Consulting firm Paradigm recently released a report, in which it wrote that the total percentage of American organizations with a DEI budget dropped 4%, from 58% in 2022 to 54% in 2023, with the number of organizations with a DEI strategy falling 9% in that same time frame.
DEI gained huge traction in 2020 after the death of George Floyd. However, this year, the poor state of the American economy and the pushback from the public and the law system forced the companies to stop the practice of DEI.
“After two years of unprecedented investment sparked by 2020’s racial justice movement, this year, global momentum around DEI slowed. There are a number of headwinds contributing to this shift: the first is economic uncertainty that not only led to reduced spending across the board, it also firmly shifted the power balance back to employers,” Paradigm wrote.
The company, however, noted that, despite the decline in funding, there was a 6% increase in the number of companies that had a senior DEI leader and an 8% increase in organizations that had goals related to representation for women in leadership from 2022 to 2023.
It was also reported that 20% of companies this year had goals related to increasing employment related to race or ethnicity, which is a 4% increase year-over-year.
Aside from not being able to financially support the funding of the leftist practices, the shift was also caused by the Supreme Court potentially targeting DEI and race-based hiring in the workplace the same way it struck down race-based admissions at colleges and universities in June 2023.
“Over the past several months, we’ve heard from a number of HR leaders who are de-emphasizing data and analytics as a part of their DEI efforts, in response to the changing legal landscape and increased scrutiny on DEI efforts,” the report said.
Paradigm also wrote that only 26% of companies examine the final results of hiring by race or ethnicity, with 33% analyzing promotions in the same manner and 36% of organizations measuring the attrition rate of their employees by race or ethnicity.