Why Silicon Valley Really Wants More Diversity
Apple shareholders last week overwhelmingly rejected a proposal to tie executive compensation to racial diversity targets. The news is being reported against the backdrop of a now-familiar storyline: a “reluctant” tech industry continues to “ignore” its “diversity problem.” Yet the Apple vote is actually a sideshow in a more overarching Silicon Valley trend. Far from being a vestige of discrimination, the high-tech industry, lured by government contracts, is, by and large, actively pursuing Washington’s diversity agenda.
Silicon Valley’s resurgence since the collapse of the dot-com bubble in 2001 has coincided with a growing national consensus on affirmative action. Since the election of George W. Bush in 2000, the Republican Party has largely ceded the workplace discrimination debate. Noteworthy is the GOP’s about-face on the Equal Employment Opportunity Commission (EEOC) — a federal body that since 1965 has been charged with enforcing employment discrimination laws. In a shift from the Reagan administration, President Bush approved eight straight years of EEOC budget increases and appointed EEOC advocates Cari Dominguez and Naomi Earp to chair the commission. In arguments before the Supreme Court, the Bush Justice Department offered what commentator Christopher Caldwell judged at the time to be, “the most important substantive defense of affirmative action ever issued by a sitting president.” With “the Bush administration undercutting affirmative-action foes” and “embracing the ‘diversity’ mantra” of the left, Harry Stein wrote in a 2006 City Journal piece that the “desertion” of the Republican Party had become the most significant threat facing the anti-preferences movement.
Republican backing for the EEOC laid the groundwork for today’s diversity push in the high-tech industry. Among the more notable EEOC actions during the Bush administration was an inquiry into the financial industry’s hiring practices. Because the tech employment market, like the financial industry, has high-paying jobs with generous benefits, EEOC Commission Chair Jenny Yang cited actions against the financial sector as a precedent for measures directed at Silicon Valley. In 2016, the EEOC issued a special report on “Diversity in Tech,” flagging the “lack of diversity among high tech workers” as one of the country’s “central public policy concerns.”
Since the enactment of the Equal Employment Opportunity Act of 1972—which empowered the EEOC with litigation authority against private employers—many of the commission’s most enduring efforts to promote affirmative action have come through protracted lawsuits. In the tech sector, however, Washington is effectively achieving its diversity goals without litigation, or indeed even without conciliation. In April 2016, online service platform TaskRabbit, in conjunction with the Congressional Black Caucus’ Tech 2020 plan, announced that it would seek an increase in African-American representation to 13 percent within eight months. Two months later, more than thirty tech giants sent President Obama an “Inclusion Pledge” to “recruit, retain, and advance diverse technology talent” as a “top management priority and business imperative.” Venture capital firms followed suit, promising the president that they would adopt the “Rooney Rule”—a requirement to consider at least one underrepresented minority for each senior executive position.
Why are tech giants so eagerly advancing the government’s diversity wish list? And why are they persisting even as industry leaders confront embarrassing press coverage for retreating from their own much-celebrated “hiring goals”?
Silicon Valley’s political correctness cannot be discounted as a reason. As San Francisco-based writer Anna Wiener reports in the March issue of The Atlantic, with Silicon Valley abandoning the disruptive, pioneering ethos of its past, the “difference between the East and West Coasts is not fundamentally all that great.” These cultural similarities manifest themselves in the political realm. Even more so than in print media, News Corp CEO Robert Thompson recently observed that the “mindset” in Silicon Valley is marked by a “deep fondness for political correctness, and a tendency to be intolerant of ideological infractions.” The Silicon Valley work force is, after all, comprised disproportionately of alumni from elite coastal schools—the “standard 20 schools” as Slack’s Leslie Miley calls them. Politically correct explanations for racial and gender disparities in tech, like “stereotype threat” and “unconscious bias,” are largely taken for granted; never mind that the introduction of “blind” (no names and pictures) hiring processes at tech firms have, in some cases, led to drops in the number of diversity candidates. Tech CEOs like Blendoor’s Stephanie Lampkin gladly blame the “brogrammer culture, the hoodies, the flip-flops, the ‘Revenge of the Nerds’ type of vibe” in Silicon Valley as a “significant contribution to why a lot of women and minorities have been pushed out.” Yet biological theories about innate group differences—and the achievement gaps and diverging career choices they produce between groups—are as taboo in Silicon Valley as they are in the Ivy League, where studies even questioning the supposed correlation between workplace diversity and profitability or productivity have “little chance of being published.” So when Y Combinator president Sam Altman preens that women’s outreach is “the right thing to do,” or Silicon Valley founder-turned-academic Vivek Wadhwa attributes venture capital’s low returns to a dearth of African-Americans and Latinos, the allure of a flattering press “dying to write” about minority entrepreneurs may not be the only motivation.
As the Apple vote shows, however, Silicon Valley is willing to resist social justice agitation when profits are on the line. Uber CEO Travis Kalanick may have hired former attorney general Eric Holder to conduct a review on “diversity and inclusion,” but he hasn’t shied away from legal battles to keep Uber drivers—over a third of whom are African-American or Hispanic—near minimum wage. Just 2 percent of venture capitalists consider building a diverse team to be a “top priority” and even the tech industry’s most visible affirmative action enthusiasts are unwilling to abandon Silicon Valley’s meritocratic ideal wholesale. As “diversity consultant” Y-Vonne Hutchinson recently admitted, efforts by advocacy groups such as Project Include to promote affirmative action in Silicon Valley generate “a lot of blowback” because the tech industry is “really married to the idea of a meritocracy.” Facebook COO Sheryl Sandberg inspired a national discussion on “gender equality” with her recent report on “Women in the Workplace,” but less noted was her opposition to affirmative action for educated women. And this is to say nothing of the exasperation from male investors and founders, as well as a fringe but growing “neoreactionary” subculture in Silicon Valley.
To a certain extent, Silicon Valley may be pursuing a defensive legal strategy. Tech firms, after all, are required to file Equal Employment Opportunity 1 (EEO-1) reports, which disclose internal demographic data to the government. Last year, the Department of Labor filed for the first time equal opportunity lawsuits against three Silicon Valley companies —Palantir, Google, and Oracle—and experts generally are noticing a “tougher, more adversarial tone” among federal compliance officers toward Silicon Valley. The tech sector could increasingly be targeted under the EEOC’s new strategic enforcement plan, which emphasizes diversity concerns in the “gig” economy.
Still, the overall threat of EEOC action is not especially significant. With an annual budget of less than $365 million, the EEOC is chronically backlogged and wont to approach cases with the skill of an “unwise gambler.” In a legal environment in which labor and employment law has not kept up with the sharing economy and technology-based platforms, Silicon Valley is well-positioned to shape employment discrimination law through litigation. As a recent article in the American Journal of Sociology shows, courts are particularly deferential to corporations in antidiscrimination cases when, like today’s tech giants, they have already implemented organizational structures indicating “rational governance and compliance with antidiscrimination laws.”
A more convincing explanation for Silicon Valley’s diversity outreach can be found in tech’s evolving relationship with Washington. Once an industry that “didn’t get—and didn’t want to get—the importance of lobbying”, tech has now “caught on to the traditional way of doing business” in Washington. Since 1998, big tech lobbying expenditures have jumped by over 250 percent—more than double the rate at which the lobbying industry generally has increased. From less than $15 million on the eve of the Obama presidency, the top five tech firms alone—Google, Facebook, Amazon, Microsoft, and Apple—spent in 2015 some $49 million on lobbyists. That’s more than twice as much as the top five banks. And direct lobbying figures hardly capture the millions tech companies pour into shadow lobbying through Beltway think-tanks, trade associations, “revolving door” moves, and “other, less visible forms of influence.” Nor do they account for the quintupling of campaign contributions from tech PACs and executives since 2000.
To what end? According to Ed Ring of the California Policy Center, a new generation of Silicon Valley entrepreneurs, has realized that
the government is a customer with very deep pockets, that more regulations will empower big companies and destroy emergent ones, that environmentalist mandates will force consumers to buy their products as they forge OEM relationships with manufacturers of durable goods, that the security state is a voracious consumer of high technology, and that public bureaucrats can be sold billions of dollars worth of educational hardware and software.
Consider Palantir. Politicoreports that after seven years of battle against “an entrenched bureaucracy and opposition from major contractors skilled in the Washington game,” Palantir recently landed $1.2 billion worth of federal contracts. Palantir’s lobbying expenditures during this period grew from $300 thousand to over $1 million, and 40 percent of the firm’s business now comes from government clients. Yet the executives at Palantir are still amateurs compared to Elon Musk, perhaps “the most prominent case of cronyism in modern history.” Among other Musk feats: convincing the Treasury Department to fork over more than $497 million in direct grants for solar installations.
With this much money on the line, Silicon Valley’s PC nostrums are understandable. It’s an investment—a “rational judgment,’’ as Google’s former director of public policy in Washington describes it. However they might feel about “phoney [sic] PC police axe-grinding”—Musk’s words—high-minded diversity statements, affirmative action hires “employed as demographic icons”, and charitable contributions to such EEOC favorites as Black Girls Code, Hack the Hood, and Lesbians Who Tech make financial sense. Why refuse an opportunity to make a personal pitch to the president—or 21 of them in Google’s case? A $40 million donation to the Thurgood Marshall College Fund might be a bargain if it prevents further shakedowns by the likes of Jesse Jackson and Van Jones. Rev. Jackson, let’s remember, is “at least as upset about Silicon Valley” as he is about Selma’s bloody voter crackdowns in 1965.
Diversity plays have another advantage. When affirmative action fails to deliver Washington’s preferred racial and gender proportions, Silicon Valley is better positioned to turn the tables on the government. After Facebook’s 2016 diversity report revealed that the company’s extensive outreach campaign had produced no change in the percentage of black and Hispanic employees, and a mere 1 percentage point increase in the number of women, Facebook diversity head Maxine Williams shot back in an official statement: “Appropriate representation in technology…will depend upon more people having the opportunity to gain necessary skills through the public education system”—a process, Williams predicted, that would take at least ten years. (Williams neglected to say why non-public education can’t produce tech talent.)
At least in the context of Silicon Valley, those who voted for Trump as a rejection of political correctness are likely to be disappointed. Trump may not “have time for total political correctness” but his positions on workplace discrimination are hardly different from Washington’s diversity lobby. Even in the midst of the Republican primaries, Trump reminded the nation that he is “fine with” affirmative action and criticized Justice Scalia for a critique of racial preferences that, in Trump’s sensibility, was “very tough to the African-American community.” On gender equality, Trump issued a statement supporting “equal pay for equal work” and vowed to “enforce all statutes against discrimination.” Already, President Trump has enacted two laws promoting female STEM recruitment by NASA and the National Science Foundation and promised more legislation to “address the barriers faced by female entrepreneurs and by those in STEM fields.” At the EEOC, Trump appointees are signaling that they will retain Obama’s stringent EEO-1 compensation reporting requirements; make equal pay cases a “priority,” and maintain the commission’s commitment to systemic discrimination suits—albeit with more focus on individual cases.
With Silicon Valley increasingly profiting off Washington’s diversity agenda, stands against political correctness, like the Apple vote, may become harder to sustain.