The Right Coast

July 11, 2004
Thoughts on the National Urban League's New Diversity Report
By Gail Heriot

Ask a fuzzy question and you'll get a fuzzy answer. And the National Urban League's new report on diversity is proof.

Entitled "Diversity Practices that Work: The American Worker Speaks," the report gives the results of a poll of over 2000 employees across the country on the subject of workplace diversity. And it seems to be getting a fair amount of publicity in the media, including an op-ed in the San Diego Union-Tribune.

Approximately 59.0% of the employees interviewed were women and 41.0% were men. Racially, they broke down approximately as follows: White 35.6%, Hispanic 11.0%, African American 20.2%, Asian American 18.1%, and Native American 15.1%. The group was thus dominated by both women and minorities--a problem in a poll that purports to study race and gender issues. I saw no suggestion in the report that the overall responses were weighted to take account of the country’s actual demographics, and my quick calculations suggest that it is unlikely they were. It is, however, impossible to say for sure.

But that’s just a minor problem with the report. Other problems are more serious. I will touch here on only two, one dealing with fuzziness and the other with the profitability of employers with strong diversity initiatives.

Perhaps the most important "key finding" of the report was this one:

"Unfavorable Views at Many Companies: Although they consider the subject of diversity important, American Workers often view diversity initiatives at their own companies unfavorably. In fact, fewer than one-third of American companies believe their company has an effective diversity initiative."

The suggestion here appears to be that employees would like to see their employers ramp up their diversity initiatives. But what is the basis for that suggestion?

According to the report, 65% of the employees interviewed responded favorably to the statement, "A diverse work force improves creativity and innovation in the workplace." No surprise there. Many people, including me, believe that, all other things being equal, most businesses will benefit from having a workforce that is diverse as the race, ethnicity, sex, age and other things. That doesn't mean these same people believe that most diversity initiatives are a good thing. The excessive bean-counting and preferential treatment that usually go hand-in-hand with those initiatives turn a lot of people off (again, including me).

The National Urban League calls it "a wake up call" that only 32% of the employees responded "favorably" (and fully 26% responded "unfavorably") to the statement "My company has an effective diversity initiative.'" But it's impossible to know what the employees meant. Maybe those who thought their companies did not have an "effective" diversity initiative did so because they thought that no such program is ever useful or effective. They're either happy that their companies have no program or unhappy that they do have a program that is inevitably destined to be "ineffective." Or maybe they thought their companies were too small for a special program; a significant number of the companies studied had fewer than 20 employees. Of those who believed that their employers did have an "effective diversity initiative," some may have done so because their employers had no program and they thought that best. The study is simply indecipherable.

One thing is quite clear, since study after study shows it. Americans oppose diversity initiatives that involve preferential treatment based on race. All you have to do is ask them. In a Washington Post poll, for example, 94% of whites and 86% of African Americans said hiring, promotions and college admissions should be based "strictly on merit and qualifications other than race/ethnicity." Similarly, in another poll, a strong majority (69%) said that college applicants "should be admitted solely on the basis of merit even if that results in few minority students being admitted." The National Urban League report carefully avoids inquiring into this area. At every turn, it denies the employees any opportunity to express misgivings of this kind.

My second point concerns the another part of the report, in which the reader is invited to take a look at companies with diversity policies that are seen as particularly admirable. Here the report really breaks into nonsense. The reader is told these companies are "18% more productive than the United States economy overall." The suggestion here is that employers need not sacrifice profits for a strong diversity initiative and that perhaps diversity initiatives add to profits. Note, however, that the word used is "productive" and not "profitable." In fact, the measure being used here is revenue generated per employee. Such a measure is not only not a measure of how profitable a company is, it is not even a rough and ready proxy for profitability. It is closer to being a measure of how capital intensive a company is. A company that is highly capital intensive will tend to have a high level of productivity per employee, all other things being equal. A company that is labor intensive will tend to have a lower rate of productivity per employee.

Interestingly, it is capital intensive industries that are considered most vulnerable to unionization and other phenomena that are at least perceived by management as being a damper on profitability. With their heavy investment in real estate, equipment and other capital, they sometimes lack the flexibility to get out of the way when demands are placed on them from the outside. Are they similarly vulnerable to demands for diversity initiatives? It's hard to say whether there is a connection here, but it's worth considering.