About 90% of America’s most prominent companies are now meeting the gold standard for transparency on racial representation—a group that doesn’t include the firms of two notable billionaire holdouts.
Elon Musk’s Tesla Inc. and Warren Buffett’s Berkshire Hathaway Inc. have thus far rejected calls from investors to disclose their EEO-1 forms, the private documents that provide granular detail about the number of Black, Hispanic, Asian, Native and White men and women at every level of a company.
Every employer with more than 100 workers submits the form annually to the U.S. government, and increasingly, they’re making them public as investors demand more transparency. But even some companies that have provided the data to the public say they agree with the two billionaires’ point of view.
Which Companies Are Now Disclosing the ’Gold Standard’ of Race Data
The knock on the EEO-1 form, according to Tesla and Berkshire, is that it’s an imperfect tool. For Berkshire, the document is too simple to capture a company that spans many industries and different types of workers. Tesla says the more limited data it discloses is sufficient. Even companies such as Target Corp., who have embraced the form in the past, say it doesn’t reflect people who can’t be assigned to specific racial categories or to a specific gender.
Bloomberg has been gathering EEO-1 forms from companies in the S&P 100 index since the summer of 2020 and now has one of the most extensive collections of data on race in corporate America. In many cases we now have multiple years’ worth of data, allowing us to show for the first time which companies are making progress – and which are falling behind.
We now know that in the immediate aftermath of George Floyd’s murder in 2020, the percentage of Black managers rose by a median of 0.4 percentage point from 2018 among 36 companies. Representation of Hispanics in management climbed by a similar rate, and the portion of Asians in top-level jobs climbed by a median of 1.2 percentage points. As we get more data for 2021 and beyond, we’ll be able to see whether the changes companies implemented in the summer of 2020 paid off with more progress.
Most Companies Improved Percentage of Minorities in Management
These numbers show how powerful the information can be in holding companies accountable for their pledges to improve racial representation. The vast majority of top publicly traded companies in the U.S. have concluded that giving investors the same data they give to the government is the most appropriate move.
Whatever its flaws, the EEO-1 has emerged as the best option for company race and gender data because of its standardization and longevity, said Alison Omens, chief strategy officer at JUST Capital, a research group that’s tracking which companies are releasing their EEO-1 data. Companies can supplement with additional information, but there’s still a need for a common underlying process, she said.
“It’s not a complete picture, but it is the gold standard,” Omens said.
Many Companies Increased Minority Share of Professional Workers
But even advocates for representation acknowledge the EEO-1 can also can produce confusing patterns and head-scratching swings, and some find it altogether misleading.
“You will find no one who thinks the EEO-1 is less useful than I do,” said James Paretti, a shareholder at law firm Littler, who worked for the Equal Employment Opportunity Commission from 2010 to 2018, including as senior counsel and chief of staff to the acting director. “I understand why a company would choose to do so. But I fully respect any company that says ‘This is not useful. It will serve no purpose. It will not educate anyone on anything and it’s not really what our company looks like or what our workforce looks like in any meaningful fashion.’”
A look at data gleaned from two of Silicon Valley’s most influential companies show the benefits and drawbacks of the EEO-1. At Apple Inc., comparing the forms from 2018 and 2020 makes it clear that White workers declined as a percentage of the overall employee population, mostly to the benefit of Asian employees in management and professional positions. Black and Hispanic employees made incremental gains in each category. And overall, Black representation actually declined in 2020 from 2018, while Hispanic representation was little changed. Apple said in a statement that the number of employees from underrepresented groups has risen 64% in the U.S. since 2014, and it’s committed to doing more.
Apple’s Asian Workers in U.S. Make Biggest Gains
For Netflix Inc., the EEO-1 data offers a more confusing picture. Netflix releases both its own curated set of diversity data as well as the raw EEO-1 information, and it’s possible to use either one to see how the company is improving its representation for women and people of color among permanent workers.
The EEO-1, however, reflects large swings in some categories of workers, perhaps because of temporary hirings for production work. From 2018 to 2019, the number of employees listed as craft workers, operatives and laborers plummeted to about 200 from about 2,000. When that happened, the proportion of Hispanic employees jumped significantly. The phenomenon reversed in 2020, with the overall total surging and Hispanic representation declining. With such choppy data, it’s hard for investors to get a real sense of how Netflix is doing.
Netflix’s Roller Coaster Ride
Netflix acknowledges the shifts in the workforce and said it is working to address better opportunities for Hispanic workers as well as improve diversity among film crews, which is an issue across Hollywood. While the numbers can be difficult to sift through, shareholders and employees will be able to hold it accountable for that pledge because the data is public.
Confusion over job classifications is one of the most common complaints about the EEO-1 form, which includes titles such as “craft worker” and “laborers & helpers” that don’t easily match up with most company job titles in 2022. The EEOC has dozens of pages of instructions to help companies properly classify their employees into the right boxes. The professional category, for a hospital, includes everyone from the charge nurse and a surgeon to the head bookkeeper and an assistant general counsel, said Paretti, who wouldn’t comment on any specific companies. “It’s not apples to oranges,” Paretti said. “It’s apples to poodles.”
When General Electric Co. this year released the EEO-1 form for the first time, the company warned investors: “The EEO-1 Report mandates the use of specific job categories, which differ from how our workforce is structured. While we are making data from our EEO-1 Report available, we believe our Diversity Annual Report more accurately speaks to our current representation data, progress, and aspirations to support inclusion and diversity globally.” Other companies, such as McDonald’s Corp., have similar disclaimers alongside their public disclosures.
Some employers say the form, for all its detail, needs to be more comprehensive beyond race and gender. The EEO-1 doesn’t include other worker attributes that are protected by workplace rules such as age, veteran status, or LGBTQ identity, said Dan Stern, a member and labor attorney in San Antonio, Texas, for the Dykema law firm.
Target, which has previously released its EEO-1 data, this year isn’t publicly disclosing the form it submitted to the government. Instead, the company sent Bloomberg a slightly modified version that shows the more than 4,800 employees whose race or gender was not known or unidentified. That change means Target’s data, while more reflective of the challenge of the racial composition of the company, can’t be compared with other companies, Target’s historic data, or the EEOC’s industrywide data.
The EEOC said it wants to track nonbinary workers and is studying the idea. In the meantime, companies can add data in the notes for the EEO-1 form, and the agency has instructions on how to use averages to allocate employees who don’t fall into neat categories.
The EEO-1 form is still the only set of race and gender employment data collected nationally by the U.S. at a company level. The EEOC also anonymizes and aggregates the information every year into a set of data that can be analyzed by business sector, geography, job type and hundreds of other categories — and the agency has been collecting the data in some form since 1966 as part of powers granted by the Civil Rights Act in 1964.
That’s why Berkshire and Tesla, two companies that thrive on data, stand out so much for bucking the trend. Berkshire said in a March 11 regulatory filing that while the conglomerate is committed to diversity, equity and inclusion, an investor proposal that it release the EEO-1 data was impractical because Berkshire’s more than 60 operating businesses “manages its operating businesses on an unusually decentralized basis and has minimal involvement in these businesses’ day-to-day activities.” Almost three-quarters of Berkshire’s investors agreed last year to reject a proposal to publicize the EEO-1 by the group As You Sow, which is trying again at April’s annual meeting. Among Berkshire’s more than 60 business units, which sell everything from insurance to paint, about a dozen had some diversity data and none released a full EEO-1 form.
Buffett might be driven by his well-known frugality as well, said David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business. While the billionaire says he will disclose anything that’s required by law, he’s less inclined to spend time or money on reports that are voluntary.
“I think it’s his overall view of maximizing shareholder value, being the custodian of shareholder funds, and being 100% focused on that,” Kass said. “So whether you have $1 or $1 billion, you watch every dollar carefully. I think it’s his discipline.”
Tesla, which is defending against multiple allegations of racism at its California assembly plant, also said last year that it’s opposed to a request from investor Calvert Research & Management that it release the EEO-1 form. The automaker said the decision in 2020 to release detailed diversity data for the first time was sufficient to outline the race and gender of its workforce. The added job breakdown wouldn’t add additional value. In this case, a majority of Tesla Shareholders — 57% — agreed with Calvert in the non-binding resolution. Tesla didn’t respond to requests for comment.
Calvert has asked each of its 100 biggest investments to release their EEO-1 forms. So far, 83 have agreed, said John Wilson, Calvert’s director of corporate engagement and investment. The data is most useful when a company provides additional data, and discussion, to put the data in proper context, he said.
“We’re not really here to attack you for your numbers,” he said in an interview. “It’s more about asking the question about ‘What are you going to do to improve your weak spots?’ Everybody knows corporate America lags on diversity. That’s not a new story.”
Tesla so far has not engaged with Calvert on the issue, even after the shareholder vote, Wilson said.
“Elon Musk is always kind of a wild card. He might just be saying “I don’t want to do this.” he said. “With Berkshire I think it’s just one individual. He’s 91 years old and he’s bringing his values with him. When he retires, I bet you will see a lot of changes at Berkshire.”