By Jon Miltimore | The Foundation for Economic Education
It’s safe to say that diversity, equity, and inclusion is one of the more controversial ideas of our time (and a multibillion-dollar industry).
Some such as Elon Musk argue that DEI — which definitionally speaking means addressing structural inequalities in society — constitutes blatant racism. Others contend that DEI is simply about creating more equitable and harmonious workplaces, and offers clear financial benefits to companies, as well. “Study after study has proved that diverse companies perform better than their more homogeneous counterparts,” Inc. reported in 2023. “Companies that don’t foster an inclusive environment or prioritize diversity initiatives do so at their own peril.”
“Proved” is a heavy (and inaccurate) word here, but Inc. isn’t wrong about the abundance of evidence showing that DEI initiatives make companies more profitable. From 2015–23, McKinsey & Company, a multinational strategy and management consulting firm, released four separate studies showing that DEI initiatives boost corporate earnings. Unfortunately for DEI advocates, the research appears to be bunk.
A new study published in Econ Journal Watch, a semiannual peer-reviewed academic journal, shows that researchers were unable to replicate the results of all four McKinsey studies.
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