DeMuth attended the Lawrenceville School, graduating in 1964. He graduated from Harvard College in 1968, after which he worked at the Nixon White House helping to draft speeches on environmentalism, affordable housing, and women's issues. In his youth, he was a member of the politically moderate Ripon Society. After attending law school at the University of Chicago, he worked for law firm Sidley & Austin, the Consolidated Rail Corporation, and Harvard's Kennedy School of Government, where he taught that corporations "cannot" be racist because that would put them at a competitive disadvantage, if they were not hiring the best personnel regardless of race, and would therefore go out of business.