DEI also stands for ‘Discriminatory, Expensive, and Illegal’

OPINION:

Diversity, Equity, and Inclusion is one of the most odious concepts to emerge in America in the last 15 years. 

DEI is built on the foundational premise that America is fundamentally discriminatory, and therefore the government must deliberately give preferential treatment to “underrepresented” groups who are allegedly oppressed.

This stands in sharp contrast to civil rights laws, which Republicans advanced for the narrowly tailored purpose of remedying discrimination and segregation against Americans descended from slavery. It did not envision racial quotas or reverse discrimination; rather, it sought to address the real discrimination that existed at the time. 

DEI perverts those laws, which were designed to make sure all Americans were treated equally regardless of race, and abandons the fundamental strength of American exceptionalism: a meritocracy that prioritizes qualifications and performance over immutable characteristics. 

DEI programs are also bad for business. The 2026 Economic Report of the President found that industries pursuing DEI practices are about 2.7% less productive. The White House estimates DEI inefficiencies cost the U.S. economy $94 billion in output — 0.34% of GDP — in 2023 alone. That’s $1,160 per American family with two working adults.

Over many decades, DEI has been immersed in American society and taken various forms. The“Disparate Impact” clause opened the door to race-conscious remedies. Affirmative action on college campuses followed in 1978. The Voting Rights Act of 1965 was even used to create race-based voting districts until earlier this year. These tools, while framed as temporary correctives, evolved into a permanent racial hierarchy. 

Corporate America largely resisted these pressures until the mid-2010s, when consulting firm McKinsey & Company claimed that “when companies commit themselves to diverse leadership, they are more successful.” This woke wave led to the full promotion of DEI in government, academia, and firms across the nation. 

The pretense that diversity drives academic or financial performance was enshrined in policy and business models. American companies pledged $340 billion toward racial equity initiatives between 2020 and 2022. 

Mentions of DEI in earnings calls and financial filings peaked at an average of 12.5 per firm in 2022.

Research from the Harvard Kennedy School estimates firms spend an average of $8 billion on DEI programs annually—money that could otherwise be used to hire more employees, expand operations, or lower prices.

The federal government scaled up DEI even more aggressively. Analyses of Biden-era federal programs identified over $1.1 trillion in cumulative budgets tied to DEI across hundreds of initiatives. For example, Ohio State University and the University of Michigan spent $20.4 million and $30 million on DEI staffing and programming, respectively. 

At best, DEI programs are a waste of money. At worst, they are discriminatory and illegal. In the 2023 Students for Fair Admissions v. Harvard case, the Supreme Court ruled race-based admissions, specifically affirmative action policies analogous to DEI, were unconstitutional. 

The Department of Justice, many state attorneys general, and legislatures extended similar logic and issued opinions declaring DEI to be unlawful. In Florida, state Attorney General James Uthmeier stated, “Florida laws requiring race-based state action are presumptively unconstitutional.” Later, in the 2026 Florida legislative session, policies that banned local governments from participating in DEI programs were codified into law. 

Many major corporations, including Walmart, Meta, and Ford, have since scaled back or eliminated explicit DEI structures and diversity-linked executive compensation across America. For example, IBM cited legal risks and “inherent tensions in practicing inclusion” as reasons to cease doing so. 

The trillions of dollars federal, state, and local governments have spent on DEI programs have cost American families and the broader economy hundreds of billions of dollars on an annualized basis. The private sector’s additional pursuit of DEI in the last decade has wasted time, money, and resources, ultimately slowing productivity and national economic growth.

But beyond even that, the careers of hundreds of thousands of Americans have been stunted by these discriminatory policies that were unfoundedly promoted as “good for business.” Preferential selection that subordinates competence and performance to demographic targets distorts talent allocation, and harms business outcomes.

DEI initiatives are antithetical to the Western and American Tradition. They seek to pigeonhole people based upon their immutable characteristics or ancestry, not their shared sense of universal human dignity, capabilities, or character. While this is reason enough to oppose DEI, they also cost American firms and consumers billions annually. 

Lawmakers and business leaders should acknowledge what DEI really stands for—Discriminatory, Expensive, and Illegal — and replace this failed form of social engineering with standards and policies that expand genuine opportunity through excellence.

• Nicole Huyer is a Senior Research Associate in The Heritage Foundation’s Roe Institute for Economic Policy Studies. Christopher Lynch was a former member of Heritage’s Young Leaders Program.