You are here

Prepared Remarks for American Center of Japan: "Diversity as Strength: How the United States Economy and Society Benefit from a Diverse Workforce"

June 1, 2016

Good evening. I’m delighted to be with you. My remarks today will focus on diversity as a source of strength for the global economy and for society generally.

The timing for this topic is auspicious, because just two weeks ago, as part of the G7 Summit meetings, Education Ministers from Japan, the U.S., the U.K., France, Germany, and other nations gathered in Japan, in Kurashiki City — and diversity was at the forefront of their discussion.

The Education Ministers discussed the role of higher education in preparing students for the 21st-century economy, and they recognized that learning to cooperate and collaborate with people from different backgrounds and various cultures is an essential part of that education.

Given the global character of today’s economy, one of the most important things that universities do for students — in addition to equipping them with fundamental knowledge and technical skills — is equipping them with a well-developed appreciation for diversity while teaching them to work in diverse teams.

For the purposes of these remarks, I define “diversity” to mean consideration of the full range of human differences along dimensions of race, ethnicity, gender, national origin, socioeconomic background, age — as well as diversity of thought.

Those differences are important in work and in society generally, because they give people different life experiences to draw upon when they interact with one another; different ways to see and think about the world; and different approaches to solving the complex problems we face as a society.

Diversity produces better results, because it forces us to prepare better for interactions with other people. When individuals know they will be engaging with people from different backgrounds, they anticipate opposing viewpoints and think through their counter-arguments, and they expect that reaching consensus will take effort.

Every day at the University of Virginia, I see the value of diversity in my own leadership team. The President’s Cabinet at UVA — my top leadership team, consisting of 25 people — includes 10 women and three African-Americans. The deans of UVA’s 11 schools include an African-American and two women, and the incoming dean of our Law School is also a woman. This diversity in UVA’s top leadership makes the institution stronger, and wiser.

Diversity is a leading issue in the United States, because the U.S. — a nation of immigrants since its birth — is becoming increasingly diverse. For example, a 2015 Census Bureau report projected that the minority population in the U.S. will rise to 56% of the total population by 2060, compared with 38% in 2014. Likewise, the U.S. is becoming more representative of the entire global population. By 2060, the nation’s foreign-born population is projected to reach nearly 19% of the total U.S. population, up from 13% in 2014.

To keep pace with these demographic trends, and to reflect the society that we prepare students to enter, the leaders of U.S. colleges and universities are working to diversify their student and faculty populations.

The goal of diversifying universities by attracting students from every racial, ethnic, and socio-economic background is relatively new. Until about a half-century ago, few colleges and universities in the U.S. bothered to seek out talented students from the full range of the population. Instead, students who excelled in high school and had adequate financial means attended the universities of their choice.

As a result, most colleges and universities were remarkably un-diverse 50 or 60 years ago. Desegregation and co-education brought the beginning of change, and now just about every university seeks to enroll talented students from under-served and under-represented populations.

This effort requires hard work. We build diverse pools of job candidates and diverse pools of student applicants through outreach. For example, we are seeking to diversify our faculty now through strategic hiring practices that will help us build more diverse pools of candidates. To help diversify our student body, every year we send letters to high-achieving African-American high school students across the U.S., urging them to include UVA among their college options. We also reach out to students on the lower end of the socioeconomic strata to provide information about financial support.

Diversity demands effort.

Diversity also leads to superior outcomes in every realm. The American social scientist Scott Page wrote extensively about this topic. In one example, Page cites a study that showed the value of diversity of thought in scholarly work. The study found that the chance of writing a successful paper, defined as one that receives more than 100 citations, increases more than four-fold if the article is co-authored rather than written by a single author. Furthermore, when the co-authors were from similar ethnic groups, they received fewer citations. And when co-authors came from different universities, rather than working at the same university, they had more citations.

There are potential downsides to diverse groups. Page noted that diverse groups tend to have less confidence in their abilities than homogenous groups, and they often disagree more frequently. That’s why it’s so important for students to develop the ability to work well in diverse, multiracial, multiethnic, multinational groups while they’re still in college. Because when they enter the world of work, they’ll do a better job of functioning well in diverse teams.

Demographics and Diversity in Japan

Diversity in the Japanese workforce may become increasingly important in the next several years, for several reasons.

First, Japan’s labor force is shrinking. Over the next decade, the number of working-age adults will decrease by about 1 million each year, as large numbers of Baby Boomers retire. At the same time, the cohorts of 20-year-olds entering the workforce today are half the size that they were 20 years ago. In 1995, about 2 million 20-year-olds entered the labor market each year; this year, only about 1 million are entering.

As of now, Japan is not replacing these lost workers with immigrants. Net migration is only about 50,000 people a year, mainly because Japan has only a small quota of slots for admitting long-term permanent residents leading to citizenship. Foreign workers tend to come for three years as trainees and return home after at the conclusion of their three-year stay.

In this context of a shrinking labor force, Japanese employers and government officials who manage the economy are considering the possibility of opening doors to enable more women and possibly more immigrants to enter the labor force.

If policies here would allow more women and foreign nationals to enter the Japanese workplace, it would do more than just rebuild the labor force. It would bring an infusion of diversity that would lead to numerous benefits, as we have experienced in the U.S. over the last half-century. Let me share some examples of those benefits …

Diversity in the U.S. Workplace

Women began entering the U.S. workforce in large numbers over the last 50 years, and the effect on the economy has been profound. Two U.S. business professors studied the size and gender composition of firms’ top management teams, and compared that data with the financial performance of the firms. They found that, on average, female representation in top management leads to an increase of $42 million in firm value.

They also measured “innovation intensity” of the firms by measuring the ratio of research and development expenses to assets. They found that companies that focused on innovation saw greater financial gains when women were part of the leadership ranks.

Another study by the global management consulting firm McKinsey & Company showed that the increase in women’s overall share of labor in the U.S. has contributed significant growth. Women went from holding 37% of all jobs to 47% over the past 40 years, and this increase has accounted for about a quarter of the nation’s current GDP.

As with gender diversity, racial diversity also leads to better performance. A U.S. research team surveyed executives at about 180 national banks in the U.S., then compared financial performance, racial diversity, and the emphasis the bank presidents put on innovation. For innovation-focused banks, increases in racial diversity showed a clear connection to enhanced financial performance.

Studies have also shown that diversity sparks creativity and innovation in the workplace. 320 large global companies were surveyed in a Forbes study — companies with at least $500 million in annual revenue — and 85% of the company leaders “agreed” or “strongly agreed” that diversity is crucial to fostering innovation in the workplace.

Diversity for Society

Not only is diversity critical to the success in the workplace, it benefits the larger society in profound ways. In a study of jury decision-making, a U.S. social psychologist named Samuel Sommers conducted mock jury trials with a group of selected jurors. The participants knew the mock jury was an experiment, but they did not know that the purpose was to study the impact of racial diversity on jury decision making.

Sommers composed the six-person juries with either all-white jurors or four white and two black jurors. He found that the diverse juries were better at considering case facts; they made fewer errors recalling details of the case; and they displayed a greater openness to discussing the role of race in the case.

We can see the value of diversity in so many ways, even in something as simple as guessing the weight of an ox … as we learned from a discovery made by the English sociologist Francis Galton more than 100 years ago.

In 1906, Galton stopped by a weight-guessing competition at a livestock exhibition. A large ox had been placed on display, and people were lining up to place wagers on its weight. Eight hundred people placed guesses, and it was a diverse group. Some were livestock experts, such as farmers and butchers, but many others had no knowledge of livestock. They were just guessing based on the animal they saw.

When the contest was over, Galton gathered the wagers and conducted statistical analysis on them. Some of the expert farmers and butchers were off the mark in their guess, as were some of the non-experts.

Galton surmised that the average guess of the group would be way off the mark. But he was wrong. The average guess of the group was that the ox weighed 1,197 pounds; in fact, the ox weighed 1,198 pounds.

In other words, the collective wisdom of the diverse crowd was essentially perfect.

This experiment reveals an important truth that explains why diversity is so important today: diverse groups as a whole are smarter, and make better decisions, than even the smartest individuals and best individual decision-makers within a group.

Nearly 200 years ago, Thomas Jefferson, founder of the University of Virginia, said, “Knowledge is power.” Today we know that diversity, too, is a form of power and a measure of strength. We see evidence of this truth in higher education, in the workplace, on corporate boards, on courtroom juries, and throughout society.

Creating diverse universities, workplaces, and communities remains a work-in-progress in the U.S. and around the world.

The American Civil Rights leader Dr. Martin Luther King, Jr., said, “An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity.”

This is really the highest calling of diversity: for each of us to recognize that our individual concerns and opinions are secondary to the collective wisdom and shared concerns of humanity … and to the achievement of the greater good.

Thank you.