DEI in Economic Development

Ernst & Young LLP

Diversity, equity and inclusion are increasingly discussed topics in economic development, but lack of clarity can make it difficult for communities to develop practical strategies to address each. Before the COVID-19 pandemic, communities increasingly asked why many Americans continued to face limited economic opportunities despite the longest period of economic growth in history. The pandemic exacerbated these disparities, as the virus and associated economic crisis hit lower-income Americans and communities of color the hardest. As chambers, economic development organizations and other groups focus on economic recovery, applying diversity, equity and inclusion frameworks will be important to growth and building long-term resilience.

Diversity, equity and inclusion are related but distinct terms. A few years ago, The Independent Sector developed working definitions that are useful for economic development purposes. Diversity refers to all the ways people differ from each other. These identities and perspectives are often referenced with regards to race, ethnicity and gender but also can include age, occupation, sexual orientation, rural vs. urban location, marital status, and more. Notably, under this definition all communities are diverse; this is not a characteristic found only in big city melting pots. Diversity may look different in each community, but it is always present.

Equity refers to fair treatment, access and opportunity for economic advancement of all people. Discussions of economic equity often focus on identifying, understanding and addressing barriers to opportunity faced by different individuals and population groups in a community. Research by the W. K. Kellogg Foundation, among other organizations, reveals a business case for addressing equity disparities, noting that the US economy could be $8 trillion larger by 2050 if racial disparities were addressed in health, education, incarceration and employment.

Inclusion refers to acts of welcoming all individuals and groups into the economic mainstream and working to make certain they are respected, supported and allowed to fully participate. Being inclusive in economic development often means inviting more voices to the table when making decisions, confirming broad community representation in organizations, listening to underserved groups when developing programs that address their needs, and including them in implementation. The potential economic benefits of an inclusive approach have been noted by organizations including the Brookings Institute and Ernst & Young LLP.

By integrating diversity, equity and inclusion into economic development programs, we can help create stronger, more resilient local economies. The first step is often awareness of our community. Economic developers can utilize data to see how their community is diverse and understand where economic disparities exist. This can lead to inclusive conversations that bring people and organizations together to understand barriers to economic opportunity, which in turn can lead to strategies and solutions that reduce the barriers and increase economic growth.

Inclusive economic development strategies can bolster talent and educational attainment, enhance innovation and entrepreneurship, and grow prosperity for diverse businesses and people. We have seen this work in comprehensive strategies like the new Greater Minneapolis-St. Paul Regional Economic Framework, which provides a regional strategic road map for inclusive growth. We have also seen this in collaborative local initiatives like the Charlotte Regional Business Alliance’s efforts to expand paths to economic mobility for unemployed and underemployed individuals (who are disproportionately Black and Latinx) and cultivate a more inclusive entrepreneurial ecosystem that accelerates the growth of diverse small businesses.

Diversity, equity and inclusion are not abstract topics; they are important lenses that when applied to economic development can help improve conditions for all people and businesses and make our economies stronger, more resilient and more innovative.

The views expressed by the author are not necessarily those of Ernst & Young LLP or other members of the global EY organization.

By Tony DeLisi, Director of Strategy, Economic Development Advisory Services, Ernst & Young LLP & Rod Garvin, Manager, Economic Development Advisory Services, Ernst & Young LLP