Back in 2014, major tech companies began collectively publishing diversity data. The recent scandals that rocked Uber and Google have made it clear that diversity and inclusion continue to be very hot topics for the tech industry. Because we pride ourselves on being the data specialists for all things workplace related, we decided to our own deep dive into the state of diversity in tech. It appears that many of these companies are making a lot of noise with their diversity initiatives but with few results as of yet.
In fact, it appears things might be trending in the wrong direction. According to Nathan Ensmenger, a computing historian, and professor at Indiana University, “About 35% of computer programmers in the period between 1955 and 1970 are women.” Today, at tech companies, “women make up at most 30 percent of leadership roles and less than 27% of technical roles at these companies,” according to the data gathered below by recode this year.
The numbers for tech companies look even more troubling when race is examined and especially when intersectionality – a term used to describe the overlapping of identifying factors such as sexual orientation, religion, race, ethnicity, and class – is factored in. The term intersectionality describes someone, for example, that is both a minority and gay.
Ellen Pao, Co-Founder and CEO of Project Include, often discusses the topic of intersectionality within tech, and points out that women of color have it toughest when it comes to reaching the executive level. She has stated that “while white men are 41 percent more likely to be executives than white women, they are 260 percent more likely than Asian women, and over 400 percent more likely than Black women and Latinx women.” With that said, the state of intersectionality in tech is a complex issue that would require it’s own article in order to be properly examined.
In support of the argument that little has changed over the years are the sexual harassment scandals that continue to trouble the tech industry and the VC firms funding and working with female founders. Six women came forward accusing Justin Caldbeck, a Co-Founder of Binary Capital, a San Francisco-based VC firm, of sexual harassment, which eventually led to his resignation.
A lack of diversity also permeates the venture capital firms funding startup tech companies. Only one percent of funded startup founders were black, even though they make up 11 percent of the U.S. population,” according to a 2015 report from CB Insights. The same study reported that “only 8% of funded founders were female.”
However, there are a few variables that confused the issue. Female founders typically start service-based businesses, which aren’t meant to scale on a national or global level. The highest concentrations of businesses founded by women are in the healthcare, social assistance, and service-based categories, according to a 2014 study by American Express OPEN.
Overall, “women-owned firms now account for 30% of all enterprises and are growing faster in number and employment than most other firms,” according to the same American Express OPEN study. “Firms owned by women of color now account for one in three (32%) women-owned firms in the U.S.,” up 14% since 1997. But, in tech, women only make up 5% of founders.”
Ironically, it appears that diverse and in particular, female-run companies, are statistically more profitable. “Shark Tank” star and investor Kevin O’Leary claims that female-led companies that he invested in show better returns than those run by their male counterparts. He should know. He has nearly 30 companies in his investment portfolio, according to a 2015 article from Business Insider, in which he said:
“All the cash in the last two-quarters is coming from companies run by women,” he told Business Insider at a recent event for the startup Honeyfund, in which he is an investor. “I don’t have a single company run by a man right now that’s outperformed the ones run by women.”
While that’s a small sampling and anecdotal data in nature, multiple studies support this theory. A 2016 study conducted by The Peterson Institute for International Economics and EY surveyed 21,980 publicly traded companies in 91 countries. It revealed that “an organization with 30 percent female leaders could add up to 6 percentage points to its net margin.”
But, what about minority founders trying to capture VC funding for their endeavors? The answer to this question is much more complicated. Like their female counterparts, the largest percentage of African American-owned businesses are in the healthcare and social assistance sectors, so many of them aren’t seeking VC funding. But, we should acknowledge the issues minorities face that could impact their ability to compete during their careers.
“Black children are much more likely than white children to be enrolled in low-quality day care,” according to a 2015 US News article citing U.S. census reports. Additionally, low-income neighborhoods often can only afford to hire teachers with less experience, resulting in minorities falling behind developmentally even before high school.
The last indicator may lie in the ethnic makeup of those who own and found venture capital firms. In a 2011 study conducted by the National Venture Capital Association, “87 percent were Caucasian, nine percent were Asian, two percent were African American or Latino, and two percent were of “mixed race.”
To self-correct the VC investment trend, minorities and those in support of funding marginalized founders are starting their own VC firms to get around the problem. Founded in 2015, 72 percent of Backstage Capital’s funded founders are of color. Of those, 44 percent are women of color, a point of intersectionality as mentioned earlier.
The wildly popular ride-sharing company, Uber, is one company at the forefront of sexual harassment scandals. When Susan Fowler blogged about the gender bias and sexual harassment she endured at Uber as an engineer, that kicked off an independent investigation of the company, which included a total of 200 allegations of sexual harassment. The result was the firing of a total of 20 employees. It’s also important to mention that Uber has a host of other problems they are addressing, so they are somewhat of an anomaly within the industry.
When Uber released its diversity statistics for the first time in March of this year, despite being founded in 2009, those numbers were equally disappointing. Their report showed that 15 percent of engineers are women and black and Hispanic employees make up only 15 percent of its workforce.
If you’re tempted to believe that lack of diversity is only a big problem at a few companies, think again. Only one percent of the workforce at Facebook, Yahoo, Airbnb, and Google are black, according to reporters at Gizmodo, who compiled several diversity reports to view the bigger picture.
There’s also evidence of ageism among tech companies. Because companies aren’t required to report the ages of employees to the EEOC, many companies aren’t monitoring age-related statistics. Ageism became an issue for Dan Lyons, author of Disrupted, who details his journey from journalism to tech that began at the age of 52.
When Lyons’ position as tech editor was eliminated at Newsweek in 2012, Lyons joined Hubspot, a software company that offers tools for marketers to increase inbound lead generation for online SMBs. There, he found most of his colleagues to be half his age. In fact, the median age of Hubspot employees at the time was 26.
Even the AARP is well aware of the systematic ageism occurring in tech companies today. In testimony sent to the EEOC (Equal Employment Opportunity Commission) in May of 2016, AARP Senior Attorney Laurie McCann wrote: “it would appear that age discrimination is very prevalent in the technology sector of the economy.”
Her written testimony concludes by mentioning that AARP’s California state office also submitted comments urging particular attention to hiring issues, including age-related job postings and application procedures, and urged the Commission to pay particular attention to problem industries such as Silicon Valley.
While the EEOC reports the median age of the American workers to be 42, it’s much lower at the tech behemoths. The average age is more likely to be 31 (Apple), 30 (Google, Tesla), 29 (Facebook, LinkedIn), or younger.
What is concerning is that some tech leaders and CEOs don’t seem to consider ageism to be a problem. Instead, their focus on diversity is geared towards gender or race. Facebook CEO Mark Zuckerberg unabashedly once told a Stanford audience, “Younger people are just smarter.”
Admittedly, the problem with ageism in tech could be related to the fact that tech startups sometimes offer low salaries and below-average benefits. For someone in their 20s, those factors are less worrisome and therefore not a barrier to accepting employment under those conditions. Generally speaking, someone in their 20s is less likely to have commitments (kids, spouse, mortgage, etc.) that would decrease their ability to accept lower than average salaries and benefits. We’ll dive deeper into ageism in a future installment in this series.
To be clear – fixing this situation is as important for companies as it is for society as a whole. Research from a 2015 report from the global management consulting company McKinsey and Company showed that “companies in the top quarter for gender or racial and ethnic diversity are more likely to have financial returns above their national medians.”
We also have to consider that women or minorities might not bother trying to work for tech companies or in male-dominated functional areas because of their previous bad experiences, fear of harassment, or the knowledge that being different will make them stand out.
According to a 2017 online poll by the Kapor Center for Social Impact and the Ford Foundation, “unfairness or mistreatment within the work environment was the most frequently cited reason for leaving, with 37% of the sample indicating that unfair treatment was a major factor in their decision to leave their company.” The study was conducted via an online poll of 2,006 adults that worked in and left a technology-industry related job.
The good news is that now, more than ever, women and minorities are studying STEM (science, technology, engineering, and math). According to the American Society for Engineering Education, women were awarded 23.1% of doctoral degrees in 2015 versus 21.3% in 2009. And, more women and minorities are taking college-level computer classes in high school than in prior years.
It’s also worth mentioning studies like the one conducted by the National Assessment of Educational Progress. When a technology-oriented problem-solving challenge was presented to eighth-grade students, the results were noteworthy; “45% of eighth-grade girls were at least proficient at these tasks, compared with 42% of eighth-grade boys.”
So, why do significantly fewer women continue to study STEM by the time they reach college? That is a question we need to continue to ask and address. According to the ASEE (American Society for Engineering Education), women received 19.9% of engineering degrees awarded in the U.S. in 2014. According to the National Science Foundation, 18 percent of those graduating with a bachelor’s degree in computer science were female, which is down from 25 percent in 2004.
Fortunately, there has been a surge of funding efforts by nonprofit organizations and tech companies to generate interest in amongst women and minorities to pursue STEM (Science Technology Engineering and Math) careers. At the same time, we need to continue to review the data regularly. We also need to continue to find innovative ways to address the problem to ensure that programs deliver tangible results. Otherwise, we’re just generating noise, not change.
In my next article, I’ll take a deeper look at some of the initiatives that are already in place, and some of the most promising solutions.