AI transcript
0:00:09 In our previous episode, we talked about the ever expanding National Football League, which
0:00:14 is already the biggest, richest sports league in history.
0:00:20 The NFL is a tight confederation of 32 teams that are essentially run as individual firms.
0:00:24 Unlike the European soccer leagues, where the worst teams are pushed out each year and
0:00:30 placed by teams from the lower ranks, the NFL is a closed ecosystem.
0:00:33 And it is an extraordinarily powerful one.
0:00:38 The NFL lies at the center of not only sport, but also media and advertising, gambling, pop
0:00:42 culture and politics, and just about anything else you can think of.
0:00:45 It may be sacrilegious to say this, but it may also be true.
0:00:50 The NFL, which plays most of its games on Sunday afternoon, is the closest thing we
0:00:53 have today to a national religion.
0:00:58 In 1960, on Meet the Press, Martin Luther King Jr. made the following observation about
0:01:00 church going.
0:01:03 I think it is one of the tragedies of our nation.
0:01:08 One of the shameful tragedies at 11 o’clock on Sunday morning is one of the most segregated
0:01:14 hours, not the most segregated hours in Christian America.
0:01:20 If Sunday morning church time is or at least was the most segregated hour in America, would
0:01:26 it also be sacrilegious to say that the rest of Sunday is the least segregated?
0:01:30 There are countless constituencies attached to this game.
0:01:36 Because of that, the NFL draws enormous attention, and it often sets the cultural or political
0:01:41 agenda, especially when it comes to society and race.
0:01:45 The story we began last week looked at an NFL policy called the Rooney Rule, named after
0:01:48 the late Pittsburgh Steelers owner, Dan Rooney.
0:01:53 The rule was adopted in 2003, and it required that whenever an NFL team hired a new head
0:01:57 coach, which happens on average about every three years, that they interview at least
0:02:00 one candidate who isn’t white.
0:02:05 Some people saw this move as long overdue, since the majority of NFL players were black
0:02:09 and the vast majority of head coaches were white.
0:02:13 Dan Rooney’s name was attached to this policy not only because he helped build consensus
0:02:19 for it among the league’s 32 team owners, but because his Steelers have been out front
0:02:26 on diverse hiring at every level of the organization, players, coaches, scouts, team executives,
0:02:27 and more.
0:02:32 The Steelers also had the most Super Bowl wins in history, so there was some proof of
0:02:33 concept there.
0:02:38 The Steelers current head coach, Mike Tomlin, is a black man and the longest tenured coach
0:02:40 in the NFL.
0:02:46 Tomlin hasn’t won a Super Bowl since 2009, but he also hasn’t had a single losing season
0:02:47 in 17 years.
0:02:54 In other words, the Rooney family, which still owns the team, has lived out the Rooney Rule.
0:02:58 Several other teams followed them, and in the first decade of the rule, it seemed to
0:03:01 have the intended effect.
0:03:05 Today on Freakin’omics Radio, we’ll hear where things went wrong in the second decade.
0:03:08 Yes, I would call that a sham interview.
0:03:13 And we’ll hear how the Rooney Rule has reverberated in the corporate world, especially after the
0:03:15 police murder of George Floyd.
0:03:19 Yay, I hire a lot of diverse people and the ferries come and everything happens and there’s
0:03:21 sprinkle of dust and it’s great.
0:03:27 Along with a massive wave of DEI policy, there has been DEI pushback.
0:03:28 We’ll hear some of that too.
0:03:33 Part of the actors stirred up new theories that the way to fight racial discrimination
0:03:36 is with brand new racial discrimination.
0:03:41 As for the NFL, how can you measure the Rooney Rule’s long-term effect?
0:03:48 So we collected data on over 1,300 coaches, and it yielded a data set of over 10,000 coach
0:03:49 years.
0:03:54 Try not to Google number of black coaches in the NFL today until the end of this episode,
0:03:55 okay?
0:04:21 In the meantime, you won’t have to.
0:04:30 Let’s start with Tynesha Boyer Robinson.
0:04:35 I go by Ty, and I’m the president and CEO of CapEQ, and we work with businesses and
0:04:40 investors to embed equitable impact into their daily practices.
0:04:45 Most people would call Boyer Robinson a diversity consultant, but she is not a fan of that label.
0:04:50 I always say equitable impact because diversity opens a drawer in people’s heads that’s usually
0:04:51 people-related.
0:04:53 It’s just, “Do you look like me?
0:04:54 Are you the same gender?
0:04:55 Are you the same race?
0:04:56 Are you the same ethnicity?”
0:05:01 And to really build an equitable organization, it’s really about, “Is our workforce reflective
0:05:03 of our population?”
0:05:09 If you believe in all talent is created equal, then you would believe that your company should
0:05:12 be recruiting people in a way that reflects the population.
0:05:15 And if it isn’t, there’s something broken in your system that’s keeping certain people
0:05:17 out and keeping certain people in.
0:05:24 So in terms of equitable impact, how does she think about the NFL and the Rooney Rule?
0:05:27 The Rooney Rule is really about making sure that you have a diverse slate when you’re
0:05:30 selecting and hiring people.
0:05:31 That’s it in its nutshell.
0:05:37 There’s so much about the league itself that’s diverse that it’s bizarre not to have an organizational
0:05:41 structure that reflects its employee base.
0:05:43 How are you able to navigate the needs of the employee base?
0:05:46 Or even if you think about the consumer base, it’s incredibly diverse.
0:05:51 The NFL is such a powerful organization for bringing so many demographics together and
0:05:53 feeling like one, like feeling like one body.
0:05:57 You may not agree on your politics or whatever, but if you’re a chiefs fan, you’re like,
0:05:58 “Patty Mahomes, let’s go!
0:06:03 Yes, I love Kelsey and Swift.”
0:06:09 It’s nice to think about the NFL in that way as a big unifying force in America.
0:06:15 And when you hear, as we heard last week, that the 32 NFL teams adopted the Rooney Rule
0:06:20 in a unanimous vote, you might get a nice warm feeling, but it didn’t take much digging
0:06:25 on our part to learn that a unanimous vote isn’t as meaningful as it may seem.
0:06:26 Here is Jeremy Duru.
0:06:32 He is a legal scholar at American University and the author of a book called Advancing the
0:06:37 Ball, Race, Reformation, and the Quest for Equal Coaching Opportunity in the NFL.
0:06:43 What I will say is that it wasn’t two weeks after everybody had agreed to the rule that
0:06:47 it was totally flouted by an owner who just agreed to it.
0:06:49 I think a part of it was, Stephen.
0:06:53 All right, this thing, here’s another equal opportunity initiative.
0:06:54 Let’s just agree to it and keep moving.
0:06:56 Who was the owner who flouted it?
0:06:57 Jerry Jones.
0:07:00 Jerry Jones, Dallas Cowboys, and who did he hire as his head coach?
0:07:02 Bill Parcells.
0:07:03 And let’s be clear.
0:07:06 I mean, Bill Parcells, he’s a Hall of Fame coach.
0:07:07 He’s a great coach.
0:07:09 Nobody could argue that he’s not.
0:07:11 But this rule had just been put into place.
0:07:19 What happened was Jerry Jones interviewed Parcells over the course of I think 11 hours
0:07:24 during two trips, both of which he took his private jet to Jersey to interview Bill Parcells
0:07:25 and come back.
0:07:28 So two cross country chips.
0:07:32 And he called Dennis Green, who had previously been fired by the Vikings.
0:07:33 Black coach.
0:07:34 Black coach.
0:07:39 And they spoke on the phone for 20 minutes and Parcells was hired.
0:07:40 Now wait a minute.
0:07:41 He flouted the rule.
0:07:45 Sounds like he lived by the letter of the law, if not the spirit.
0:07:48 I wouldn’t say if not the spirit, Steve, that’s definitely not the spirit.
0:07:53 I mean, you have 11 hours in person versus 20 minutes on the phone.
0:07:55 So do you think of that as a total sham interview then?
0:07:56 Yes.
0:07:58 I would call that a sham interview.
0:08:04 Did anyone say to Jerry Jones, hey, we the owners just agreed to this rule where we’re
0:08:09 going to require at least one minority interview every time you hire head coach and you didn’t
0:08:12 what’s the story, did anybody confront him on that?
0:08:13 Yes.
0:08:17 The league looked into it and they said basically what you just indicated earlier, which is,
0:08:21 well, you know, the rule says you’re going to interview a person of color before the
0:08:23 hire and the club did that.
0:08:28 Now we recognize the club did not offer a full-throated interview to Green, but he didn’t violate
0:08:30 the rule.
0:08:33 And then you had the Lions, the Lions situation.
0:08:38 You had the general manager who desperately wanted a head coach for years.
0:08:44 Steve Meriuci was the coach that Matt Mellon wanted, Matt Mellon being general manager.
0:08:49 And when he became available, Mellon basically said it was clear to everyone in the community
0:08:51 as well as in the press, I’m hiring mooch.
0:08:54 That’s a nickname, Steve Merige, I’m hiring mooch.
0:08:57 And so I said to some black coaches, could you come up for an interview?
0:09:01 I want to be respectful of the rule, even though, you know, it’s going to be mooch.
0:09:03 And no black coaches would go in for the interview.
0:09:05 Because they knew that it was useless.
0:09:07 Because they knew it was useless.
0:09:11 And in this case, the Rooney Rules text was violated as well.
0:09:17 It was after the experience of the text being violated by the Lions and the spirit being
0:09:23 violated by the Cowboys that the league altered and strengthened the rule.
0:09:29 By the next summer, the league had altered the rule to require a meaningful interview
0:09:33 and meaningful is defined as similarly situated.
0:09:37 So if you only view one person in person, the other should be interviewed in person.
0:09:41 If you interview one person for five hours at the facility, then the other person should
0:09:44 be interviewed for roughly five hours at the facility.
0:09:48 So there really did seem to be progress being made.
0:09:55 It was expanded to the general manager ranks and the general manager ranks increased with
0:09:57 respect to diversity.
0:10:04 Around 2007, 2008, the rule was so well respected in the league and it’s been exported to organizations
0:10:07 across the world in this country totally apart from sport.
0:10:14 So most trends, once they start in a strong direction, positive or negative, they develop
0:10:20 some momentum and even if they might have been unusual 10 years ago, once they become
0:10:22 the norm, they just stay the norm.
0:10:25 But that was not the case here, correct?
0:10:26 That wasn’t the case.
0:10:27 No, that wasn’t the case.
0:10:28 So what happened?
0:10:30 A number of things happened.
0:10:36 When you have 32 different businesses, you’re going to have those 32 different perspectives.
0:10:40 You just had some organizations that just weren’t really into it.
0:10:48 There seemed to be a reduction in commitment to equity in the league generally and to the
0:10:50 Rooney Rule specifically.
0:10:55 And did that reduction translate into a reduction in minority coaches?
0:10:56 Yeah.
0:10:57 Yeah.
0:11:04 It was from the mid-20s up until the end of the decade.
0:11:09 In 2018, the owner of the Oakland Raiders, Mark Davis, essentially admitted that he broke
0:11:11 the Rooney Rule.
0:11:15 The Raiders, like the Detroit Lions in 2003, had already picked out the head coach they
0:11:21 wanted to hire, or in this case, rehire, John Gruden, who had a successful run as the Raiders
0:11:23 coach nearly two decades earlier.
0:11:30 This time around, once Mark Davis got a commitment from Gruden, he had his general manager conduct
0:11:34 two perfunctory interviews with minority coaches.
0:11:40 Gruden then signed a contract with the Raiders, worth a reported $100 million over 10 years.
0:11:46 He barely lasted three years, during which time he won just over 40% of his games.
0:11:50 And he resigned in disgrace after the discovery of a bunch of his old emails that were filled
0:11:53 with racist, sexist, and homophobic remarks.
0:11:58 The Raiders were never disciplined by the league for violating the Rooney Rule when
0:12:02 they hired Gruden, just as the Dallas Cowboys hadn’t been disciplined earlier when they
0:12:04 hired Bill Parcells.
0:12:09 In fact, only one team has ever been disciplined for violating the Rooney Rule, the Detroit
0:12:12 Lions, for how they hired Steve Mariucci.
0:12:18 That produced a $200,000 fine, which in the NFL is pocket change.
0:12:23 For what it’s worth, Mariucci also bombed out as coach of the Lions.
0:12:30 He won only around a third of his games, and he was fired midway through his third season.
0:12:36 These three head coach hirings, Mariucci, Gruden, and Parcells, are of course a tiny sample,
0:12:42 but if you pay even a little attention to the NFL, you will recognize a pattern.
0:12:48 Team owners hire coaches who look the part, who feel the part, even if they are no longer
0:12:53 right for the part, even if there might be better candidates out there who, for one reason
0:12:57 or another, don’t quite look the part to the team’s owner.
0:13:02 By 2019, there were just three black head coaches in the league, the same number as
0:13:05 in 2003, the year the Rooney Rule took effect.
0:13:09 Yeah, so the situation had become bad.
0:13:15 That was a situation among NFL head coaches, at least, but as Jeremy DeRue noted earlier,
0:13:19 other organizations had begun to take interest in the Rooney Rule.
0:13:22 The underlying policy is pretty simple.
0:13:26 It requires what HR people call a diverse candidate slate.
0:13:29 This was hardly a new idea in corporate America.
0:13:34 Companies like Goldman Sachs and Starbucks had already adopted it without much fanfare,
0:13:38 but there was something about the simplicity of the Rooney Rule, or maybe it was the catchier
0:13:45 name, or the halo effect of the NFL, that gave this policy a bit more buzz.
0:13:50 In New York, city controller Scott Stringer sent a letter to a few dozen big American
0:13:55 companies, including AT&T and Walt Disney, calling for them to adopt a version of the
0:14:01 Rooney Rule and noting its connection to the NFL, a nice halo effect.
0:14:05 Within a year, Stringer’s office announced that 14 of those companies had adopted the
0:14:06 policy.
0:14:12 The city of Portland, Oregon adopted the Rooney Rule for hiring municipal employees, so did
0:14:13 the city of Pittsburgh.
0:14:17 It was also adopted by the English Football League, which includes the three main soccer
0:14:20 divisions below the Premier League.
0:14:27 Back in the NFL, meanwhile, Dan Rooney had died in 2017, but the league kept building
0:14:29 on his rule.
0:14:35 In 2020, the policy came to cover not just general managers and head coaches, but also
0:14:41 the head coaches, three lieutenants, the offensive, defensive and special teams coordinators.
0:14:45 The new version of the rule also required that at least two non-white candidates be
0:14:48 interviewed for each job instead of one.
0:14:50 Jeremy DeRue again.
0:14:54 And that was a result of a number of studies, including one from the Harvard Business Review
0:15:00 that indicated that when you have one person of color being interviewed in otherwise homogenous
0:15:07 interviewee group, that person of color is automatically, albeit, perhaps subconsciously, recognized
0:15:11 as the outsider, the person who’s just here to check a box.
0:15:17 When you have more than one, let’s say you have two, that doesn’t attach to both, right?
0:15:20 Both of them are considered more seriously.
0:15:25 They call it two in the pool, and the Harvard Business Review study revealed that when you
0:15:30 have two in the pool, the likelihood of getting a person of color or a woman in this seat
0:15:31 is much higher.
0:15:39 And so these parties pushed through, changes to the Rooney Rule, and that time period coincided
0:15:44 with the spring and summer of 2020.
0:15:49 Less than a week after the NFL made these amplifications to the Rooney Rule, a black
0:15:53 man was killed by police in Minneapolis.
0:15:57 To the break, the consequences of George Floyd’s murder.
0:16:00 I’m Stephen Dubner, and this is Freakonomics Radio.
0:16:11 We’ll be right back.
0:16:17 In the spring of 2020, the police killing of George Floyd set off a wave of despair and
0:16:22 protest that hadn’t been produced by similar incidents in the recent past.
0:16:27 Maybe it’s because it happened during the early terrible months of the COVID pandemic.
0:16:31 Maybe it’s because the incident was captured on video for everyone to see.
0:16:38 Whatever the case, Floyd’s death supercharged our national conversation on racial and social
0:16:41 equity, including in the NFL.
0:16:46 Roger Goodell, the league’s commissioner, felt compelled to say this.
0:16:54 “We the National Football League condemn racism and the systematic oppression of black people.
0:16:59 We the National Football League admit we were wrong for not listening to NFL players earlier
0:17:04 and encourage all to speak out and peacefully protest.
0:17:09 We the National Football League believe black lives matter.
0:17:16 I personally protest with you and want to be part of the much needed change in this country.
0:17:20 Without black players, there would be no National Football League.”
0:17:26 That line about admitting we were wrong for not listening to NFL players earlier.
0:17:29 That seems to refer to the NFL’s treatment of Colin Kaepernick.
0:17:35 Kaepernick was a San Francisco 49ers quarterback who a few years earlier began taking a knee
0:17:41 rather than standing during the pregame national anthem to protest police brutality.
0:17:47 Not long after, Kaepernick’s NFL career was essentially over, but now in the aftermath
0:17:54 of the George Floyd murder, the NFL pledged $250 million over 10 years to combat systemic
0:17:56 racism as they put it.
0:17:59 Some of this took the form of on-field messaging.
0:18:05 Players were allowed to wear social justice messages on their helmets, teams painted slogans
0:18:06 in their end zones.
0:18:09 It takes all of us and end racism.
0:18:13 The pregame now included a performance of “Lift Every Voice,” a song known as the
0:18:17 Black National Anthem, and if you’ve been watching NFL games this season and wonder
0:18:24 why you’re seeing so many get-out-the-vote ads, that too is part of the program.
0:18:29 The National Basketball Association made similar changes, even NASCAR got on board.
0:18:34 The National Association for Stock Car Auto Racing has never been known for racial enlightenment,
0:18:37 in fact, quite the opposite.
0:18:42 But after the George Floyd killing, NASCAR banned the Confederate battle flag from all
0:18:44 its events and properties.
0:18:49 NASCAR President Steve Phelps later said that banning the flag had a surprising upside,
0:18:55 a big surge in younger fans who had been turned off by NASCAR’s redneck reputation.
0:19:00 Back in the NFL, meanwhile, the George Floyd aftermath produced a further strengthening
0:19:02 of the Rooney Rule.
0:19:06 This time, the league used a carrot instead of a stick.
0:19:07 Here’s the carrot.
0:19:12 If your team already had a minority coach or executive and if another team poached that
0:19:17 person, which happens all the time, then you would be compensated with extra picks in the
0:19:19 college draft.
0:19:22 You would literally get extra players for your team.
0:19:27 In last week’s episode, we spoke with Herm Edwards, a longtime NFL player and coach,
0:19:30 now an analyst for ESPN.
0:19:36 He told us what it was like to be the first black head coach at every team where he landed.
0:19:42 I also asked him what he thought of this policy of teams getting extra draft picks for losing
0:19:43 a minority coach.
0:19:47 Oh, because now you’re telling me, if you hire a black coach, you get compensation.
0:19:48 Really?
0:19:49 What?
0:19:52 I always tell people, he’s just a coach.
0:19:53 They’re hiring a coach, man.
0:19:55 When they hire a white coach, you mean they don’t give them anything?
0:19:58 Let’s say I hire a black coach, I get something extra.
0:20:00 I mean, stop.
0:20:02 It shouldn’t have to come to that.
0:20:04 It really shouldn’t.
0:20:07 And I get why they did it, but it’s like, really, guys?
0:20:09 Herm Edwards may not like this new policy.
0:20:15 He may see it as patronizing, but the George Floyd killing had provoked a widespread racial
0:20:21 reckoning, as it was often called, and all sorts of institutions and firms decided that
0:20:24 diversity was good for business.
0:20:30 Corporate America was particularly enthusiastic, usually in the form of a DEI hiring program
0:20:34 that stands for diversity, equity, and inclusion.
0:20:41 In 2020, US companies spent a reported $7.5 billion on DEI programs, a lot of money for
0:20:45 something that many people hadn’t heard of a year earlier.
0:20:51 Many billions more were pledged to organizations and projects devoted to racial justice or
0:20:52 racial equity.
0:20:59 Even so, if you lined up all the CEOs in the Fortune 500 for a team photo, it would
0:21:05 look like a team photo of all NFL head coaches a few decades ago.
0:21:10 As of this recording, fewer than 2% of Fortune 500 CEOs are black.
0:21:14 Tynisha Boye Robinson says this shouldn’t be too surprising.
0:21:19 I think people overcomplicate DEI, and they’re like, “Oh my gosh, diversity must not work
0:21:21 because we poured millions of dollars into it.
0:21:22 What happened?”
0:21:24 It’s no different than saying, “Oh, you know what?
0:21:26 I want to run a marathon,” and then somebody just started running.
0:21:28 You’re like, “What the…”
0:21:33 There is a 42-week process where you train, y’all.
0:21:37 You don’t just get up and say, “I’m going to run 26.2 miles,” and that’s what people
0:21:38 did with their diversity efforts.
0:21:40 They said, “Oh, George Floyd, that’s bad.
0:21:41 We don’t want to be bad.
0:21:42 We don’t want to be racist.
0:21:46 We’re going to fix diversity,” and then they, like, having no infrastructure, having
0:21:50 no training, having no muscles built, just threw a whole bunch of money at it, and we’re
0:21:52 surprised it didn’t work.
0:21:57 Whereas if I told those same people, “You needed to launch a new product because your
0:22:00 lunch is getting eaten by your competitor,” they would do strategy and analysis.
0:22:02 They might pull in some consultants.
0:22:03 They’d start off with a pilot.
0:22:08 They know how to fix these problems, but when it came to diversity, their brains often went
0:22:13 off, and they went straight to action because they didn’t know what else to do.
0:22:17 And over the past few years, a lot of firms have been trimming their diversity programs.
0:22:25 Tesla, Metta, Lyft, Home Depot, and other companies have cut DEI teams by more than 50%.
0:22:29 And you remember those sham interviews we told you about in the NFL?
0:22:31 They seem to have happened in corporate America, too.
0:22:38 A recent class action lawsuit against Wells Fargo, the third largest bank in the US, accused
0:22:43 them of defrauding shareholders by misrepresenting their commitment to diverse hiring practices.
0:22:49 Wells Fargo had adopted a Rooney Rule-like policy, which required that half of the job
0:22:54 candidates who interviewed for positions above a certain salary come from one of several
0:22:59 minority categories– race, gender, disability, or sexual orientation.
0:23:05 The lawsuit alleges that many of those candidates got interviews only after the job was already
0:23:06 filled.
0:23:10 Wells Fargo denies the allegations, the suit is ongoing.
0:23:18 Meanwhile, in some circles, there is a fierce backlash against any sort of DEI policy, including
0:23:21 the NFL’s own Rooney Rule.
0:23:25 A conservative nonprofit called America First Legal, founded by former Trump advisor Stephen
0:23:30 Miller, filed a federal civil rights complaint against the NFL, arguing that the Rooney
0:23:35 Rule is itself discriminatory and, therefore, illegal.
0:23:39 We couldn’t get America First Legal to speak with us, but we did have a conversation with
0:23:42 someone who takes a similar position.
0:23:46 The Rooney Rule, or anything that aims at quotas, headcounts, whatever they want to
0:23:52 call them, doesn’t do the hard work, the necessary work, the important work.
0:23:57 And that’s why they so fundamentally make things worse, even when they’re good-hardly
0:23:59 trying to make things better.
0:24:00 That is Scott Shepard.
0:24:04 I’m the general counsel at the National Center for Public Policy Research.
0:24:10 I was also the director of the Free Enterprise Project, which is our center’s project
0:24:15 that for about 20 years has recognized the leftward drift of corporations and has been
0:24:20 the shareholder proponent trying to stand at thought that hollering stop.
0:24:25 In order to be that shareholder proponent, Shepard’s organization buys stock in the companies
0:24:27 it wants to monitor.
0:24:29 And how much stock do they need to buy?
0:24:34 One share if we want to try to make a comment at a shareholder meeting, but to submit a
0:24:38 shareholder proposal, the floor is very low.
0:24:45 It’s only continuously owning $2,000 worth of a company for three years without let-up.
0:24:50 And how does Shepard see his organization representing the interests of the shareholders?
0:24:55 We are fighting the breaches of fiduciary duty, and particularly the breaches of fiduciary
0:25:01 duty arising from partisanship, from directors and executives taking their eyes off the ball
0:25:07 and getting involved in completely unnecessary, completely unrelated to core business.
0:25:12 Partisan controversies that are guaranteed to upset lots of people, to have high potential
0:25:15 risk and not much upside.
0:25:19 When things are good for companies, no behaviors have to be forced.
0:25:24 If discrimination on the basis of race, sex, and orientation were good for corporations,
0:25:27 would have been figuring out a way to do it on their own.
0:25:31 So your argument is that if it were good for the business, the business would be doing
0:25:35 it, because they’re competitive people in a competitive marketplace and so on.
0:25:38 Let me port that argument over to the NFL.
0:25:40 That’s a very competitive environment.
0:25:45 It’s a league where there are really just 32 stakeholders, and they really do run and
0:25:49 own the league, even though the league acts as if it runs them.
0:25:51 And they’re all obviously competitive.
0:25:54 They want to win on the field and off the field.
0:25:57 Would you say the same is true about them, that in order to optimize their chances of
0:26:02 success, whether it’s on field victory or business, that they would inherently hire
0:26:07 the best people and that they’re not leaving any good overlooked talent behind?
0:26:12 Well, I have to preface this by saying I was a tiny little boy in the ’70s in the center
0:26:17 of Pennsylvania, so I am, I think, legally disbarred from saying anything unpleasant about
0:26:18 a running.
0:26:22 And I won’t, because I think that Dan was, we’re not on a first name basis.
0:26:28 I think that Dan was kind of heart and good of soul and recognizing something that was
0:26:33 a real, true problem and a problem of discrimination in the NFL.
0:26:37 You can’t possibly have the numbers that he recognized without there being some genuine
0:26:39 systemic internal discrimination.
0:26:42 I should think it was a careful move.
0:26:44 It was thoughtful.
0:26:48 And I think that it was the right place to try something like that.
0:26:52 It sounds like there’s a but there that you haven’t gotten to, but you’re either unconvinced
0:26:56 that it was the right move or you think it’s gone too far or what?
0:27:02 All discrimination on invidious grounds, race, sex orientation, is wrong and leads to bad
0:27:07 consequences for everybody, but particularly the people on whose behalf the discrimination
0:27:09 supposedly occurs.
0:27:16 Because once the Rooney rules in place, then every black interviewee has the question mark
0:27:18 hanging over his head.
0:27:25 Is he or maybe someday she legitimately there or are they being used as a token?
0:27:30 And once that stain arises, everybody’s tarred.
0:27:33 Justice Thomas has talked about he having been tarred.
0:27:35 So I think it runs everywhere.
0:27:38 Do you think the Rooney rule is unconstitutional?
0:27:45 Well, I think that the Rooney rule as applied by Dan Rooney, when it was and how it was
0:27:53 might be, but when there’s direct proof of past discrimination by a specific organization,
0:27:59 they can take some steps continent with the Constitution to rectify those specific deeds.
0:28:03 I just genuinely don’t know what the courts would decide about the constitutionality,
0:28:10 but once you hop outside of the NFL, it is absolutely and unequivocally unconstitutional.
0:28:15 If I were to ask you what share of let’s say the 500 biggest companies in the US are
0:28:21 engaged in what your organization would consider illegal DEI practices, what would that number
0:28:22 be?
0:28:30 If I could add a probably or it’s our best evaluation, I would say something above 75%.
0:28:34 And give me some evidence of what makes you think the number is so high.
0:28:40 Well, our first bit of evidence is the gleeful declarations of discriminatory and unconstitutional
0:28:49 behavior that so many corporations engaged in during the lockdown, the protests and riots,
0:28:52 the George Floyd summer of 2020.
0:28:56 It seems that everybody being at home, there were some miscommunications.
0:29:01 And so certain departments just announced things that an objective legal department
0:29:05 would have said, “No, no, no, no, no, let’s not admit to that out loud.”
0:29:07 Give me a for instance, sir.
0:29:13 Here is a program that I’m certain that lots of companies, A, engaged in and B, were proud
0:29:15 to announce at one point.
0:29:17 I think they’ve probably wiped all of that now.
0:29:24 A lot of thought went into fairly sophisticated efforts to actually discriminate without triggering
0:29:26 the constitutional bar.
0:29:27 It worked in three parts.
0:29:33 The first part was a diversity dashboard, executives and directors who had the authority
0:29:38 to hire, promote, make other human resources decisions knew the surface characteristics
0:29:43 or private characteristics of everybody who reported to them.
0:29:48 And then they said, and companies were very careful about the word, although not the content,
0:29:53 just goals, just goals, not quotas, for what sort of surface or private characteristics
0:29:55 were meant to be achieved.
0:30:00 And then, and this is the real clincher, those actors got bonuses if they hit those
0:30:02 goals, not quotas.
0:30:03 And that would be illegal?
0:30:04 Why exactly?
0:30:05 Why specifically?
0:30:12 It is illegal to discriminate on the basis of race, sex orientation, even if a company
0:30:18 has made it more difficult to discover just where in the process the actual discrimination
0:30:19 occurred.
0:30:23 And we think that these corporations using this system made their problems much, much
0:30:31 worse, because you can be harmed by illegal discrimination, even if you’re not a member
0:30:34 of the class at whom the harm is directed.
0:30:39 For instance, if you’ve got a person with hiring authority and it comes down to them
0:30:45 to both make the discriminatory decision and to black box it, well, the incentive structure
0:30:50 that’s been established creates exactly the incentive for them to discriminate on the
0:30:52 basis of race, sex orientation.
0:30:57 And so it’s a hostile work environment for them as well as everybody else.
0:31:03 I understand you were part of a lawsuit against Starbucks CEO Howard Schultz and the company’s
0:31:04 officers and directors.
0:31:05 Walk me through that.
0:31:06 Would you please, Scott?
0:31:07 Sure.
0:31:13 Our claim at base was one arising from fiduciary duty as well as the codex of civil rights
0:31:14 laws.
0:31:18 And this is, I think, fairly clear black letter law.
0:31:22 Directors and executives may not take any action that violates law.
0:31:27 And in other contexts, directors and executives rely on that obligation fairly heavily.
0:31:32 But discriminating in the ways that Starbucks was discriminating and they were using that
0:31:33 tripart structure, I just…
0:31:36 So this is the hiring component of Starbucks you’re talking about, yes?
0:31:39 Or other personnel issues or compensation?
0:31:40 What did it include?
0:31:45 We had six or seven different examples and they extended beyond hiring.
0:31:48 I don’t recall right now in what directions.
0:31:52 But it seemed like, and this is, I think, a fairly telling word in this instance, it
0:31:58 seemed like fairly systemic race, sex, and orientation discrimination by Starbucks.
0:32:04 So we brought suit in district court against not the company, but the directors and executives.
0:32:07 And the luck of our draw with a district and judge…
0:32:10 Yeah, the judge didn’t like your case at all.
0:32:12 No, but it’s interesting.
0:32:18 The way I read his decision and opinion, he didn’t dismiss on the grounds of any demonstrable
0:32:19 law.
0:32:25 In fact, one of the positions he cited, one of the things he indicated backed his dismissal
0:32:31 and opportunity for Starbucks executives to try to sanction us, which was fairly unusual,
0:32:33 was that we’re shareholders.
0:32:37 If we don’t like what Starbucks is doing, we can sell and buy another company.
0:32:44 But if that’s so, then the whole edifice of fiduciary duty law collapses, right?
0:32:50 It cannot be the position of the American courts, much less a federal court interpreting
0:32:56 state law, that fiduciary duty just doesn’t really matter anymore.
0:32:57 You can just sell your shares.
0:33:01 And so we thought that was a very telling way of responding to that.
0:33:08 We think it was proof of concept and that when we get to a court more driven by obvious
0:33:15 demonstrations of fidelity to law, we’ll get different results and others will as well.
0:33:19 The judge in that case cited a number of reasons for dismissing the case, including that the
0:33:25 plaintiff, that is Scott Shepard’s National Center for Public Policy Research, was “pursuing
0:33:31 its personal interests rather than those of Starbucks and that his organization has shown
0:33:36 obvious vindictiveness toward Starbucks and lacks the support of the vast majority of
0:33:39 Starbucks shareholders.”
0:33:45 That said, if you think the Starbucks case was the last of its kind in this DEI era,
0:33:47 you are almost certainly wrong.
0:33:52 Coming up after the break, back to the NFL and one researcher’s attempt to perform what
0:33:55 he calls “equity analytics.”
0:33:58 It is more interesting than it sounds, I promise.
0:34:08 This is Freakonomics Radio, I’m Stephen Dubner, we’ll be right back.
0:34:12 This is the second episode in our mini-series about the Rooney Rule.
0:34:15 Here’s a headline we gave the series.
0:34:19 Did the NFL solve diversity hiring?
0:34:21 So did it?
0:34:26 I’m not asking if it solved the problem for Starbucks or Wells Fargo or Metta, I just
0:34:28 mean for the NFL.
0:34:33 The problem, remember, was that the NFL had few black head coaches, even though most players
0:34:37 are black and many coaches are former players.
0:34:41 So did the Rooney Rule solve that problem?
0:34:44 To answer that, we need to hear from one last guest.
0:34:49 My name is Chris Ryder, I’m a self-described expert in what I call “equity analytics.”
0:34:53 Ryder is a professor of entrepreneurial studies at the University of Michigan’s Business
0:34:56 School and what does he mean by “equity analytics”?
0:35:03 I document gaps among groups of people, gaps in pay, promotions, any kind of career outcome.
0:35:08 I then try to understand what causes those gaps and then I design interventions to close
0:35:11 those gaps that we deem to be inequitable.
0:35:16 Ryder used to study pay gaps among attorneys, but a few years ago he and some colleagues
0:35:21 realized they could get hold of data that allowed them to study a slightly more high-profile
0:35:24 labor force, NFL coaches.
0:35:29 We collected three decades worth of career history data for NFL coaches.
0:35:35 This is the kind of data that would be nearly impossible to collect in any other setting.
0:35:41 We went through NFL directories, websites, and we characterized where people started
0:35:46 their careers coaching and what position for what team, and we followed them every single
0:35:49 year until they left the NFL.
0:35:54 Then we went back and also collected the position that they had played, if not in the NFL, then
0:35:56 in college or high school.
0:36:02 Moreover, across the National Football League, teams used the same objective measures of
0:36:08 performance, points scored, yards allowed, turnovers, so we could compare people who
0:36:13 are being measured according to the same objective performance measures.
0:36:17 I couldn’t imagine doing that in legal services.
0:36:24 We collected data on over 1,300 coaches and it yielded a data set of over 10,000 coach
0:36:25 years.
0:36:30 But the data was even more robust than all that, both broader and deeper.
0:36:37 For example, if we’re just comparing quarterback’s coaches, we would hold constant passing yards,
0:36:42 passing touchdowns, interceptions, quarterback rating, et cetera, et cetera, of the players
0:36:44 that they coach.
0:36:49 For running backs, it would be rushing yards, rushing touchdowns, points scored.
0:36:56 We can do this at a team level, winning percentage, at a unit level, offensive or defensive efficiency,
0:37:02 and then we can standardize those so that they are comparable across positions.
0:37:09 That is, we can compare running backs’ coaches who are in the 90th percentile of performance
0:37:14 for running backs’ coaches to linebacker coaches who are in the 90th percentile of linebacker
0:37:16 coaches in terms of performance.
0:37:21 In addition to the objective performance metrics, we can hold constant a lot of factors in
0:37:26 the NFL that would be difficult or impossible to hold constant in another setting.
0:37:33 If a coach’s brother, father, or some other relative is coaching in the NFL, then we can
0:37:38 hold that constant and compare coaches who have kinship ties to those who don’t.
0:37:43 If a coach coached under a very established or successful coach like Bill Belichak or
0:37:46 Tony Dungey, we can hold that constant.
0:37:52 With all this data, Chris Ryder and his colleagues now tried to answer one key question.
0:37:56 Why are NFL head coaches disproportionately white men?
0:38:01 Their massive data set covered the NFL seasons from 1985 to 2015.
0:38:06 The Rooney Rule was implemented in 2003, roughly two-thirds of the way in.
0:38:12 We conduct a standard promotion analysis, which is we take all the coaches who are at
0:38:18 risk of being promoted to a higher level, and we model the likelihood that they are promoted
0:38:20 to a higher level at the end of the year.
0:38:23 We do that based on all of those factors.
0:38:29 Coaching position, coaching position, performance, kinship ties, networks, etc., etc.
0:38:31 And what do they find?
0:38:38 We find that all else equal, white coaches are approximately 60 to 70% more likely to
0:38:44 get promoted at the end of a season than coaches of color are, even when we hold constant all
0:38:46 of those factors.
0:38:49 And how about the impact of the Rooney Rule?
0:38:53 I believe that the Rooney Rule is likely effective.
0:38:58 If we search broad and wide for a candidate, we’re likely to have a diverse candidate slate,
0:39:04 and we should be more likely to hire a good candidate than if we zero in on a small segment
0:39:08 of the candidate pool and select only from that niche.
0:39:11 So intuitively, the Rooney Rule makes a lot of sense.
0:39:18 The challenge is producing evidence that makes that belief unequivocally supported.
0:39:20 So I have a proposition for an organization.
0:39:23 But there’s a leader out there that would like to settle this debate about the Rooney
0:39:24 Rule.
0:39:30 In January, when the coaching carousel comes to an end and the talking heads go on TV,
0:39:35 and we debate whether or not the Rooney Rule is effective, let’s put an end to that.
0:39:41 I just need one organization that hires many people, one leader who wants to run an A/B
0:39:47 test, a randomized controlled trial, where some jobs are subject to the Rooney Rule and
0:39:49 other jobs are not.
0:39:53 When all those positions are filled, let’s compare the representation among those that
0:39:57 were subject to the Rooney Rule and those that were not.
0:40:01 I will design the research, I will conduct the analysis for free.
0:40:03 I just need one organization.
0:40:10 And I think that if we have an organization that’s willing to do that, we can know within
0:40:15 the next year whether or not the Rooney Rule is effective, and if so, let’s adopt it broadly.
0:40:17 And if not, let’s try something else.
0:40:22 We asked Chris Ryder about an earlier research paper published in 2011, which found that
0:40:28 the Rooney Rule was not responsible for producing more minority head coaches.
0:40:33 We replicated that study, but we can only reproduce the result if we do one important thing, which
0:40:38 is we limit the analysis to coordinators only.
0:40:41 Coordinators, you will remember, are the head coaches’ lieutenants.
0:40:46 There are usually three per team overseeing the defense, offense, and special teams.
0:40:50 And when we limit the analysis to coordinators only, that is, we’ve dropped all the running
0:40:56 backs coaches and defensive backs coaches and special teams coaches from our analysis.
0:41:00 Now we find that there is no racial disparity in getting promoted from coordinator to head
0:41:01 coach.
0:41:06 This suggests that if you can make it to the coordinator level, you’ve got the same chance
0:41:09 of getting a head coaching job regardless of your race.
0:41:14 And coordinator is the prior position for about 80% of first-time head coaches.
0:41:17 So prior studies were incomplete.
0:41:24 They didn’t collect enough data to identify the racial disparity, which is at a lower
0:41:27 level than coordinator.
0:41:33 Those jobs are the one in which white coaches have a nearly 2X advantage in getting promoted
0:41:35 over coaches of color.
0:41:40 So ironically, the Rooney Rule was designed to increase leadership representation at the
0:41:42 head coach level.
0:41:48 So even if it was purely effective, it was being applied at too high a level to have
0:41:52 the kind of impact that proponents would like it to have.
0:41:58 What we do document is that if you look lower down the org chart, there is a huge disparity
0:42:01 in getting promoted to that number two job.
0:42:07 Now that Chris Ryder has done equity analysis on football coaches and lawyers, how does he
0:42:12 think about the equity conversations that other big institutions are having or maybe
0:42:13 not having?
0:42:19 Recently, we’ve seen a lot of organizations backtrack on DEI and specifically on equity.
0:42:20 Why?
0:42:24 Because it is difficult to define equity.
0:42:26 It causes debate.
0:42:28 It fosters disagreement.
0:42:31 What I think is fair is different from what you think is fair.
0:42:36 And I think that many organizations in doing this are missing the point of equity.
0:42:42 We should not expect to ever arrive at a uniform definition of fairness.
0:42:48 Leaders should be trying to integrate diverse notions of fairness in a way that recognizes
0:42:51 the diversity of an organization and a way that is inclusive of the people who are part
0:42:53 of that organization.
0:42:57 And only by doing that can we truly be equitable.
0:43:02 I would suggest that organizations that are giving up on equity because it’s hard to define
0:43:05 are missing the point.
0:43:10 As for the question of how the Rooney Rule has worked out for the organization that conceived
0:43:14 of it, the NFL, we went back to Jeremy Duru.
0:43:19 What would a team photo of this year’s 32 NFL head coaches look like?
0:43:25 So head coaches were at nine head coaches of color, six of whom are black, and the general
0:43:32 manager ranks were around nine general managers of color, presidents of color were at six,
0:43:35 and there were none up until five years ago.
0:43:40 Leaders of color, defensive side of the ball, about a third of the leagues, defensive coordinators
0:43:41 are of color.
0:43:44 On the offensive side of the ball, that’s where the huge gap is.
0:43:46 That’s where we’ve got no real representation.
0:43:52 When I hear those numbers for head coaches, coordinators, and major front office personnel,
0:43:56 they’re the ones who are making the decisions to hire future coaches.
0:43:59 That sounds like success, is it?
0:44:00 I think there’s success.
0:44:05 Now, you know, we must recognize there’s a spectrum of success.
0:44:09 If we reach the point at which we don’t need to be concerned about this, no.
0:44:15 One thing that we saw from 2017 through 2020 is how quickly there can be backsliding.
0:44:17 We have seen some success.
0:44:23 I think we’re on an upward trajectory, but you cannot take your foot off the pedal.
0:44:28 You cannot abandon commitment to thinking about how we ensure equity in organizations,
0:44:29 sports, or otherwise.
0:44:35 If you do that, I think you’re priming yourself for a real loss.
0:44:39 And thus concludes our two-part series on the Rooney Rule.
0:44:43 Thanks to everyone who spoke with us, Jeremy Duru, Chris Ryder, Scott Shepard, Tynesha
0:44:47 Boye Robinson, Herm Edwards, and especially Jim Rooney.
0:44:52 Jim Rooney wrote a book about his father, Dan, called A Different Way to Win.
0:44:56 There is a forthcoming audio version of the book that includes interviews with several
0:45:01 key Pittsburgh Steelers as well as current NFL Commissioner Roger Goodell and former
0:45:03 Commissioner Paul Tagliapu.
0:45:09 Also, if you run any kind of big organization that hires a lot of people every year and
0:45:14 you want to help the Michigan Business Professor Chris Ryder run that experiment he mentioned
0:45:20 to see if the Rooney Rule really works, send an email to radio@freakonomics.com.
0:45:22 We will pass it along.
0:45:27 Coming up next time on the show, did you know that 60 percent of Americans today work in
0:45:31 jobs that didn’t exist in 1940?
0:45:35 We’re constantly thinking of new things to desire, new services to offer, new goods and
0:45:36 products.
0:45:41 But what happens is our labor becomes more digital and less physical.
0:45:46 Modern efficiency has robbed most of us of that profound satisfaction that comes from
0:45:51 baking a loaf of bread, digging a hole in the garden, going fishing.
0:45:54 There are still people doing physical work.
0:45:55 That’s Bob.
0:45:57 I’ve been up on that beam with him.
0:45:58 That’s the West Side Highway.
0:46:00 But we talk about all those new jobs, too.
0:46:04 Jobs that sometimes require an explanation.
0:46:06 It’s kind of nerve-wracking, I will be honest.
0:46:11 Do you ever find yourself asking what exactly do people do all day?
0:46:12 We did.
0:46:14 That’s next time on the show.
0:46:15 Until then, take care of yourself.
0:46:18 And if you can, someone else too.
0:46:21 Science Radio is produced by Stitcher and Renbud Radio.
0:46:27 You can find our entire archive on any podcast app, also at Freakonomics.com, where we publish
0:46:29 transcripts and show notes.
0:46:31 This episode was produced by Teo Jacobs.
0:46:36 Our staff also includes Alina Kulman, Augusta Chapman, Dalvin Abouaji, Eleanor Osborn,
0:46:41 Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippon, Jasmine Klinger, Jeremy Johnson,
0:46:46 John Schnarrs, Julie Kanfer, Lyric Bowditch, Morgan Levy, Neil Carruth, Rebecca Lee Douglas,
0:46:48 Sarah Lilly, and Zach Lipinski.
0:46:51 Our theme song is Mr. Fortune by the Hitchhikers.
0:46:54 Our composer is Luis Guerra.
0:46:56 As always, thank you for listening.
0:47:14 The Freakonomics Radio Network, the hidden side of everything.
0:47:15 Stitcher.
0:47:17 (upbeat music)
0:47:19 you
0:00:14 is already the biggest, richest sports league in history.
0:00:20 The NFL is a tight confederation of 32 teams that are essentially run as individual firms.
0:00:24 Unlike the European soccer leagues, where the worst teams are pushed out each year and
0:00:30 placed by teams from the lower ranks, the NFL is a closed ecosystem.
0:00:33 And it is an extraordinarily powerful one.
0:00:38 The NFL lies at the center of not only sport, but also media and advertising, gambling, pop
0:00:42 culture and politics, and just about anything else you can think of.
0:00:45 It may be sacrilegious to say this, but it may also be true.
0:00:50 The NFL, which plays most of its games on Sunday afternoon, is the closest thing we
0:00:53 have today to a national religion.
0:00:58 In 1960, on Meet the Press, Martin Luther King Jr. made the following observation about
0:01:00 church going.
0:01:03 I think it is one of the tragedies of our nation.
0:01:08 One of the shameful tragedies at 11 o’clock on Sunday morning is one of the most segregated
0:01:14 hours, not the most segregated hours in Christian America.
0:01:20 If Sunday morning church time is or at least was the most segregated hour in America, would
0:01:26 it also be sacrilegious to say that the rest of Sunday is the least segregated?
0:01:30 There are countless constituencies attached to this game.
0:01:36 Because of that, the NFL draws enormous attention, and it often sets the cultural or political
0:01:41 agenda, especially when it comes to society and race.
0:01:45 The story we began last week looked at an NFL policy called the Rooney Rule, named after
0:01:48 the late Pittsburgh Steelers owner, Dan Rooney.
0:01:53 The rule was adopted in 2003, and it required that whenever an NFL team hired a new head
0:01:57 coach, which happens on average about every three years, that they interview at least
0:02:00 one candidate who isn’t white.
0:02:05 Some people saw this move as long overdue, since the majority of NFL players were black
0:02:09 and the vast majority of head coaches were white.
0:02:13 Dan Rooney’s name was attached to this policy not only because he helped build consensus
0:02:19 for it among the league’s 32 team owners, but because his Steelers have been out front
0:02:26 on diverse hiring at every level of the organization, players, coaches, scouts, team executives,
0:02:27 and more.
0:02:32 The Steelers also had the most Super Bowl wins in history, so there was some proof of
0:02:33 concept there.
0:02:38 The Steelers current head coach, Mike Tomlin, is a black man and the longest tenured coach
0:02:40 in the NFL.
0:02:46 Tomlin hasn’t won a Super Bowl since 2009, but he also hasn’t had a single losing season
0:02:47 in 17 years.
0:02:54 In other words, the Rooney family, which still owns the team, has lived out the Rooney Rule.
0:02:58 Several other teams followed them, and in the first decade of the rule, it seemed to
0:03:01 have the intended effect.
0:03:05 Today on Freakin’omics Radio, we’ll hear where things went wrong in the second decade.
0:03:08 Yes, I would call that a sham interview.
0:03:13 And we’ll hear how the Rooney Rule has reverberated in the corporate world, especially after the
0:03:15 police murder of George Floyd.
0:03:19 Yay, I hire a lot of diverse people and the ferries come and everything happens and there’s
0:03:21 sprinkle of dust and it’s great.
0:03:27 Along with a massive wave of DEI policy, there has been DEI pushback.
0:03:28 We’ll hear some of that too.
0:03:33 Part of the actors stirred up new theories that the way to fight racial discrimination
0:03:36 is with brand new racial discrimination.
0:03:41 As for the NFL, how can you measure the Rooney Rule’s long-term effect?
0:03:48 So we collected data on over 1,300 coaches, and it yielded a data set of over 10,000 coach
0:03:49 years.
0:03:54 Try not to Google number of black coaches in the NFL today until the end of this episode,
0:03:55 okay?
0:04:21 In the meantime, you won’t have to.
0:04:30 Let’s start with Tynesha Boyer Robinson.
0:04:35 I go by Ty, and I’m the president and CEO of CapEQ, and we work with businesses and
0:04:40 investors to embed equitable impact into their daily practices.
0:04:45 Most people would call Boyer Robinson a diversity consultant, but she is not a fan of that label.
0:04:50 I always say equitable impact because diversity opens a drawer in people’s heads that’s usually
0:04:51 people-related.
0:04:53 It’s just, “Do you look like me?
0:04:54 Are you the same gender?
0:04:55 Are you the same race?
0:04:56 Are you the same ethnicity?”
0:05:01 And to really build an equitable organization, it’s really about, “Is our workforce reflective
0:05:03 of our population?”
0:05:09 If you believe in all talent is created equal, then you would believe that your company should
0:05:12 be recruiting people in a way that reflects the population.
0:05:15 And if it isn’t, there’s something broken in your system that’s keeping certain people
0:05:17 out and keeping certain people in.
0:05:24 So in terms of equitable impact, how does she think about the NFL and the Rooney Rule?
0:05:27 The Rooney Rule is really about making sure that you have a diverse slate when you’re
0:05:30 selecting and hiring people.
0:05:31 That’s it in its nutshell.
0:05:37 There’s so much about the league itself that’s diverse that it’s bizarre not to have an organizational
0:05:41 structure that reflects its employee base.
0:05:43 How are you able to navigate the needs of the employee base?
0:05:46 Or even if you think about the consumer base, it’s incredibly diverse.
0:05:51 The NFL is such a powerful organization for bringing so many demographics together and
0:05:53 feeling like one, like feeling like one body.
0:05:57 You may not agree on your politics or whatever, but if you’re a chiefs fan, you’re like,
0:05:58 “Patty Mahomes, let’s go!
0:06:03 Yes, I love Kelsey and Swift.”
0:06:09 It’s nice to think about the NFL in that way as a big unifying force in America.
0:06:15 And when you hear, as we heard last week, that the 32 NFL teams adopted the Rooney Rule
0:06:20 in a unanimous vote, you might get a nice warm feeling, but it didn’t take much digging
0:06:25 on our part to learn that a unanimous vote isn’t as meaningful as it may seem.
0:06:26 Here is Jeremy Duru.
0:06:32 He is a legal scholar at American University and the author of a book called Advancing the
0:06:37 Ball, Race, Reformation, and the Quest for Equal Coaching Opportunity in the NFL.
0:06:43 What I will say is that it wasn’t two weeks after everybody had agreed to the rule that
0:06:47 it was totally flouted by an owner who just agreed to it.
0:06:49 I think a part of it was, Stephen.
0:06:53 All right, this thing, here’s another equal opportunity initiative.
0:06:54 Let’s just agree to it and keep moving.
0:06:56 Who was the owner who flouted it?
0:06:57 Jerry Jones.
0:07:00 Jerry Jones, Dallas Cowboys, and who did he hire as his head coach?
0:07:02 Bill Parcells.
0:07:03 And let’s be clear.
0:07:06 I mean, Bill Parcells, he’s a Hall of Fame coach.
0:07:07 He’s a great coach.
0:07:09 Nobody could argue that he’s not.
0:07:11 But this rule had just been put into place.
0:07:19 What happened was Jerry Jones interviewed Parcells over the course of I think 11 hours
0:07:24 during two trips, both of which he took his private jet to Jersey to interview Bill Parcells
0:07:25 and come back.
0:07:28 So two cross country chips.
0:07:32 And he called Dennis Green, who had previously been fired by the Vikings.
0:07:33 Black coach.
0:07:34 Black coach.
0:07:39 And they spoke on the phone for 20 minutes and Parcells was hired.
0:07:40 Now wait a minute.
0:07:41 He flouted the rule.
0:07:45 Sounds like he lived by the letter of the law, if not the spirit.
0:07:48 I wouldn’t say if not the spirit, Steve, that’s definitely not the spirit.
0:07:53 I mean, you have 11 hours in person versus 20 minutes on the phone.
0:07:55 So do you think of that as a total sham interview then?
0:07:56 Yes.
0:07:58 I would call that a sham interview.
0:08:04 Did anyone say to Jerry Jones, hey, we the owners just agreed to this rule where we’re
0:08:09 going to require at least one minority interview every time you hire head coach and you didn’t
0:08:12 what’s the story, did anybody confront him on that?
0:08:13 Yes.
0:08:17 The league looked into it and they said basically what you just indicated earlier, which is,
0:08:21 well, you know, the rule says you’re going to interview a person of color before the
0:08:23 hire and the club did that.
0:08:28 Now we recognize the club did not offer a full-throated interview to Green, but he didn’t violate
0:08:30 the rule.
0:08:33 And then you had the Lions, the Lions situation.
0:08:38 You had the general manager who desperately wanted a head coach for years.
0:08:44 Steve Meriuci was the coach that Matt Mellon wanted, Matt Mellon being general manager.
0:08:49 And when he became available, Mellon basically said it was clear to everyone in the community
0:08:51 as well as in the press, I’m hiring mooch.
0:08:54 That’s a nickname, Steve Merige, I’m hiring mooch.
0:08:57 And so I said to some black coaches, could you come up for an interview?
0:09:01 I want to be respectful of the rule, even though, you know, it’s going to be mooch.
0:09:03 And no black coaches would go in for the interview.
0:09:05 Because they knew that it was useless.
0:09:07 Because they knew it was useless.
0:09:11 And in this case, the Rooney Rules text was violated as well.
0:09:17 It was after the experience of the text being violated by the Lions and the spirit being
0:09:23 violated by the Cowboys that the league altered and strengthened the rule.
0:09:29 By the next summer, the league had altered the rule to require a meaningful interview
0:09:33 and meaningful is defined as similarly situated.
0:09:37 So if you only view one person in person, the other should be interviewed in person.
0:09:41 If you interview one person for five hours at the facility, then the other person should
0:09:44 be interviewed for roughly five hours at the facility.
0:09:48 So there really did seem to be progress being made.
0:09:55 It was expanded to the general manager ranks and the general manager ranks increased with
0:09:57 respect to diversity.
0:10:04 Around 2007, 2008, the rule was so well respected in the league and it’s been exported to organizations
0:10:07 across the world in this country totally apart from sport.
0:10:14 So most trends, once they start in a strong direction, positive or negative, they develop
0:10:20 some momentum and even if they might have been unusual 10 years ago, once they become
0:10:22 the norm, they just stay the norm.
0:10:25 But that was not the case here, correct?
0:10:26 That wasn’t the case.
0:10:27 No, that wasn’t the case.
0:10:28 So what happened?
0:10:30 A number of things happened.
0:10:36 When you have 32 different businesses, you’re going to have those 32 different perspectives.
0:10:40 You just had some organizations that just weren’t really into it.
0:10:48 There seemed to be a reduction in commitment to equity in the league generally and to the
0:10:50 Rooney Rule specifically.
0:10:55 And did that reduction translate into a reduction in minority coaches?
0:10:56 Yeah.
0:10:57 Yeah.
0:11:04 It was from the mid-20s up until the end of the decade.
0:11:09 In 2018, the owner of the Oakland Raiders, Mark Davis, essentially admitted that he broke
0:11:11 the Rooney Rule.
0:11:15 The Raiders, like the Detroit Lions in 2003, had already picked out the head coach they
0:11:21 wanted to hire, or in this case, rehire, John Gruden, who had a successful run as the Raiders
0:11:23 coach nearly two decades earlier.
0:11:30 This time around, once Mark Davis got a commitment from Gruden, he had his general manager conduct
0:11:34 two perfunctory interviews with minority coaches.
0:11:40 Gruden then signed a contract with the Raiders, worth a reported $100 million over 10 years.
0:11:46 He barely lasted three years, during which time he won just over 40% of his games.
0:11:50 And he resigned in disgrace after the discovery of a bunch of his old emails that were filled
0:11:53 with racist, sexist, and homophobic remarks.
0:11:58 The Raiders were never disciplined by the league for violating the Rooney Rule when
0:12:02 they hired Gruden, just as the Dallas Cowboys hadn’t been disciplined earlier when they
0:12:04 hired Bill Parcells.
0:12:09 In fact, only one team has ever been disciplined for violating the Rooney Rule, the Detroit
0:12:12 Lions, for how they hired Steve Mariucci.
0:12:18 That produced a $200,000 fine, which in the NFL is pocket change.
0:12:23 For what it’s worth, Mariucci also bombed out as coach of the Lions.
0:12:30 He won only around a third of his games, and he was fired midway through his third season.
0:12:36 These three head coach hirings, Mariucci, Gruden, and Parcells, are of course a tiny sample,
0:12:42 but if you pay even a little attention to the NFL, you will recognize a pattern.
0:12:48 Team owners hire coaches who look the part, who feel the part, even if they are no longer
0:12:53 right for the part, even if there might be better candidates out there who, for one reason
0:12:57 or another, don’t quite look the part to the team’s owner.
0:13:02 By 2019, there were just three black head coaches in the league, the same number as
0:13:05 in 2003, the year the Rooney Rule took effect.
0:13:09 Yeah, so the situation had become bad.
0:13:15 That was a situation among NFL head coaches, at least, but as Jeremy DeRue noted earlier,
0:13:19 other organizations had begun to take interest in the Rooney Rule.
0:13:22 The underlying policy is pretty simple.
0:13:26 It requires what HR people call a diverse candidate slate.
0:13:29 This was hardly a new idea in corporate America.
0:13:34 Companies like Goldman Sachs and Starbucks had already adopted it without much fanfare,
0:13:38 but there was something about the simplicity of the Rooney Rule, or maybe it was the catchier
0:13:45 name, or the halo effect of the NFL, that gave this policy a bit more buzz.
0:13:50 In New York, city controller Scott Stringer sent a letter to a few dozen big American
0:13:55 companies, including AT&T and Walt Disney, calling for them to adopt a version of the
0:14:01 Rooney Rule and noting its connection to the NFL, a nice halo effect.
0:14:05 Within a year, Stringer’s office announced that 14 of those companies had adopted the
0:14:06 policy.
0:14:12 The city of Portland, Oregon adopted the Rooney Rule for hiring municipal employees, so did
0:14:13 the city of Pittsburgh.
0:14:17 It was also adopted by the English Football League, which includes the three main soccer
0:14:20 divisions below the Premier League.
0:14:27 Back in the NFL, meanwhile, Dan Rooney had died in 2017, but the league kept building
0:14:29 on his rule.
0:14:35 In 2020, the policy came to cover not just general managers and head coaches, but also
0:14:41 the head coaches, three lieutenants, the offensive, defensive and special teams coordinators.
0:14:45 The new version of the rule also required that at least two non-white candidates be
0:14:48 interviewed for each job instead of one.
0:14:50 Jeremy DeRue again.
0:14:54 And that was a result of a number of studies, including one from the Harvard Business Review
0:15:00 that indicated that when you have one person of color being interviewed in otherwise homogenous
0:15:07 interviewee group, that person of color is automatically, albeit, perhaps subconsciously, recognized
0:15:11 as the outsider, the person who’s just here to check a box.
0:15:17 When you have more than one, let’s say you have two, that doesn’t attach to both, right?
0:15:20 Both of them are considered more seriously.
0:15:25 They call it two in the pool, and the Harvard Business Review study revealed that when you
0:15:30 have two in the pool, the likelihood of getting a person of color or a woman in this seat
0:15:31 is much higher.
0:15:39 And so these parties pushed through, changes to the Rooney Rule, and that time period coincided
0:15:44 with the spring and summer of 2020.
0:15:49 Less than a week after the NFL made these amplifications to the Rooney Rule, a black
0:15:53 man was killed by police in Minneapolis.
0:15:57 To the break, the consequences of George Floyd’s murder.
0:16:00 I’m Stephen Dubner, and this is Freakonomics Radio.
0:16:11 We’ll be right back.
0:16:17 In the spring of 2020, the police killing of George Floyd set off a wave of despair and
0:16:22 protest that hadn’t been produced by similar incidents in the recent past.
0:16:27 Maybe it’s because it happened during the early terrible months of the COVID pandemic.
0:16:31 Maybe it’s because the incident was captured on video for everyone to see.
0:16:38 Whatever the case, Floyd’s death supercharged our national conversation on racial and social
0:16:41 equity, including in the NFL.
0:16:46 Roger Goodell, the league’s commissioner, felt compelled to say this.
0:16:54 “We the National Football League condemn racism and the systematic oppression of black people.
0:16:59 We the National Football League admit we were wrong for not listening to NFL players earlier
0:17:04 and encourage all to speak out and peacefully protest.
0:17:09 We the National Football League believe black lives matter.
0:17:16 I personally protest with you and want to be part of the much needed change in this country.
0:17:20 Without black players, there would be no National Football League.”
0:17:26 That line about admitting we were wrong for not listening to NFL players earlier.
0:17:29 That seems to refer to the NFL’s treatment of Colin Kaepernick.
0:17:35 Kaepernick was a San Francisco 49ers quarterback who a few years earlier began taking a knee
0:17:41 rather than standing during the pregame national anthem to protest police brutality.
0:17:47 Not long after, Kaepernick’s NFL career was essentially over, but now in the aftermath
0:17:54 of the George Floyd murder, the NFL pledged $250 million over 10 years to combat systemic
0:17:56 racism as they put it.
0:17:59 Some of this took the form of on-field messaging.
0:18:05 Players were allowed to wear social justice messages on their helmets, teams painted slogans
0:18:06 in their end zones.
0:18:09 It takes all of us and end racism.
0:18:13 The pregame now included a performance of “Lift Every Voice,” a song known as the
0:18:17 Black National Anthem, and if you’ve been watching NFL games this season and wonder
0:18:24 why you’re seeing so many get-out-the-vote ads, that too is part of the program.
0:18:29 The National Basketball Association made similar changes, even NASCAR got on board.
0:18:34 The National Association for Stock Car Auto Racing has never been known for racial enlightenment,
0:18:37 in fact, quite the opposite.
0:18:42 But after the George Floyd killing, NASCAR banned the Confederate battle flag from all
0:18:44 its events and properties.
0:18:49 NASCAR President Steve Phelps later said that banning the flag had a surprising upside,
0:18:55 a big surge in younger fans who had been turned off by NASCAR’s redneck reputation.
0:19:00 Back in the NFL, meanwhile, the George Floyd aftermath produced a further strengthening
0:19:02 of the Rooney Rule.
0:19:06 This time, the league used a carrot instead of a stick.
0:19:07 Here’s the carrot.
0:19:12 If your team already had a minority coach or executive and if another team poached that
0:19:17 person, which happens all the time, then you would be compensated with extra picks in the
0:19:19 college draft.
0:19:22 You would literally get extra players for your team.
0:19:27 In last week’s episode, we spoke with Herm Edwards, a longtime NFL player and coach,
0:19:30 now an analyst for ESPN.
0:19:36 He told us what it was like to be the first black head coach at every team where he landed.
0:19:42 I also asked him what he thought of this policy of teams getting extra draft picks for losing
0:19:43 a minority coach.
0:19:47 Oh, because now you’re telling me, if you hire a black coach, you get compensation.
0:19:48 Really?
0:19:49 What?
0:19:52 I always tell people, he’s just a coach.
0:19:53 They’re hiring a coach, man.
0:19:55 When they hire a white coach, you mean they don’t give them anything?
0:19:58 Let’s say I hire a black coach, I get something extra.
0:20:00 I mean, stop.
0:20:02 It shouldn’t have to come to that.
0:20:04 It really shouldn’t.
0:20:07 And I get why they did it, but it’s like, really, guys?
0:20:09 Herm Edwards may not like this new policy.
0:20:15 He may see it as patronizing, but the George Floyd killing had provoked a widespread racial
0:20:21 reckoning, as it was often called, and all sorts of institutions and firms decided that
0:20:24 diversity was good for business.
0:20:30 Corporate America was particularly enthusiastic, usually in the form of a DEI hiring program
0:20:34 that stands for diversity, equity, and inclusion.
0:20:41 In 2020, US companies spent a reported $7.5 billion on DEI programs, a lot of money for
0:20:45 something that many people hadn’t heard of a year earlier.
0:20:51 Many billions more were pledged to organizations and projects devoted to racial justice or
0:20:52 racial equity.
0:20:59 Even so, if you lined up all the CEOs in the Fortune 500 for a team photo, it would
0:21:05 look like a team photo of all NFL head coaches a few decades ago.
0:21:10 As of this recording, fewer than 2% of Fortune 500 CEOs are black.
0:21:14 Tynisha Boye Robinson says this shouldn’t be too surprising.
0:21:19 I think people overcomplicate DEI, and they’re like, “Oh my gosh, diversity must not work
0:21:21 because we poured millions of dollars into it.
0:21:22 What happened?”
0:21:24 It’s no different than saying, “Oh, you know what?
0:21:26 I want to run a marathon,” and then somebody just started running.
0:21:28 You’re like, “What the…”
0:21:33 There is a 42-week process where you train, y’all.
0:21:37 You don’t just get up and say, “I’m going to run 26.2 miles,” and that’s what people
0:21:38 did with their diversity efforts.
0:21:40 They said, “Oh, George Floyd, that’s bad.
0:21:41 We don’t want to be bad.
0:21:42 We don’t want to be racist.
0:21:46 We’re going to fix diversity,” and then they, like, having no infrastructure, having
0:21:50 no training, having no muscles built, just threw a whole bunch of money at it, and we’re
0:21:52 surprised it didn’t work.
0:21:57 Whereas if I told those same people, “You needed to launch a new product because your
0:22:00 lunch is getting eaten by your competitor,” they would do strategy and analysis.
0:22:02 They might pull in some consultants.
0:22:03 They’d start off with a pilot.
0:22:08 They know how to fix these problems, but when it came to diversity, their brains often went
0:22:13 off, and they went straight to action because they didn’t know what else to do.
0:22:17 And over the past few years, a lot of firms have been trimming their diversity programs.
0:22:25 Tesla, Metta, Lyft, Home Depot, and other companies have cut DEI teams by more than 50%.
0:22:29 And you remember those sham interviews we told you about in the NFL?
0:22:31 They seem to have happened in corporate America, too.
0:22:38 A recent class action lawsuit against Wells Fargo, the third largest bank in the US, accused
0:22:43 them of defrauding shareholders by misrepresenting their commitment to diverse hiring practices.
0:22:49 Wells Fargo had adopted a Rooney Rule-like policy, which required that half of the job
0:22:54 candidates who interviewed for positions above a certain salary come from one of several
0:22:59 minority categories– race, gender, disability, or sexual orientation.
0:23:05 The lawsuit alleges that many of those candidates got interviews only after the job was already
0:23:06 filled.
0:23:10 Wells Fargo denies the allegations, the suit is ongoing.
0:23:18 Meanwhile, in some circles, there is a fierce backlash against any sort of DEI policy, including
0:23:21 the NFL’s own Rooney Rule.
0:23:25 A conservative nonprofit called America First Legal, founded by former Trump advisor Stephen
0:23:30 Miller, filed a federal civil rights complaint against the NFL, arguing that the Rooney
0:23:35 Rule is itself discriminatory and, therefore, illegal.
0:23:39 We couldn’t get America First Legal to speak with us, but we did have a conversation with
0:23:42 someone who takes a similar position.
0:23:46 The Rooney Rule, or anything that aims at quotas, headcounts, whatever they want to
0:23:52 call them, doesn’t do the hard work, the necessary work, the important work.
0:23:57 And that’s why they so fundamentally make things worse, even when they’re good-hardly
0:23:59 trying to make things better.
0:24:00 That is Scott Shepard.
0:24:04 I’m the general counsel at the National Center for Public Policy Research.
0:24:10 I was also the director of the Free Enterprise Project, which is our center’s project
0:24:15 that for about 20 years has recognized the leftward drift of corporations and has been
0:24:20 the shareholder proponent trying to stand at thought that hollering stop.
0:24:25 In order to be that shareholder proponent, Shepard’s organization buys stock in the companies
0:24:27 it wants to monitor.
0:24:29 And how much stock do they need to buy?
0:24:34 One share if we want to try to make a comment at a shareholder meeting, but to submit a
0:24:38 shareholder proposal, the floor is very low.
0:24:45 It’s only continuously owning $2,000 worth of a company for three years without let-up.
0:24:50 And how does Shepard see his organization representing the interests of the shareholders?
0:24:55 We are fighting the breaches of fiduciary duty, and particularly the breaches of fiduciary
0:25:01 duty arising from partisanship, from directors and executives taking their eyes off the ball
0:25:07 and getting involved in completely unnecessary, completely unrelated to core business.
0:25:12 Partisan controversies that are guaranteed to upset lots of people, to have high potential
0:25:15 risk and not much upside.
0:25:19 When things are good for companies, no behaviors have to be forced.
0:25:24 If discrimination on the basis of race, sex, and orientation were good for corporations,
0:25:27 would have been figuring out a way to do it on their own.
0:25:31 So your argument is that if it were good for the business, the business would be doing
0:25:35 it, because they’re competitive people in a competitive marketplace and so on.
0:25:38 Let me port that argument over to the NFL.
0:25:40 That’s a very competitive environment.
0:25:45 It’s a league where there are really just 32 stakeholders, and they really do run and
0:25:49 own the league, even though the league acts as if it runs them.
0:25:51 And they’re all obviously competitive.
0:25:54 They want to win on the field and off the field.
0:25:57 Would you say the same is true about them, that in order to optimize their chances of
0:26:02 success, whether it’s on field victory or business, that they would inherently hire
0:26:07 the best people and that they’re not leaving any good overlooked talent behind?
0:26:12 Well, I have to preface this by saying I was a tiny little boy in the ’70s in the center
0:26:17 of Pennsylvania, so I am, I think, legally disbarred from saying anything unpleasant about
0:26:18 a running.
0:26:22 And I won’t, because I think that Dan was, we’re not on a first name basis.
0:26:28 I think that Dan was kind of heart and good of soul and recognizing something that was
0:26:33 a real, true problem and a problem of discrimination in the NFL.
0:26:37 You can’t possibly have the numbers that he recognized without there being some genuine
0:26:39 systemic internal discrimination.
0:26:42 I should think it was a careful move.
0:26:44 It was thoughtful.
0:26:48 And I think that it was the right place to try something like that.
0:26:52 It sounds like there’s a but there that you haven’t gotten to, but you’re either unconvinced
0:26:56 that it was the right move or you think it’s gone too far or what?
0:27:02 All discrimination on invidious grounds, race, sex orientation, is wrong and leads to bad
0:27:07 consequences for everybody, but particularly the people on whose behalf the discrimination
0:27:09 supposedly occurs.
0:27:16 Because once the Rooney rules in place, then every black interviewee has the question mark
0:27:18 hanging over his head.
0:27:25 Is he or maybe someday she legitimately there or are they being used as a token?
0:27:30 And once that stain arises, everybody’s tarred.
0:27:33 Justice Thomas has talked about he having been tarred.
0:27:35 So I think it runs everywhere.
0:27:38 Do you think the Rooney rule is unconstitutional?
0:27:45 Well, I think that the Rooney rule as applied by Dan Rooney, when it was and how it was
0:27:53 might be, but when there’s direct proof of past discrimination by a specific organization,
0:27:59 they can take some steps continent with the Constitution to rectify those specific deeds.
0:28:03 I just genuinely don’t know what the courts would decide about the constitutionality,
0:28:10 but once you hop outside of the NFL, it is absolutely and unequivocally unconstitutional.
0:28:15 If I were to ask you what share of let’s say the 500 biggest companies in the US are
0:28:21 engaged in what your organization would consider illegal DEI practices, what would that number
0:28:22 be?
0:28:30 If I could add a probably or it’s our best evaluation, I would say something above 75%.
0:28:34 And give me some evidence of what makes you think the number is so high.
0:28:40 Well, our first bit of evidence is the gleeful declarations of discriminatory and unconstitutional
0:28:49 behavior that so many corporations engaged in during the lockdown, the protests and riots,
0:28:52 the George Floyd summer of 2020.
0:28:56 It seems that everybody being at home, there were some miscommunications.
0:29:01 And so certain departments just announced things that an objective legal department
0:29:05 would have said, “No, no, no, no, no, let’s not admit to that out loud.”
0:29:07 Give me a for instance, sir.
0:29:13 Here is a program that I’m certain that lots of companies, A, engaged in and B, were proud
0:29:15 to announce at one point.
0:29:17 I think they’ve probably wiped all of that now.
0:29:24 A lot of thought went into fairly sophisticated efforts to actually discriminate without triggering
0:29:26 the constitutional bar.
0:29:27 It worked in three parts.
0:29:33 The first part was a diversity dashboard, executives and directors who had the authority
0:29:38 to hire, promote, make other human resources decisions knew the surface characteristics
0:29:43 or private characteristics of everybody who reported to them.
0:29:48 And then they said, and companies were very careful about the word, although not the content,
0:29:53 just goals, just goals, not quotas, for what sort of surface or private characteristics
0:29:55 were meant to be achieved.
0:30:00 And then, and this is the real clincher, those actors got bonuses if they hit those
0:30:02 goals, not quotas.
0:30:03 And that would be illegal?
0:30:04 Why exactly?
0:30:05 Why specifically?
0:30:12 It is illegal to discriminate on the basis of race, sex orientation, even if a company
0:30:18 has made it more difficult to discover just where in the process the actual discrimination
0:30:19 occurred.
0:30:23 And we think that these corporations using this system made their problems much, much
0:30:31 worse, because you can be harmed by illegal discrimination, even if you’re not a member
0:30:34 of the class at whom the harm is directed.
0:30:39 For instance, if you’ve got a person with hiring authority and it comes down to them
0:30:45 to both make the discriminatory decision and to black box it, well, the incentive structure
0:30:50 that’s been established creates exactly the incentive for them to discriminate on the
0:30:52 basis of race, sex orientation.
0:30:57 And so it’s a hostile work environment for them as well as everybody else.
0:31:03 I understand you were part of a lawsuit against Starbucks CEO Howard Schultz and the company’s
0:31:04 officers and directors.
0:31:05 Walk me through that.
0:31:06 Would you please, Scott?
0:31:07 Sure.
0:31:13 Our claim at base was one arising from fiduciary duty as well as the codex of civil rights
0:31:14 laws.
0:31:18 And this is, I think, fairly clear black letter law.
0:31:22 Directors and executives may not take any action that violates law.
0:31:27 And in other contexts, directors and executives rely on that obligation fairly heavily.
0:31:32 But discriminating in the ways that Starbucks was discriminating and they were using that
0:31:33 tripart structure, I just…
0:31:36 So this is the hiring component of Starbucks you’re talking about, yes?
0:31:39 Or other personnel issues or compensation?
0:31:40 What did it include?
0:31:45 We had six or seven different examples and they extended beyond hiring.
0:31:48 I don’t recall right now in what directions.
0:31:52 But it seemed like, and this is, I think, a fairly telling word in this instance, it
0:31:58 seemed like fairly systemic race, sex, and orientation discrimination by Starbucks.
0:32:04 So we brought suit in district court against not the company, but the directors and executives.
0:32:07 And the luck of our draw with a district and judge…
0:32:10 Yeah, the judge didn’t like your case at all.
0:32:12 No, but it’s interesting.
0:32:18 The way I read his decision and opinion, he didn’t dismiss on the grounds of any demonstrable
0:32:19 law.
0:32:25 In fact, one of the positions he cited, one of the things he indicated backed his dismissal
0:32:31 and opportunity for Starbucks executives to try to sanction us, which was fairly unusual,
0:32:33 was that we’re shareholders.
0:32:37 If we don’t like what Starbucks is doing, we can sell and buy another company.
0:32:44 But if that’s so, then the whole edifice of fiduciary duty law collapses, right?
0:32:50 It cannot be the position of the American courts, much less a federal court interpreting
0:32:56 state law, that fiduciary duty just doesn’t really matter anymore.
0:32:57 You can just sell your shares.
0:33:01 And so we thought that was a very telling way of responding to that.
0:33:08 We think it was proof of concept and that when we get to a court more driven by obvious
0:33:15 demonstrations of fidelity to law, we’ll get different results and others will as well.
0:33:19 The judge in that case cited a number of reasons for dismissing the case, including that the
0:33:25 plaintiff, that is Scott Shepard’s National Center for Public Policy Research, was “pursuing
0:33:31 its personal interests rather than those of Starbucks and that his organization has shown
0:33:36 obvious vindictiveness toward Starbucks and lacks the support of the vast majority of
0:33:39 Starbucks shareholders.”
0:33:45 That said, if you think the Starbucks case was the last of its kind in this DEI era,
0:33:47 you are almost certainly wrong.
0:33:52 Coming up after the break, back to the NFL and one researcher’s attempt to perform what
0:33:55 he calls “equity analytics.”
0:33:58 It is more interesting than it sounds, I promise.
0:34:08 This is Freakonomics Radio, I’m Stephen Dubner, we’ll be right back.
0:34:12 This is the second episode in our mini-series about the Rooney Rule.
0:34:15 Here’s a headline we gave the series.
0:34:19 Did the NFL solve diversity hiring?
0:34:21 So did it?
0:34:26 I’m not asking if it solved the problem for Starbucks or Wells Fargo or Metta, I just
0:34:28 mean for the NFL.
0:34:33 The problem, remember, was that the NFL had few black head coaches, even though most players
0:34:37 are black and many coaches are former players.
0:34:41 So did the Rooney Rule solve that problem?
0:34:44 To answer that, we need to hear from one last guest.
0:34:49 My name is Chris Ryder, I’m a self-described expert in what I call “equity analytics.”
0:34:53 Ryder is a professor of entrepreneurial studies at the University of Michigan’s Business
0:34:56 School and what does he mean by “equity analytics”?
0:35:03 I document gaps among groups of people, gaps in pay, promotions, any kind of career outcome.
0:35:08 I then try to understand what causes those gaps and then I design interventions to close
0:35:11 those gaps that we deem to be inequitable.
0:35:16 Ryder used to study pay gaps among attorneys, but a few years ago he and some colleagues
0:35:21 realized they could get hold of data that allowed them to study a slightly more high-profile
0:35:24 labor force, NFL coaches.
0:35:29 We collected three decades worth of career history data for NFL coaches.
0:35:35 This is the kind of data that would be nearly impossible to collect in any other setting.
0:35:41 We went through NFL directories, websites, and we characterized where people started
0:35:46 their careers coaching and what position for what team, and we followed them every single
0:35:49 year until they left the NFL.
0:35:54 Then we went back and also collected the position that they had played, if not in the NFL, then
0:35:56 in college or high school.
0:36:02 Moreover, across the National Football League, teams used the same objective measures of
0:36:08 performance, points scored, yards allowed, turnovers, so we could compare people who
0:36:13 are being measured according to the same objective performance measures.
0:36:17 I couldn’t imagine doing that in legal services.
0:36:24 We collected data on over 1,300 coaches and it yielded a data set of over 10,000 coach
0:36:25 years.
0:36:30 But the data was even more robust than all that, both broader and deeper.
0:36:37 For example, if we’re just comparing quarterback’s coaches, we would hold constant passing yards,
0:36:42 passing touchdowns, interceptions, quarterback rating, et cetera, et cetera, of the players
0:36:44 that they coach.
0:36:49 For running backs, it would be rushing yards, rushing touchdowns, points scored.
0:36:56 We can do this at a team level, winning percentage, at a unit level, offensive or defensive efficiency,
0:37:02 and then we can standardize those so that they are comparable across positions.
0:37:09 That is, we can compare running backs’ coaches who are in the 90th percentile of performance
0:37:14 for running backs’ coaches to linebacker coaches who are in the 90th percentile of linebacker
0:37:16 coaches in terms of performance.
0:37:21 In addition to the objective performance metrics, we can hold constant a lot of factors in
0:37:26 the NFL that would be difficult or impossible to hold constant in another setting.
0:37:33 If a coach’s brother, father, or some other relative is coaching in the NFL, then we can
0:37:38 hold that constant and compare coaches who have kinship ties to those who don’t.
0:37:43 If a coach coached under a very established or successful coach like Bill Belichak or
0:37:46 Tony Dungey, we can hold that constant.
0:37:52 With all this data, Chris Ryder and his colleagues now tried to answer one key question.
0:37:56 Why are NFL head coaches disproportionately white men?
0:38:01 Their massive data set covered the NFL seasons from 1985 to 2015.
0:38:06 The Rooney Rule was implemented in 2003, roughly two-thirds of the way in.
0:38:12 We conduct a standard promotion analysis, which is we take all the coaches who are at
0:38:18 risk of being promoted to a higher level, and we model the likelihood that they are promoted
0:38:20 to a higher level at the end of the year.
0:38:23 We do that based on all of those factors.
0:38:29 Coaching position, coaching position, performance, kinship ties, networks, etc., etc.
0:38:31 And what do they find?
0:38:38 We find that all else equal, white coaches are approximately 60 to 70% more likely to
0:38:44 get promoted at the end of a season than coaches of color are, even when we hold constant all
0:38:46 of those factors.
0:38:49 And how about the impact of the Rooney Rule?
0:38:53 I believe that the Rooney Rule is likely effective.
0:38:58 If we search broad and wide for a candidate, we’re likely to have a diverse candidate slate,
0:39:04 and we should be more likely to hire a good candidate than if we zero in on a small segment
0:39:08 of the candidate pool and select only from that niche.
0:39:11 So intuitively, the Rooney Rule makes a lot of sense.
0:39:18 The challenge is producing evidence that makes that belief unequivocally supported.
0:39:20 So I have a proposition for an organization.
0:39:23 But there’s a leader out there that would like to settle this debate about the Rooney
0:39:24 Rule.
0:39:30 In January, when the coaching carousel comes to an end and the talking heads go on TV,
0:39:35 and we debate whether or not the Rooney Rule is effective, let’s put an end to that.
0:39:41 I just need one organization that hires many people, one leader who wants to run an A/B
0:39:47 test, a randomized controlled trial, where some jobs are subject to the Rooney Rule and
0:39:49 other jobs are not.
0:39:53 When all those positions are filled, let’s compare the representation among those that
0:39:57 were subject to the Rooney Rule and those that were not.
0:40:01 I will design the research, I will conduct the analysis for free.
0:40:03 I just need one organization.
0:40:10 And I think that if we have an organization that’s willing to do that, we can know within
0:40:15 the next year whether or not the Rooney Rule is effective, and if so, let’s adopt it broadly.
0:40:17 And if not, let’s try something else.
0:40:22 We asked Chris Ryder about an earlier research paper published in 2011, which found that
0:40:28 the Rooney Rule was not responsible for producing more minority head coaches.
0:40:33 We replicated that study, but we can only reproduce the result if we do one important thing, which
0:40:38 is we limit the analysis to coordinators only.
0:40:41 Coordinators, you will remember, are the head coaches’ lieutenants.
0:40:46 There are usually three per team overseeing the defense, offense, and special teams.
0:40:50 And when we limit the analysis to coordinators only, that is, we’ve dropped all the running
0:40:56 backs coaches and defensive backs coaches and special teams coaches from our analysis.
0:41:00 Now we find that there is no racial disparity in getting promoted from coordinator to head
0:41:01 coach.
0:41:06 This suggests that if you can make it to the coordinator level, you’ve got the same chance
0:41:09 of getting a head coaching job regardless of your race.
0:41:14 And coordinator is the prior position for about 80% of first-time head coaches.
0:41:17 So prior studies were incomplete.
0:41:24 They didn’t collect enough data to identify the racial disparity, which is at a lower
0:41:27 level than coordinator.
0:41:33 Those jobs are the one in which white coaches have a nearly 2X advantage in getting promoted
0:41:35 over coaches of color.
0:41:40 So ironically, the Rooney Rule was designed to increase leadership representation at the
0:41:42 head coach level.
0:41:48 So even if it was purely effective, it was being applied at too high a level to have
0:41:52 the kind of impact that proponents would like it to have.
0:41:58 What we do document is that if you look lower down the org chart, there is a huge disparity
0:42:01 in getting promoted to that number two job.
0:42:07 Now that Chris Ryder has done equity analysis on football coaches and lawyers, how does he
0:42:12 think about the equity conversations that other big institutions are having or maybe
0:42:13 not having?
0:42:19 Recently, we’ve seen a lot of organizations backtrack on DEI and specifically on equity.
0:42:20 Why?
0:42:24 Because it is difficult to define equity.
0:42:26 It causes debate.
0:42:28 It fosters disagreement.
0:42:31 What I think is fair is different from what you think is fair.
0:42:36 And I think that many organizations in doing this are missing the point of equity.
0:42:42 We should not expect to ever arrive at a uniform definition of fairness.
0:42:48 Leaders should be trying to integrate diverse notions of fairness in a way that recognizes
0:42:51 the diversity of an organization and a way that is inclusive of the people who are part
0:42:53 of that organization.
0:42:57 And only by doing that can we truly be equitable.
0:43:02 I would suggest that organizations that are giving up on equity because it’s hard to define
0:43:05 are missing the point.
0:43:10 As for the question of how the Rooney Rule has worked out for the organization that conceived
0:43:14 of it, the NFL, we went back to Jeremy Duru.
0:43:19 What would a team photo of this year’s 32 NFL head coaches look like?
0:43:25 So head coaches were at nine head coaches of color, six of whom are black, and the general
0:43:32 manager ranks were around nine general managers of color, presidents of color were at six,
0:43:35 and there were none up until five years ago.
0:43:40 Leaders of color, defensive side of the ball, about a third of the leagues, defensive coordinators
0:43:41 are of color.
0:43:44 On the offensive side of the ball, that’s where the huge gap is.
0:43:46 That’s where we’ve got no real representation.
0:43:52 When I hear those numbers for head coaches, coordinators, and major front office personnel,
0:43:56 they’re the ones who are making the decisions to hire future coaches.
0:43:59 That sounds like success, is it?
0:44:00 I think there’s success.
0:44:05 Now, you know, we must recognize there’s a spectrum of success.
0:44:09 If we reach the point at which we don’t need to be concerned about this, no.
0:44:15 One thing that we saw from 2017 through 2020 is how quickly there can be backsliding.
0:44:17 We have seen some success.
0:44:23 I think we’re on an upward trajectory, but you cannot take your foot off the pedal.
0:44:28 You cannot abandon commitment to thinking about how we ensure equity in organizations,
0:44:29 sports, or otherwise.
0:44:35 If you do that, I think you’re priming yourself for a real loss.
0:44:39 And thus concludes our two-part series on the Rooney Rule.
0:44:43 Thanks to everyone who spoke with us, Jeremy Duru, Chris Ryder, Scott Shepard, Tynesha
0:44:47 Boye Robinson, Herm Edwards, and especially Jim Rooney.
0:44:52 Jim Rooney wrote a book about his father, Dan, called A Different Way to Win.
0:44:56 There is a forthcoming audio version of the book that includes interviews with several
0:45:01 key Pittsburgh Steelers as well as current NFL Commissioner Roger Goodell and former
0:45:03 Commissioner Paul Tagliapu.
0:45:09 Also, if you run any kind of big organization that hires a lot of people every year and
0:45:14 you want to help the Michigan Business Professor Chris Ryder run that experiment he mentioned
0:45:20 to see if the Rooney Rule really works, send an email to radio@freakonomics.com.
0:45:22 We will pass it along.
0:45:27 Coming up next time on the show, did you know that 60 percent of Americans today work in
0:45:31 jobs that didn’t exist in 1940?
0:45:35 We’re constantly thinking of new things to desire, new services to offer, new goods and
0:45:36 products.
0:45:41 But what happens is our labor becomes more digital and less physical.
0:45:46 Modern efficiency has robbed most of us of that profound satisfaction that comes from
0:45:51 baking a loaf of bread, digging a hole in the garden, going fishing.
0:45:54 There are still people doing physical work.
0:45:55 That’s Bob.
0:45:57 I’ve been up on that beam with him.
0:45:58 That’s the West Side Highway.
0:46:00 But we talk about all those new jobs, too.
0:46:04 Jobs that sometimes require an explanation.
0:46:06 It’s kind of nerve-wracking, I will be honest.
0:46:11 Do you ever find yourself asking what exactly do people do all day?
0:46:12 We did.
0:46:14 That’s next time on the show.
0:46:15 Until then, take care of yourself.
0:46:18 And if you can, someone else too.
0:46:21 Science Radio is produced by Stitcher and Renbud Radio.
0:46:27 You can find our entire archive on any podcast app, also at Freakonomics.com, where we publish
0:46:29 transcripts and show notes.
0:46:31 This episode was produced by Teo Jacobs.
0:46:36 Our staff also includes Alina Kulman, Augusta Chapman, Dalvin Abouaji, Eleanor Osborn,
0:46:41 Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippon, Jasmine Klinger, Jeremy Johnson,
0:46:46 John Schnarrs, Julie Kanfer, Lyric Bowditch, Morgan Levy, Neil Carruth, Rebecca Lee Douglas,
0:46:48 Sarah Lilly, and Zach Lipinski.
0:46:51 Our theme song is Mr. Fortune by the Hitchhikers.
0:46:54 Our composer is Luis Guerra.
0:46:56 As always, thank you for listening.
0:47:14 The Freakonomics Radio Network, the hidden side of everything.
0:47:15 Stitcher.
0:47:17 (upbeat music)
0:47:19 you
What happened when the Rooney Rule made its way from pro football to corporate America? Some progress, some backsliding, and a lot of controversy. (Second in a two-part series.)
- SOURCES:
- Tynesia Boyea-Robinson, president and C.E.O. of CapEQ.
- N. Jeremi Duru, professor of law at American University.
- Herm Edwards, former N.F.L. player and head coach.
- Christopher Rider, professor of entrepreneurial studies at the University of Michigan.
- Jim Rooney, author and co-partner of Rooney Consulting.
- Scott Shephard, general counsel at the National Center for Public Policy Research.
- RESOURCES:
- The Social Impact Advantage: Win Customers and Talent By Harnessing Your Business For Good, by Tynesia Boyea-Robinson (2022).
- A Different Way to Win: Dan Rooney’s Story from the Super Bowl to the Rooney Rule, by Jim Rooney (2019).
- “If There’s Only One Woman in Your Candidate Pool, There’s Statistically No Chance She’ll Be Hired,” by Stefanie K. Johnson, David R. Hekman and Elsa T. Chan (Harvard Business Review, 2016).
- “Racial Disparity in Leadership: Performance-Reward Bias in Promotions of National Football League Coaches,” by Christopher I. Rider, James Wade, Anand Swaminathan, and Andreas Schwab (SSRN, 2016).
- Advancing the Ball: Race, Reformation, and the Quest for Equal Coaching Opportunity in the NFL, by N. Jeremi Duru (2010).
- EXTRAS:
- “Did the N.F.L. Solve Diversity Hiring? (Part 1),” by Freakonomics Radio (2024).
- “When Is a Superstar Just Another Employee?” by Freakonomics Radio (2023).
- “How Much Does Discrimination Hurt the Economy? (Replay),” by Freakonomics Radio (2023).