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Challenging Racial Inequality, Driving Economic Growth

How confronting racism and closing the wealth gap will boost America’s economy Tweet This

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The experience of the Obama administration and the outcome of the election belie any thought that we live in a post-racial America.

We know there is a difference when the average life expectancy of African Americans is 20 years less than whites living in adjacent ZIP codes only miles apart.

We know there is a difference when African Americans have only 6 cents of wealth for every dollar of white wealth—and Latinos are only a penny better off, with 7 cents of wealth for every dollar.

And the gap is only widening. According to a recent study titled “The Ever-Growing Gap,” over the past 30 years the average wealth of white families in the United States has grown by 84%—1.2 times the rate of growth for the Latino population and three times the rate of growth for the black population. As a result, it would take the average black family over 150 years to accumulate as much wealth as their white counterparts.

I challenge us to push ourselves further, to face inequity head-on.

African Americans have only 6 cents of wealth for every dollar of white wealth—and Latinos are only a penny better off, with 7 cents of wealth for every dollar. And the gap is only widening.

This starts with an honest conversation about the historical roots of current inequity, and moving through a process of healing to gain the empathy and understanding required for us to understand the lived realities of those who have experienced the destructive dehumanization of a society predicated on the false narrative of a hierarchy of human value.

The benefits go beyond our repairing the moral fabric of our country, what Jim Wallis of Sojourners calls America’s original sin.

There are profound economic benefits. If the average incomes of minorities were raised to the average incomes of whites, total U.S. earnings would increase by 12%, representing nearly $1 trillion today.

Gross domestic product (GDP) would increase by $1.9 trillion and translate into $180 billion in additional corporate profits, $290 billion in additional federal tax revenues, and a reduction in the federal deficit of $350 billion, or 2.3% of GDP.

If the average incomes of minorities were raised to the average incomes of whites, total U.S. earnings would increase by 12%, GDP would increase by $1.9 trillion and the federal deficit would be reduced by $350 billion.

When projected to 2030 and 2050, the results are even more startling. Minorities make up 37% of the working age population now, but they are projected to grow to 46% by 2030, and 55% by 2050. Closing the earnings gap by 2030 would increase GDP by 16%, or more than $5 trillion a year.

Federal tax revenues would increase by over $1 trillion and corporate profits would increase by $450 billion. By 2050, closing the gap would increase GDP by 20%. This is roughly the size of the entire federal budget, and a higher percentage than all U.S. healthcare expenditures.

To improve outcomes, we must target and address approaches to directly support those most impacted by historic and structural policies and discriminatory and predatory practices that have gotten us to this point, and disrupt these practices at their root.

And by building wealth for those most marginalized, we in turn build the wealth of our region and fuel our future growth.

 

Adapted from remarks delivered at the Metropolitan Planning Council’s 2016 Annual Luncheon, “Challenging Inequality, Driving Growth: The Economic Implications of Segregation.”