Global Layoffs Compound Underrepresentation Woes for People of Color in the Workforce

Underrepresentation, limited pathways to success, and lack of institutional support are some of the challenges that people of color have faced and continue to face across various industries. Despite decades of non-diverse hiring practices, it is only in recent years that many companies, including large tech firms, have publicly acknowledged their lack of diversity in the workforce.

In response, companies have invested significant amounts of money into diversity and inclusion initiatives to address these longstanding inequities and improve the representation of marginalized workers. The Black Lives Matter movement in 2020 led to particularly significant investments in diversity, particularly in the tech industry. These efforts have shown some promising results, such as Twitter’s increase in Black employees from 6.9% to 9.4% in US locations and Cisco’s 120% increase in Black vice presidents in 2022, surpassing their diversity targets for 2023.

However, the progress made by these diversity initiatives, as well as the representation of people of color in the workplace overall, may be threatened by the recent wave of global layoffs.

An analysis of publicly available data for 2022 conducted by workforce-intelligence firm Revelio Labs revealed that black and Latino workers accounted for 7.42% and 11.49%, respectively, of tech industry layoffs in 2022, despite comprising only 6.05% and 9.96% of the industry. In May 2022, Netflix laid off 150 workers, with 26.6% of them identified as workers from underrepresented backgrounds by Protocol.

While these statistics provide some insight into the impact of layoffs on diversity in certain companies, there is insufficient publicly available data to confirm whether employees of color have been laid off in greater numbers than their white counterparts overall. However, hiring patterns, layoff policies, and data on declining budgets for diversity, equity, and inclusion (DEI) resources suggest that many marginalized workers are struggling in the wake of corporate cutbacks.

Last In, First Out: Understanding the Practice of Workforce Reductions

Several companies have implemented layoff policies that use position and tenure as criteria for determining cost-cutting measures. Many of these policies were implemented following a series of high-profile lawsuits alleging gender and racial discrimination against companies such as Google, Uber, and Riot Games in 2018.

While the stated aim of these policies is neutrality, targeting employees with shorter tenure and less seniority increases the likelihood that workers of color will be let go, especially in companies that have only recently prioritized diversity-focused hiring. In a “last in, first out” layoff policy, these workers are more likely to be affected.

According to a 2016 study by Alexandra Kalev, an associate professor of sociology and anthropology at Tel Aviv University, the layoff approach negatively affects underrepresented workers. While some data suggests that workers of color have made progress towards representation in the C-suite, many are recent hires and therefore vulnerable to tenure-based layoffs.

“Companies are still making those decisions, and reflexively saying [the] last people in should be the first people out,” notes Corey Jones, co-founder and chief creative officer at PrismWork, a consultancy focused on cultural transformation in the workplace.

Jones recently co-authored a Harvard Business Review article with his PrismWork colleagues Daina Middleton and Rebecca Weaver, arguing that savvy companies should “embed DEI efforts into every stage of the employee lifecycle – including separations.” If a company is truly committed to inclusion, the authors contend that layoffs should not disproportionately affect marginalized employees, intentionally or unintentionally.

For workers of color, the challenges presented by layoffs are twofold. Overcoming the initial barrier to entry, which is higher than for their white counterparts, is one challenge. Finding a new position after a layoff, particularly in STEM careers, can prove difficult. When workers of color are let go and unable to secure new jobs in their chosen fields, it damages a growing network of professionals who provide mentorship and connections to job seekers.

A study by US-based diversity-advancement organization Hue on the State of Inequity in the workforce found that 50% of workers of color reported not having the necessary professional connections to obtain desired jobs. For these workers, “it will take longer to recover as the economy starts to stabilize,” says Fahad Khawaja, Hue’s founder and CEO. “As jobs start to become available again, you are now coming from a position of disadvantage, which will only make it harder to come back up at level footing with others.”

All of these factors can create a great deal of layoff anxiety for workers of color, who feel particularly vulnerable in a downsizing labor market. “Nearly 30% [of Black, Indigenous, People of Color] are concerned that they will be laid off or fired in the next 12 months,” says Khawaja. “And it goes higher as you look at additional intersections. For Latinos or Latinas, it’s 35%; similarly, for Asians, it’s 35%. But if you look at LGBTQ+ people of color, it’s nearly 40%.”

Addressing Occupational Segregation: Strategies for Promoting Diversity and Inclusion

In addition to job loss, the termination of diversity, equity, and inclusion (DEI) initiatives is another critical issue for workers of color facing layoffs. For instance, Lyft, which reduced its workforce by 13% in Q4 2022, also disbanded its diversity and inclusion teams. Revelio Labs’ analysis revealed that DEI positions were cut at a faster rate than non-DEI roles, starting in 2021 and continuing to accelerate during 2022 layoffs.

According to Daina Middleton, Chief Strategy Officer at PrismWork, companies are abandoning their diversity commitments made in 2020. “Initially, there was a real focus on DE&I, but all of a sudden post-layoffs, it’s ‘we’re past that, no more DE&I, not important anymore, not a priority,'” Middleton notes.

Experts suggest that these programs are being reduced because companies frequently eliminate positions that are not deemed “revenue-generating.” According to an analysis by jobs website ZipRecruiter, recruiters, HR, marketing, and sales professionals were disproportionately impacted by workforce reductions. These jobs are often filled by underrepresented workers, a phenomenon known as “occupational segregation,” notes Ruchika Tulshyan, author of Inclusion on Purpose. Furthermore, emerging data indicates that the remaining diversity officers are mostly white.

These factors can contribute to low morale among remaining employees. “It harms a sense of belonging, might cause your remaining staff to wonder if they are aligned with the company’s values and might also appear to be arbitrary and not fair,” says Tanya Tarr, a behavioral scientist and president of Cultivated Insights, an executive learning, and development company.

A Real Storm

Although the current layoffs are particularly problematic for workers of color, experts suggest that there are wider implications that affect everyone.

“The research is clear: increased diversity in staff leads to increased innovation, resilience, and profitability,” says Tarr. A 2020 report by McKinsey & Company found that companies in the top 25% for racial and gender diversity are more likely to have stronger financial returns. Furthermore, diverse teams outperform individuals about 87% of the time in business decision-making, according to a study on group performance by UK-based work-intelligence firm Cloverpop. When it comes to employee retention, research shows that employees in diverse and inclusive companies are 5.4 times as likely to stay for a longer tenure.

“Companies may think that cutting DEI staff or initiatives helps the short-term bottom line, but they’re actually cutting themselves off from the human assets that would be a stabilizing revenue source,” says Tarr.

As research continues to support the positive impacts of diverse workforces on organizational success, some executives have expressed concerns about returning to homogenous workforces that lack trust and innovation.

As mass layoffs continue, many workers of color may continue to face barriers to their progress, particularly as mass cuts show no signs of slowing down. “In many ways,” says Tulshyan, “it feels like a real storm is approaching.”