- By 2024, less than 60% of the U.S. labor force is expected to be defined as “white non-Hispanic.”
- Studies show businesses with robust diversity, equity, and inclusion practices perform better than their peers.
- Closing the racial equity gap could add as much as $8 trillion to the U.S. economy by 2050.
Diversity, equity and inclusion are important for today's businesses to continue to thrive. While the topic of diversity has garnered national attention in recent years, many business owners are not confident in their ability to advance diversity and inclusion in the workplace. In this guide, we’ll give an overview of diversity and inclusion for business owners of all sizes.
There have been some big shifts in the demographics of the U.S. over the last decade. Data from the latest census shows that the population is getting older as well as more racially and ethnically diverse. Diversity in America is increasing every year.
As the overall demographics of the country change, so will the makeup of our workforce. By 2024, Deloitte projects employees over the age of 55 will make up 24.8% of the working population, as compared to 11.9% in 1994. Women are also expected to make up a larger portion of the overall U.S. workforce, rising from 46.8% of the workforce in 2014 to 47.2% in 2024. And, by 2024, less than 60% of the U.S. labor force is expected to be defined as “white non-Hispanic.”
What does diversity mean?
First, let’s start with the basics. Diversity refers to the inherent differences that exist amongst a group of people. Diversity manifests in traits such as age, race, gender, religion, sexual orientation and even cultural diversity, like socioeconomic status, religious beliefs and education.
Diversity is often mentioned in the same breath as equity and inclusion. Commonly abbreviated as “DEI”, diversity, equity and inclusion are separate practices that enable small businesses to be more productive, innovative, and successful.
Equity refers to giving someone (e.g., a business owner or employee from an underrepresented group) the support they need to be successful. Equality, on the other hand, refers to giving everyone the same thing. Equity helps fill some of the opportunity gaps that perpetuate broader inequalities in our society.
Inclusion has to do with creating a supportive, welcoming and respectful environment at work for people of all backgrounds to participate. Inclusion is about taking action: dedicating resources and time to creating a space that embraces all perspectives and employee needs. This might include founding employee resource groups, offering mentorship programs or requiring employees to participate in diversity training regularly.
Diversity, equity and inclusion can all help businesses create vibrant, thriving companies. Beyond a moral imperative, diversity, equity and inclusion can benefit business owners and broader communities alike.
Why diversity is important
Diversity plays a crucial role in growing our national economy, as well as in the success of American business. Increasing diversity in business is projected to have widespread benefits for the country. Consider some of these statistics:
- One report found that there are 9.1 million women-owned businesses that generate a total of $1.4 trillion in sales, according to the National Association of Women Business Owners.
- Another McKinsey study found that the national GDP would add $25 billion if just 1% more disabled people were hired.
- The American economy stands to gain $8 trillion by 2050 simply by closing the racial equity gap.
Likewise, there have been many studies that show the benefit of diversity in the workplace for individual businesses. Statistically, merchants that increase diversity and inclusion in the workplace have 19% higher innovation revenues, a 35% performance advantage over their homogenous counterparts, and are 36% more profitable.
Studies show diverse teams are better at problem-solving, decision-making and innovating. Companies with an inclusive culture are not only considered a great place to work by employees, but also highly regarded by consumers. Some of the most diverse companies aren’t only successful in their industry; they also score highly on employee engagement, customer brand loyalty, and Net Promoter Scores.
Strengthening diverse businesses
The COVID-19 pandemic impacted all small businesses, but minority-owned businesses were disproportionately affected. A special report by the U.S. Chamber of Commerce and MetLife found that, as of August 2020, two in three (66%) minority small businesses were concerned about having to permanently close their business, versus 57% for non-minority small businesses.
In response, and during the past few years, there have been many public and private initiatives to bring equity to minority-owned businesses. The Coalition to Back Black Businesses was launched by the U.S. Chamber Foundation in partnership with American Express and the nation’s leading Black chambers of commerce. It’s a four-year initiative distributing more than $13 million in grants along with longer-term mentorship and resources to Black small business owners across the country through 2023.
The U.S. Chamber of Commerce Foundation also launched the Save Small Business Fund to deliver immediate financial assistance to small business owners who were reeling from shutdowns. Nearly 50% of recipients were minority-owned businesses; 47% were women-owned.
Other partners have announced similar initiatives. These campaigns aim to provide financial assistance to businesses that will contribute to the growth of the national economy.
How to promote diversity and inclusion in the workplace
Diversity and inclusion go hand-in-hand. To attract diverse candidates, it helps to have an inclusive culture, and vice versa. Organizations that seek to focus first on diversity often start with hiring. Those that focus first on inclusion start with diversity-and-inclusion training and other initiatives to change office culture.
Diversity hiring relates to efforts to improve the diversity of your workforce. Diversity hiring practices can include posting job ads on sites targeting underrepresented populations, employing blind hiring techniques, or using a panel interview in your hiring process.
Correspondingly, there are many ways to create an inclusive culture that is welcoming to all employees. A good place to start is with a diversity statement. A diversity and inclusion statement is much like a mission and values statement and should guide your hiring, employee benefits, customer service and workplace culture.
That statement can be used to guide other activities. Some companies stay on track with a 90-day action plan, a one-year plan and a three-year plan that include activities such as training, and public-facing commitments like volunteering or community events. Consider your budget and listen to your employees; they may have ideas for improving your existing culture, too.
Read more about the U.S. Chamber of Commerce’s Equality of Opportunity Initiative.