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July 12 2019

Corporate Quotas as Virtue Signaling

by Jennifer C. Braceras

Legally mandated corporate gender quotas, long commonplace in Europe, could soon be coming to a state near you.

Last year, California became the first state to require publicly traded companies headquartered in the state to set aside seats for women on their boards of directors. In Massachusetts, the legislature is considering a bill that would require that public boards be at least 50 percent female by 2022. State boards and commissions would be required to provide the Massachusetts Commission Against Discrimination with demographic data to prove compliance. Similar measures have been proposed in New Jersey and Illinois. 

But are such mandates constitutional?

The Fourteenth Amendment prohibits the government from denying any person “the equal protection of the laws,” and the U.S. Supreme Court looks skeptically upon any law that differentiates on the basis of sex, absent an “important” government interest.

My Harvard Law School classmate Hans Bader argues that state-mandated gender quotas are clear violations of the Equal Protection Clause. Bader notes that several federal courts have struck down quota requirements for government boards and regulated private entities and rejected the argument that “diversity” justifies such measures. 

Bader argues further that California’s law is illegal under its own state constitution. 

The California Constitution’s equal-protection clause also forbids racial and sexual proportionality requirements. And such requirements are at odds with the public policy contained in Article I, Section 31 of the California Constitution, which forbids racial and gender quotas even in the public sector.

They are also bad public policy. Writing recently in the Los Angeles Times, attorney Anastasia Boden argues that “quotas undermine the progress women are making without government mandates.”

According to Boden,

Between 2010 and 2015, the share of women on corporate boards increased by 54% globally. Women now hold about 20% of board positions for the 500 U.S. corporations that make up the Standard & Poor’s index. In Illinois, every public company is already compliant with the proposed mandate. Of the largest 3,000 public companies, 84% have at least one woman on their board, making them already compliant with any of the proposed mandates.

Boden worries that government mandated quotas will undermine the progress women have made by “casting doubt on whether a woman is being hired based on her merit or to meet a quota.”

Proponents of corporate gender quotas claim that increasing the number of female board members will create more female friendly workplaces. But the Washington Post notes that recent studies of board quotas in Norway and Italy found they “did little to change the culture at the company overall or to help promote more women throughout the company’s ranks.”

Here’s Boden again:

Since 2008, Norway has required 40% of board positions on public companies to be filled by women. Research suggests that more than 10 years later, the mandate has not significantly increased the number of women in senior management positions, nor has it reduced the pay gap between men and women. Seven years after the quota was enacted, the country had no female CEOs. Similarly, women occupy only 10% to 20% of senior management jobs in France, Germany and the Netherlands, despite 30% to 40% female board member quotas in those countries.

 As in Europe, American corporate quotas are unlikely to produce desired results. But don’t expect poor results and serious legal concerns to stop policy makers in progressive states from advancing corporate quotas as a convenient method of virtue signaling.





Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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