. DEI programs aim to promote opportunities for women, veterans, ethnic minorities, LGBTQ people, and other historically underrepresented groups. It also often includes things like unconscious bias training, conversations around structural inequalities, and workshops on inclusive language.
--:-- Host: Jessica Mendoza: And as companies, schools, and government agencies embraced these policies, they hired people to help implement them. So post-2020, post-George Floyd, one of the things that happened was the rise of the chief diversity officer across companies.
--:-- Guest: Chip Cutter: Well, it really became one of the hottest jobs in corporate America. Companies just started scrambling to hire chief diversity officers. I have just been hired to be the school's first chief diversity, equity, and inclusion officer.
--:-- Host: Jessica Mendoza: He hired a chief diversity officer. He hired a chief diversity officer, an inclusion officer. There was some interesting stats that in 2018, less than half the companies in the S&P 500 employed someone in the role. And by 2022, three out of four companies had created a chief diversity officer position. And that was according to a study from Russell Reynolds, an executive search firm.
--:-- Host: Jessica Mendoza: So you really saw companies just going out of their way to hire chief diversity officers. The enthusiasm didn't last. Progress on boosting representation was often mixed. Measuring something like unconscious bias is hard to do. And some of the mandatory training was just unpopular.
--:-- Host: Jessica Mendoza: A company might mandate that all employees take an anti-bias training, but employees actually sort of roll their eyes about it and, you know, try to just click through it and complete it as soon as possible. There was also a feeling among people who supported DEI goals that a lot of corporate efforts were just for show.
--:-- Host: Jessica Mendoza: Soon, newly hired chief diversity officers were leaving companies in droves. Some told the Wall Street Journal they were skeptical that their bosses wanted real change. And then a big blow to the movement came in 2023. Now to the landmark ruling from the U.S. Supreme Court today, striking down affirmative action.
--:-- Host: Jessica Mendoza: The high court saying colleges and universities can no longer rely on race in the admissions process. The Supreme Court decision really opened the floodgates and it created an environment where critics of these programs felt emboldened Conservative legal activists started filing lawsuits against companies and programs that for example were aimed at promoting more women and minorities or giving grants to certain groups.
--:-- Host: Jessica Mendoza: The ruling cast a chilling effect on corporate America, with a number of major companies pulling back on their DEI efforts. But others are holding firm. That's after the break.
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--:-- Host: Jessica Mendoza: This episode is brought to you by AARP. They have reskilling courses and career tools to help your income live as long as you do. The younger you are, the more you need AARP. Learn more at aarp.org slash skills.
--:-- Host: Jessica Mendoza: In his first few days in office, Trump wasted no time dismantling DEI initiatives within the federal government. So could you kind of dive into that for us more specifically? What actions has Trump and his administration taken so far to undo DEI?
--:-- Guest: Chip Cutter: Well, it's a lot. So he ordered an end to DEI programs across federal agencies. All staff working on those programs were put on paid leave. You saw the Agriculture Department, the Treasury Department, the Labor Department remove some web pages on diversity by Wednesday morning.
--:-- Guest: Chip Cutter: Notably, the Labor Department, for example, had a page on the history of DEI. That is down now. The Trump administration also set up a tip line to report DEI initiatives across the federal government and its contractors. It told employees there would be, quote, adverse consequences for failing to report colleagues.
--:-- Guest: Chip Cutter: The administration also instructed federal institutions to investigate DEI programs at schools with endowments of more than a billion dollars. And Trump revoked the executive order signed by former President Lyndon B. Johnson six decades ago, the one that required government contractors to proactively root out discrimination on the basis of race and gender.
--:-- Guest: Chip Cutter: But the new administration isn't just going after DEI efforts in government. Trump also instructed each government agency to identify the most egregious and discriminatory DEI practitioners among companies, nonprofits, foundations, and other private sector organizations.
--:-- Guest: Chip Cutter: And Trump recommended that these agencies recommend up to nine targets for potential civil investigation. So here he is telling agencies to look far beyond the government and to look into corporate America and to see what's happening there and what might need to be corrected.
--:-- Host: Jessica Mendoza: This is what freaks companies out. Civil rights groups like the Southern Poverty Law Center have strongly condemned Trump's actions. It's expected there will be litigation challenging the administration's efforts.
--:-- Host: Jessica Mendoza: In the last few months, some major companies have publicly pulled back from DEI. So let's just like give some examples. Ford said it would stop providing workplace data to a gay rights lobbying group. UBS stopped giving out $25,000 grants directed at businesses led by women of color.
--:-- Host: Jessica Mendoza: Walmart said it wouldn't renew funding for a charity it created to address racial disparities. And there's more. Meta ended representation goals for women and ethnic minorities and eliminated the company's DEI team. McDonald's said it would end diversity goals for its senior leadership and stop a program that encourages diversity training among its suppliers.
--:-- Host: Jessica Mendoza: And Target will end its three DEI goals There are holdouts Last week at the World Economic Forum in Davos, Switzerland, the head of one of America's biggest banks talked about the administration's actions on DEI.
--:-- Host: Jessica Mendoza: So Jamie Dimon, the CEO of JPMorgan Chase, is asked about how he plans to respond to attacks on DEI and what his message is on DEI. It's worth pointing out, one of the first executive orders that President Trump put in place was to end DEI within the government.
--:-- Host: Jessica Mendoza: So I think, first of all, I don't like monikers, and it makes it sound like it's a binary thing to what you do. And he actually comes out pretty strong in defending it and saying he isn't going to just stop what the bank has been doing to promote a more equal and diverse workforce.
--:-- Host: Jessica Mendoza: We are going to continue to reach out to the black community, the Hispanic community, the LGBT community, Basically, the bank was going to continue with its DEI work. And Jamie Dimon essentially says, bring them on.
--:-- Host: Jessica Mendoza: And is Jamie Dimon on his own here? Or are we seeing other private companies sort of resisting anti-DEI pressures as well? One company that has really defended DEI is Costco. Costco shareholders rejected a proposal from a conservative think tank to report on the potential risks of the company's diversity initiatives.
--:-- Host: Jessica Mendoza: Costco, for example, was the target of a shareholder proposal questioning its DEI efforts. And they really stood firm and said that they see DEI as important to the company. They think it's important for their employee base. It reflects their diverse range of customers.
--:-- Host: Jessica Mendoza: And I think what Costco did ended up setting a new template for corporate America because companies are often followers. They see one company hold firm and they realize, oh, we now have a model. for how to respond.
--:-- Host: Jessica Mendoza: You know, I was at a breakfast with a bunch of HR leaders, and they were all talking about it. They were saying, we couldn't believe what Costco did, that that actually is really interesting. Perhaps this is sort of a new way that companies could hold off these DEI pressures.
--:-- Host: Jessica Mendoza: They didn't get too much blowback on it, and so I think you might see other companies try to follow in a similar vein. Some that have stood their ground on DEI efforts include Apple. The company's board has urged shareholders to reject a proposal from a conservative think tank targeting DEI policies.
--:-- Host: Jessica Mendoza: And earlier this month, the CEO of United Airlines told investors in a call that a diverse workforce was still achievable. Well, we do hire on merit. We can hire the absolute best of the best and have a naturally diverse workforce.
--:-- Host: Jessica Mendoza: So at United, we can do both. Trump's war on DEI is just beginning. Today, he's expected to sign an executive order removing DEI programs from the military.
--:-- Host: Jessica Mendoza: Who is most likely to be affected by this reversal? Yeah, I mean, I think it's the people most likely to be affected are people of color, people from underrepresented groups.
--:-- Host: Jessica Mendoza: I mean, I think there are underrepresented groups now who worry, is that all going to go away? are we going to be back to sort of an environment where we feel like we do have fewer chances to succeed in corporate America?
--:-- Host: Jessica Mendoza: And I think the bigger concern is what does this look like for underrepresented groups who now worry that there are fewer people who care about what their future looks like inside these big organizations?
--:-- Host: Jessica Mendoza: One thing Chip says could happen is that some of the ideas of DEI could live on in the corporate world, but without the label. And so I think it's just there's a bigger question about how do companies operate going forward? How do these goals get interpreted in new ways?
--:-- Host: Jessica Mendoza: You know, diversity can take a lot of forms. I think you might see DEI programs morph where they focus more on veterans, for example, or people with disabilities, or you think more about geographic diversity and people from different socioeconomic backgrounds.
--:-- Host: Jessica Mendoza: And so I think you might see more of a focus on other groups now, but I think it kind of remains to be seen how exactly DEI changes. That's all for today, Monday, January 27th. The Journal is a co-production of Spotify and The Wall Street Journal.
--:-- Host: Jessica Mendoza: Additional reporting in this episode from Lauren Weber and Tepeng Chen. Thanks for listening. See you tomorrow.
