During the Biden era, a revolution swept through board rooms of America, doing away with meritocracy to be replaced with diversity, equity, and inclusion (DEI).
The results: 94% of new hires at leading public companies were “people of color,” mostly black women. Corporate diversity reports, reflect an overwhelming prioritization of identity in hiring.
Black women make up a small fraction of the US population and only 38% hold college degrees. The disproportionate focus meant many highly skilled individuals have been systematically overlooked in favor of fulfilling demographic quotas.
Yet this demographic represents only 2.28% of the U.S. population. The real victims of this social engineering are white men, excluded from opportunities earned on qualifications. The consequences are seen in declines in stock returns and organizational inefficiencies, leading to America becoming less competitiveness.
A policy that freezes out 60% of Americans based on their skin color or gender is crazy.
The tyranny of DEI hiring leaves talent and merit secondary considerations. Best Buy, for example, has codified these practices, committing to filling “one in three corporate salaried positions” with BIPOC (Black, Indigenous, People of Color) candidates.
Wells Fargo faced scrutiny for limiting interviews for jobs paying over $100,000, to only 25% white men. Forced to revise this policy after public backlash, it shined a light on the widespread adoption of such policies among America’s biggest companies.
When 94% of jobs are allocated to 2.28% of the population, it is mathematically impossible for these positions to go to the most qualified.
The fallout is hitting where it hurts most: the bottom line. Over the past year, a portfolio of S&P 500 companies employing racial and gender hiring targets has returned just 12%, compared to the broader index’s 30% gain. Over two years, the gap widens to only 17% versus 60%. https://nypost.com/2024/12/14/opinion/a-new-investment-fund-is-saying-no-to-dei-focused-companies/
Firms that abandon meritocracy in favor of identity quotas are less innovative, less productive, and less profitable. Over the next decade, the pressure to promote individuals hired under identity-based quotas is expected to mount further compounding the inefficiencies. Inevitably declining profits, slower growth, and diminished stock prices will follow.
Cicero’s (106 B.C.E. and was murdered on December 7, 43 B.C.E.) advice that “salvation is found in the counsel of the capable” applies here. From Carnegie’s steel mills to Ford’s assembly lines, the industrial revolution was not driven by identity but by ingenuity, grit, and hard work. These companies prioritized the brightest minds and the most skilled hands. By focusing on competence and excellence, America outpaced its global competitors from manufacturing to technology.
The decline of Rome, on the other hand, shifted her priorities from competence to loyalty. Her military was filled with unqualified individuals chosen for their connections and not war fighting smarts. Civil administrators were selected based on familial or political favoritism, leading to corruption and inefficiency. These practices eroded trust in institutions, weakened Rome’s ability to respond to external threats, and drained its economic vitality. The empire’s inability to innovate or adapt stemmed directly from an abandonment of merit, leaving it vulnerable to collapse under her dysfunction.
The Equal Employment Opportunity Commission (EEOC) mandates that hiring decisions cannot discriminate based on race, gender, or ethnicity. By openly advertising racial and gender quotas, companies are inviting lawsuits and undermining public trust. The recent decision of the U.S. Court of Appeals for the Fifth Circuit, in a 9-8 ruling on December 11, 2024, invalidated Nasdaq's board diversity rules, which had mandated that listed companies either appoint directors from specified demographic groups—namely women, underrepresented minorities, or LGBTQ+ individuals—or provide an explanation for non-compliance. The court determined that the Securities and Exchange Commission (SEC) exceeded its statutory authority under the Securities Exchange Act of 1934 by approving these rules. The majority opinion emphasized that the SEC's endorsement of Nasdaq's requirements did not align with the Act's primary objectives, which focus on preventing fraud, manipulation, and promoting fair competition in securities markets.
Companies must prioritize skills-based hiring. Those willing to abandon identity quotas and recommit to merit will be better off, ensuring their investors and employees reap the rewards of competence and innovation.
Corporate America stands at a crossroads. It can continue down the path of identity-based hiring (DEI) while sacrificing innovation, productivity, and shareholder value, or it can reclaim the principles that made it great. By embracing meritocracy, America’s companies can rebuild their reputations, deliver superior returns, and restore the dignity of every employee. The wise path is clear.
Editorial comments expressed in this column are the sole opinion of the writer.
