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-Editorial
Diversity, Equity, and Inclusion (DEI) programs were established to level the playing field for communities historically excluded from workplace and business opportunities. Rooted in the anti-discrimination movement of the 1960s, these initiatives have benefited not just racial minorities but also white women, veterans, and people with disabilities. While the broader public often overlooks the impact of DEI, its advocates point to critical workplace advancements—such as breastfeeding rooms—as tangible results of these policies.
However, a political and corporate backlash against DEI is now reshaping the economic landscape. The Trump administration has issued executive orders terminating federal DEI programs, eliminating diversity training requirements for federal contractors, and reducing government support for minority-owned businesses. These changes could significantly impact sectors historically relying on DEI policies to create pathways for success—tiny businesses.
Small businesses drive the U.S. economy, and minority entrepreneurs play a crucial role in this growth. Over 40% of small business owners are women, four in ten are foreign-born, and one in five are racial minorities. Latinos, in particular, have become one of the fastest-growing entrepreneurial groups. But with the rollback of DEI programs, many of these businesses face an uncertain future.
Former Small Business Administration (SBA) Deputy Administrator Dilawar Syed warns that dismantling DEI policies could be disastrous for American entrepreneurship.
“We prioritize serving all Americans, and I want to emphasize the word inclusion in DEI,” Syed said. “That means everyone is included. It is not at the expense of any other segment of society.”
Syed highlighted that under the Biden administration, historic investments—such as the Bipartisan Infrastructure Law and the CHIPS and Science Act—helped fuel a surge in minority entrepreneurship. According to Syed, Black women started businesses at four times the rate of other Americans, and Hispanic, Asian, and veteran entrepreneurs also saw record growth.
But recent federal cutbacks threaten to reverse this progress. Syed pointed to major layoffs at the SBA and the planned closure of SBA offices in cities like New Orleans, Chicago, and Denver—places with high concentrations of minority entrepreneurs.
“These are the economic engines of our country,” Syed said. “Shutting down these offices doesn’t help us serve the unmet need of this rising class of entrepreneurs.”
Perhaps most alarming is the rollback of federal contracting opportunities for minority-owned businesses. Under the Biden administration, the SBA aimed to direct 15% of federal contracts to minority entrepreneurs, reaching 13% and channeling nearly $90 billion to these businesses. But the new administration has slashed the target to just 5%.
“That means hundreds of minority, women, and veteran-owned businesses will lose federal contracts, effectively shutting down their businesses and impacting thousands of workers,” Syed said.
The federal government isn’t alone in rolling back DEI initiatives. Major corporations are also retreating from diversity-focused programs, raising concerns about how this shift will affect businesses that serve multicultural markets.
Elizabeth Barrutia, President & CEO of Barú, a woman-owned multicultural marketing agency, says these rollbacks are already having ripple effects.
“It’s challenging enough to navigate the SBA certification process to become an approved Women-Owned Small Business,” Barrutia said. “Now, with local SBA offices in large metropolitan areas shutting down, it’s even harder for entrepreneurs to get certified and compete for federal contracts.”
Barrutia, whose firm has worked on major public and private sector campaigns—including vaccine outreach and reproductive health awareness—fears that federal contract opportunities are drying up.
“I’m currently involved in three different federal Requests for Proposals (RFPs) that started before this administration’s policy shift,” she said. “As a Latina business owner, I’m very concerned that the services and programs we were bidding on will now be eliminated.”
Beyond direct business impacts, Barrutia warns that dismantling DEI policies will harm the media and advertising industries that rely on multicultural marketing efforts.
“We are culture connectors,” she said. “With the dismantling of DEI, everything we do is under attack.”
Major retailers, including Walmart and Target, had previously invested in partnerships with Black, Latino, and AAPI-owned brands, bringing more diverse products to store shelves. But with corporations pulling back on diversity commitments, those collaborations are disappearing.
“That means fewer diverse products on shelves, a less inclusive workforce, and ultimately, a loss of innovation,” Barrutia said.
Thomas A. Saenz, President and General Counsel of the Mexican American Legal Defense and Education Fund (MALDEF), argues that the attack on DEI is a thinly veiled attempt to preserve long-standing advantages for white men in employment, education, and government contracting.
“It’s quite clear that this administration’s attack on DEI is about perpetuating and expanding long-standing practices that discriminate in favor of white men,” Saenz said. “This isn’t about fairness. It’s about rolling back the clock to a time when discrimination was even more widespread than it still is today.”
Critics of DEI claim these programs promote “reverse discrimination,” but Saenz points to decades of legal precedent that disprove this argument. He notes that Supreme Court decisions, including Regents of the University of California v. Bakke (1978), have carefully defined permissible race-conscious policies.
“Nothing that the current administration is attacking violates existing law as interpreted by the Supreme Court,” Saenz said. “Hard racial quotas were eliminated long ago. Today’s DEI programs ensure that policies don’t have an unnecessary discriminatory impact on marginalized communities.”
Saenz warns that eliminating DEI will have significant economic and social consequences, disproportionately affecting small businesses, hiring practices, and government contracting opportunities for minority entrepreneurs.
“The result of this attack will be that the effort to end illegal discrimination will be disrupted,” he said. “And that means businesses will exclude diverse talent, deepening economic disparities.”
For small business owners like Dr. Esther Zeledon, founder of BeActChange, the impact of these rollbacks is already devastating.
“I lost 95% of my contracts after these policy changes,” Zeledon said. “The language in the executive order—calling DEI ‘radical’ and ‘wasteful’—slanders the work that has helped businesses and individuals thrive.”
Zeledon, a climate scientist and former diplomat, argues that dismantling DEI policies creates a culture of fear, making companies hesitant to invest in diversity efforts.
“This kind of rhetoric makes companies afraid to support DEI, fearing lawsuits or loss of federal funding,” she said.
Despite numerous studies showing that diversity investments strengthen businesses financially, Zeledon fears that misinformation is undermining public trust in DEI.
“We’re now being told we can’t even trust the research that proves DEI works,” she said.
But Zeledon remains defiant, insisting that DEI is about opening doors, not closing them.
“DEI simply allows people to knock on the door,” she said. “The idea that it’s unnecessary or harmful is dangerous—not just for businesses like mine, but for the future of equitable access in America.”
“If companies fail to recognize the power of our communities, it will be business suicide,” Barrutia said.
And as Saenz warns, failing to push back against this DEI rollback is not just an economic mistake—it’s a legal and ethical failure.
“The mechanism to respond is to challenge discrimination where it occurs,” he said. “Because those challenges are necessary to get beyond this intended discrimination in favor of white men.”
