The case for maintaining diversity in a recession

April 22, 2020

Good morning, Broadsheet readers! Jennifer Morgan is out as co-CEO of SAP, Symone Sanders runs the Biden campaign from home, and don’t let this downturn ‘drain’ your diversity. Have a good Wednesday. 

– Diversity in a downturn. The current economic crisis in the U.S. that’s seen some 22 million lose their jobs in a four-week span has been especially brutal to women.

According to March data, the unemployment rate for women rose 0.9% while that of men ticked up 0.7%. Sixty percent of the 700,000 jobs eliminated last month belonged to women. One factor here is that women are overrepresented in the types of jobs being slashed—service industry positions in hospitality, travel, and retail, for instance. Another factor is women’s seniority. As Elise Gould of the Economic Policy Institute told NPR last week , “labor market discrimination” has “led disproportionate shares of women in jobs that may be more subject to job loss.” They are less likely to be managers, who are more likely to keep their jobs in rounds of layoffs, she said.

Writing for HBR , Alexandra Kalev, an associate sociology professor at Tel Aviv University, says that based on her research, executives have determined who’s getting laid off based on either position or tenure and “drained diversity”—in terms of race and gender—from their teams as a result.

Executives argue that their layoff criteria is about job function and is “color blind,” Kavel writes. But as she puts it: “[J]ob titles are not color blind, and so layoffs aren’t, either.”

Kavel has tips for how leaders can avoid slashing diversity as they try to cut costs. “Redeploy talent to areas that need strengthening” is one piece of advice.

And 2019 research from Fortune and partner Great Place to Work explains why the stakes for such consideration are so high—beyond individual livelihoods. Examining publicly-traded companies during the Great Recession, the research found that the experience of certain key employee groups—women, people of color, front-line workers, hourly male workers, and long-tenured employees—”predicted whether organizations flatlined, merely survived, or thrived during the  [downturn].”

The S&P 500, for instance, saw a 35.5% drop in stock performance in the period between 2007 and 2009, while companies whose key employee groups had very positive experiences reported a 14.4% gain.

This downturn, of course, is different than previous ones, but that data point—that the treatment of marginalized workers can be a bellwether—is one to keep top of mind.

Claire Zillman
claire.zillman@fortune.com
@clairezillman

Today’s Broadsheet was produced by Emma Hinchliffe. 

A note from Fortune's editor-in-chief

Listen Now: Sustainable Priorities, Fashion Icons

This week, in a nod to Earth Day and businesses’ increasing focus on sustainability, the Leadership Next podcast features Eileen Fisher, a unique entrepreneur who has been putting purpose at the center of her company since 1984. Also in this week’s episode, the founders of the fashion label Public School share how they are retooling their business to become a more sustainable brand. Listen here or wherever you enjoy podcasts.

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