How ending DEI could impact Minority-Owned Businesses?

Vidya Sethuraman
India Post News Service

Diversity, equity, and inclusion (DEI) programs were established to support communities historically facing barriers to workplace opportunities. DEI has its roots in the anti-discrimination legislative movement of the 1960s. The beneficiaries of these programs are not only racial minorities but also include white women, veterans, and individuals with disabilities, among others. Many of the benefits DEI has brought remain overlooked by public opinion.

Current administration issued executive orders to terminate all federal programs related to DEI and directed federal contractors to stop promoting diversity. This move will likely significantly impact various sectors, with small businesses potentially being among the hardest hit. Over 40% of small business owners are women, four in ten are foreign-born, and one in five are racial minorities, with Latinos making up a significant portion of that group.

Dilawar Syed, former deputy administrator of the Small Business Administration SBA introduced the impact of the federal government’s elimination of DEI on minority small businesses. He said that about $700 billion of the federal government’s business is outsourced to contractors, and before President Trump, the goal was to allocate 15% of that to minority-owned businesses. During Syed’s time at the SBA, the goal was nearly met, with 13% of federal business being with minority-owned businesses, worth approximately $90 billion. However, the cancellation of DEI will directly affect these minority-owned enterprises. He said that the U.S. economy relies on minority entrepreneurs. For example, half of the founders or co-founders of U.S. technology companies were born abroad. According to data released by the American Immigration Council in September 2024, 46% of the Fortune 500 American companies were founded by immigrants or, their descendants.

Thomas A. Saenz, President and General Counsel of MALDEF, Mexican American Legal Defense and Education Fund said there are currently multiple legal proceedings for DEI cancellation. Sainz said that canceling DEI means a step back in time.

Elizabeth Barrutia, President & CEO, Barú, an independent and woman owned agency dedicated to elevating multicultural marketing and media is a direct victim of the federal government’s cancellation of DEI. Barrutia’s customer base includes, not only private companies such as Disney and Amazon Prime Video, but also Covered California, the Los Angeles County government and other California government projects. The abolition of DEI represents the government’s budget cuts for minority projects and the neglect of the minority market. She is very worried that companies such as Wal-Mart and Target will cancel the consideration of the minority market amid the wave of canceling DEI.