Diversity in the United States

OMB updates how it classifies race and ethnicity

The White House Office of Management and Budget (OMB) published significant revisions to Statistical Policy Directive No.15: Standards for Maintaining, Collecting, and Presenting Federal Data on Race and Ethnicity. This directive was implemented nearly 50 years ago, in 1977, and it was only revised once, in 1997, since then.

The changes, announced on March 28, 2024, establish a new racial-ethnic category and combine questions about race and ethnicity on federal forms. Respondents are encouraged to select multiple options if they are applicable. Federal agencies have 18 months to submit an action plan to the OMB and are expected to fully comply within five years.

The United States’ chief statistician Karin Orvis said on the White House website that these revisions will “enhance our ability to compare information and data across federal agencies, and also to understand how well federal programs serve a diverse America.”

What’s New?

Statistical Policy Directive No. 15 (SPD 15) aims to ensure the comparability of race and ethnicity across federal datasets and maximize the data quality by ensuring that the format, language, and procedures for collecting the data are consistent and evidence-based.

Racial categories were last updated in 1997, when five categories were delineated: American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or other Pacific Islander, and White. Now, there are seven broad categories for indicating one’s racial and ethnic identity on federal forms: White, Hispanic or Latino, Black or African American, Asian, American Indian or Alaska Native, Middle Eastern or North African, and Native Hawaiian or Pacific Islander.

Most advocates who have supported this update have focused on the issue of combining race and ethnicity into one question, saying that separating them has hindered data collection—particularly among Latino and Hispanic respondents. In the 2020 Census, for example, “Some Other Race” became the second largest racial group in the United States. Before this change, Hispanic or Latino ethnicity was measured in a separate question.

Middle Eastern or North African (MENA) is an entirely new category. The nonprofit Arab America Institute said in a statement that now Arab Americans “will be made visible” in the federal government’s understanding of the population of the United States. Research has strongly suggested that many MENA respondents view their identity as distinct from white and have been advocating for decades to collect MENA information separately. Members of the Congressional Asian Pacific America Caucus said that these changes represented a “historic milestone for Asian American, Native Hawaiian, and Pacific Islander communities.” Rep Judy Chu, D-CA, said in a statement that “today’s OMB announcement is a not a minor bureaucratic change or maneuver; it’s a once-in-a-generation breakthrough.”

Ability to Provide More Details

The revised Statistical Policy Directive also asks for more details by default. In other words, a respondent can check a primary racial category (e.g., “Black or African American”) and then provide additional details (e.g., Jamaican, Haitian, Nigerian, Ethiopian, etc.).

The update also refines several existing category descriptions. “Far East” has been replaced with “Central or East Asia,” and “Indian Subcontinent” has been replaced with “South Asia.” The new standard also removes the word “Negro” from the Black or African American definition.

Implications For Employers

With these changes, racial and ethnic communities will become more visible than ever before in federal and state demographic reports concerning public health, incarceration, policing, and numerous other indices. Any organization with data-reporting requirements for federal grants pursuant to the Office of Federal Contract Compliance Programs (OFCCP) must adjust its data collection and reporting systems to align with these new federal categories.

Adding categories to data collection also potentially creates new legally “protected classes,” and it is realistic to anticipate some advocacy and legal actions on behalf of MENA communities, for example, to redraw congressional districts, improve access to services, or protect members of such communities from discrimination. The Census Bureau estimates that about 3.5 million individuals will identify as MENA when given the opportunity.

These changes will affect how employers with over 100 employees report workforce data annually to the Equal Employment Opportunity Commission (EEOC). Any employer who is, or works with, a federal contractor and relies on self-reported race and ethnicity data will need to familiarize itself with these revised categories and use them in communications with employees and government agencies.

If you have any questions or concerns about how these federal racial and ethnic categories could impact your business reporting and workforce development initiatives— or questions about any state or federal regulations or enforcement actions — don’t hesitate to contact Orr & Reno for assistance.

Steven L. Winer and Lynnette V. Legra