Racial Equity Could Add $5 Trillion to the Economy
Ending racial inequality would yield trillions of dollars for the U.S. economy, according to a new study from Citigroup economists.
Because of gaps between Black people and White people in wages, access to housing financing, lending, and access to education, the U.S. has missed out on $16 trillion in gross domestic product over the past 20 years, the study from Citigroup found. If these racial gaps were closed immediately, U.S. GDP would gain $5 trillion over the next five years, or grow an average of 0.35 percentage points more per year.
“What this report underscores is that this tariff is levied on us all, and particularly in the U.S., that cost has a real and tangible impact on our country’s economic output,” Citigroup Vice Chairman Raymond J. McGuire said in a statement. “Now, more than ever, we have a responsibility and an opportunity to confront this longstanding societal ill that has plagued Black and brown people in this country for centuries, tally up the economic loss and as a society, commit to bring greater equity and prosperity to all.”
Citing existing statistics on race gaps, Citigroup concluded that inequality is inhibiting minority groups from positively contributing to the U.S. economy, cumulatively harming the nation’s overall GDP.
The report noted that if Black students had equal access to higher education over the past 20 years, incomes could have risen an estimated $90 billion to $113 billion.
It also noted that Black and Latinx people trail behind White people and Asian Americans in many categories of economic success, from accumulating wealth and owning homes to receiving a quality education beginning in prekindergarten.
These gaps are compounded by inequalities like the disproportionate incarceration of Black people, which limits their ability to “obtain employment, earn income, and build wealth,” the study said. Historically, Black and Latinx homebuyers and homeowners are more likely to be denied purchase and refinance mortgages, and business loans.
Recently, COVID-19 has also disproportionately affected communities of racial minorities, too, leading to further financial insecurity in those groups.