Is The Tech Industry Using The Economy As An Excuse To Ditch BLM Promises?
Despite Big Tech’s promises in the summer of 2020, Black and Brown tech employees are finding themselves hard hit by short-sighted cuts to diversity efforts and layoffs.
The Great Reset
“The great reset” is what San Jose State University’s Professor Ahmed Banafa calls the current climate of tech layoffs, restructuring, and downsizing.
While much of the global economy took a massive hit during the peak of the COVID-19 pandemic, the tech industry thrived. Tech companies made huge profits and hired tens, if not hundreds, of thousands of new staff. Yet, fast forward two years, and it appears that the tech bubble has burst.
So far this year, an estimated 964 tech companies have laid off nearly 150,000 employees – 9,500 in the last month alone, the highest figure since November 2020. As tech companies funnel their capital into revenue-generating areas—engineering, research, and development—human resources (HR) and Diversity, Equality, and Inclusion (DEI) have been sacrificed.
“DEIB is considered overhead costs of a corporate budget,” Errol Pierre, author of The Way Up: Climbing the Corporate Mountain as a Professional of Color, told ESSENCE.
“When you’re in the overhead bucket of a budget, you run the risk of budget cuts and deprioritization because you’re not on the business imperative side of the budget. Many companies fail to have their diversity programs moved out of overhead and into business imperative.”
This is not new
Earlier this year, Twilio CEO Jeff Lawson made headlines for his “anti-racist/ anti-oppression” approach to layoffs which saw 11% of his staff lose their jobs. Despite criticisms, Lawson acknowledged what many Black & Latine folk know all too well – when times get tough, we’re often the first to go.
Researchers have long noted the disproportionate impact of layoffs and economic downturns on people of color. A 2014 study found that managerial diversity plummets when companies downsize. During the 2007-2009 Great Recession, unemployment among BIPOC soared to levels not seen since the Great Depression and did not recover to pre-Recession levels until 2017.
Black and Latine households lost 48% and 36% of their wealth in this period, compared to 24% for white households. Unlike unemployment rates, wealth losses have yet to recover. More recently, during the COVID-19 pandemic, people of color lost their jobs at higher rates than white workers.
Do Black Lives Still Matter In Tech?
In 2020, more than 200 tech companies made formal statements in response to the highly publicized murder of George Floyd. Many promised they would invest in equity and justice-focused organizations, hire diverse talent, and tackle racism within their ranks.
“Black employees have grown accustomed to maintaining a healthy dose of skepticism toward commitments made by their employers concerning DEIB,” Pierre states.
“There have been billions of dollars spent on these programs, and the metrics have stayed pretty much the same over the last 25 years.”
Tech companies have largely failed to demonstrate any improvement in diversity. Where companies have improved diversity, often it has only gone up by 1% or 2% in the past five years. Evidence also suggests that diversity improvements are primarily due to increasing numbers of Asian men and women in technical and managerial jobs and Asian men and white women in executive positions.
“Even with pledges and recognition that the people experience matters, HR and D&I are often seen as pure overhead and perhaps a little bit distant from the profit-making engine,” Julie Coffman, chief diversity officer at management consulting firm Bain, told Fortune.
Is ditching diversity short-sighted?
According to Coffman, tech companies will likely struggle to rebuild HR and DEI teams when the economy recovers. As a result, they’ll have to play catch-up with competitors who haven’t wavered on DEI commitments.
In addition to the moral case for DEI, there is also the business case: the relationship between diverse leadership and financial outperformance has been shown to strengthen over time.
“DEIB leads to employee retention, which means there are actually savings on keeping employees in the company longer versus spending money on recruitment to fill those roles,” Pierre explains. “So that savings now becomes a business imperative as opposed to overhead.”
Moreover, younger workers have made it clear that they value companies with a proven track record and clear commitments to equality, inclusion, and justice. So, when the economy recovers, they will likely remember which companies deemed POC dispensible and which did not.