Extensive research reveals that if four key racial gaps – education, wages, housing, and investments – are closed, a significant amount of wealth would be added to the U.S. economy. As the conversation continues to move forward, data is key to determining how to close these gaps.
According to Citi’s Closing The Racial Inequality Gaps: The Cost of Black Inequality in the U.S., if the economic gap was closed 20 years ago, $16 trillion could have been added to the U.S. economy. Further, if the gaps are closed today, $5 trillion could be added to U.S. GDP over the next five years. This would be a tremendous boost to the country’s jobs, workforce, and consumer spending. By eliminating the disparities faced by people of color, the gains “would be equivalent to a continuous boost in GDP growth of 0.5% per year, increasing the competitiveness of the country for decades to come.”
There is an economic upside of racial equity. A well-equipped and diverse workforce is critical to the success of U.S. businesses. Issues the workforce faces like employer demand versus available talent is just one example of how increasing the opportunities for talent can lead to better business productivity. The Business Case for Racial Equity from The W.K. Kellogg Foundation notes, “by 2050, the United States stands to gain $8 trillion in GDP—more than the current GDP of every country in the world except the U.S. and China.” Factors that contribute to that are increased consumer spending power, a greater economic output, and reducing health disparities.
Reports show that by 2044, America will be a nation of a majority of people of color. In order for people of color to thrive in the future, health, wealth, and employment opportunities have to improve. FSG, in partnership with PolicyLink, states that the “twin forces of rising diversity amidst persistent exclusion form a core challenge that American businesses must address to remain competitive.”
To begin this work, business leaders must first develop a deeper understanding of why racial inequities exist and then take a fresh look at every aspect of their business to find opportunities for business innovation that can simultaneously advance racial equity and also benefit the business.