Now is the time to redefine DEI, not scale back

Amidst a wave of opposition to diversity programs, companies across the country have been quick to tone down or move away from their diversity, equity, and inclusion (DEI) initiatives. The change is especially evident in the tech industry, where new rounds of layoffs have targeted DEI teams over employees more essential to product development.

Yet many of these corporate programs bloomed only four years ago in the aftermath of George Floyd’s brutal death. Has our country progressed so much as to make DEI obsolete? Or is this a direct response to new political pressures which seek to eliminate DEI efforts due to a dearth of short-term results — despite the fact that DEI programs seek to rectify centuries of economic injustice?

The facts speak to the latter. While representation in corporate leadership is at a record high this year, this equates to only eight Fortune 500 companies with a Black CEO. And with bias built into our financial systems, employees of color face different and significant challenges compared to their white peers. In carrying higher debt loads, lower personal and retirement savings balances, and more caretaking responsibilities, it’s that much harder for these employees to garner the necessary focus and resources to matriculate into higher paying roles that would help diminish existing wealth gaps.

Amidst this backdrop, now is not the time to scale back DEI initiatives. On the contrary, it’s time to intentionally develop and invest in informed DEI solutions in a way that more broadly elevates BIPOC Americans both inside the workplace and out.

It’s vital that we change the narrative and public perception around DEI. These initiatives should not feel like a mandatory obligation for employers to check off in order to save face in the eyes of the public, making it, quite simply, lip service. They also should not be put on the chopping block just because they become the target of anti-DEI movements like “Stop Woke.”

Instead, DEI programs must be approached from their full value-add potential — and seen as mutually beneficial to the employee and the company as a whole.

When done right, DEI initiatives have been shown to increase overall employee satisfaction. Research conducted at the Massachusetts Institute of Technology found that DEI programs bring a host of benefits to the workplace — from better collaboration and innovation to improved recruitment and retention — which contribute to employee motivation and their companies’ financial bottom line. This remains crucial in an economy threatened by stagnating productivity and plagued by the ongoing phenomenon of “quiet quitting,” which in 2023 cost the global economy $8.8 trillion dollars, or 9% of global GDP.

And while the debate around the validity or efficacy of these programs persists, so do wealth gaps in this country. The growing racial wealth gap between Black and white families hurts individual families of color, our businesses, and the economy overall. Federal Reserve data shows this gap grew by $49,950 between 2019 and 2022, adding up to a total difference of $240,120 in wealth between the median white and the median Black household.

This simultaneously coincides with a time where American employees are facing rates of financial stress not seen since the Great Recession. Employees reporting unmanageable financial stress climbed by 34% in the last year — with even higher rates among Black and Hispanic Americans. Members of these communities are more likely to retire earlier than expected, with health being the top reason; are twice as likely to retire with less than $25k in assets compared with non-Black or Hispanic retirees; and are less likely to report having three months of emergency savings set aside.

With effective DEI initiatives in place, the workplace becomes a critical frontline in the battle to close the yawning racial wealth gap.

Related: Study: Businesses embrace DEI for innovation, reputation, and bottom line

For example, personalizing financial wellness programs for employees of color has proven to deliver an overall positive impact on financial, physical, and mental wellbeing. I led a large-scale study with the Financial Finesse Financial Wellness Think Tank to track the impact of tailored programming and coaching for Black and Hispanic Employee Resource Groups, and found a 25% decrease in participants reporting high levels of financial stress and a 23% increase in employees who are considered financially resilient. Retirement confidence doubled in these employees.

Authentic financial wellness programs have the potential to create a more equitable and prosperous future. They should be available for all employees but include efforts to elevate people of color and other segments of the workforce who are at greater financial risk, such as frontline workers. By providing access to financial coaching, education, and planning services, companies can empower employees of color to create a more secure financial future.

With this kind of potential, it’s essential for employers to keep investing in high-impact DEI initiatives. Instead of rolling back such programs, let’s redefine them so that they truly address the full range of backgrounds, cultures, and experiences faced by American workers. Only then can we walk the talk of giving everyone a fair shot at the American Dream — by shunting political pressure and investing in those employees that have been most excluded in our country’s mission to achieve liberty and justice for all.

Laura Stamps is Head of Strategy, DEI Engagement Financial Wellbeing at Financial Finesse, an independent provider of unbiased workplace financial wellness coaching programs.