Benchmarking the racial/ethnic representation of executives in S&P 500 firms against the historical qualified labor supply
41 Pages Posted: 5 Mar 2021 Last revised: 1 Feb 2024
Date Written: January 30, 2024
Abstract
Racial/ethnic representation in U.S. corporate leadership is an important topic in academia and practice. Since profit-maximizing firms will seek to hire the most qualified candidates, and as corporate leadership develops over decades, we benchmark the racial/ethnic representation of S&P 500 executives against the racial/ethnic composition of the qualified labor supply at the time the executives were first hired, which for U.S. domestic executives we take to be the BA/BS graduating cohorts of the New York Times Top 100 U.S. colleges and universities plus two top HBCUs, matched to executive age. We show that when benchmarked in this way, the magnitudes of under- or over-representations across racial/ethnic groups are typically very much smaller than when the benchmark is the current U.S. population, and that at times inversions from racial/ethnic under-representation to over-representation and vice-versa occur across the two benchmarks. We conclude that our results do not support the view that inequitable hiring or promotion decisions by firms drive the U.S. population-benchmarked large over-representation of White and large under-representation of Black and Hispanic executives. We also suggest that social policy actions having to do with executive representation are likely to have the largest long-term results if they focus on current undergraduate and pre-college students, and if policy makers accept that the effects of such policy actions will likely take 20-40 years before they are seen in the racial/ethnic proportions of S&P 500 executives.
Keywords: Executives, race, ethnicity, representation, benchmarking, qualified labor supply
JEL Classification: A13, J01, J15, J29, M12
Suggested Citation: Suggested Citation