Racism has cost the US economy $ 16 trillion in 20 years, Citi report says
According to a new report from Citi (C) Systemic racism in the United States has come at a huge cost to the economy: $ 16 trillion over the past two decades.
It is the combined cost of disparities in wages, education, investments in black-owned businesses and the housing market.
“Racial inequality has always come at an inordinate cost, which was thought to be paid only by underrepresented groups, ”said Citigroup vice president Raymond J. McGuire. “What this report highlights is that this tariff is imposed on all of us, and in particular in the United States, this cost has a real and tangible impact on the economic output of our country. Now, more than ever, we have a responsibility and an opportunity to confront this long-standing societal evil that has plagued blacks and browns in this country for centuries, accounts for economic losses and, as a society, is committed to bringing more equity and prosperity to all. ”
The $ 16 trillion burden on the US economy since 2000 has been particularly felt in the area of capital investment by black-owned businesses. A Study 2019 Illumen Capital found that $ 35 trillion in capital would be allocated differently, without racial and gender bias.
According to Citi research estimates, racism affecting black entrepreneurs has cost the United States $ 13 trillion in business revenue and potentially 6.1 million jobs that could have been created – each year.
Reduce the gap
Additionally, narrowing the pay gap between black and white employees could have added $ 2.7 trillion – or 0.2% of GDP each year to the U.S. economy.
“Improving access to housing credit could have added an additional 770,000 black homeowners, adding $ 218 billion in sales and expenses,” the study found, while improving access to housing he college for black students could increase black employee earnings by up to $ 113 billion over their lifetime.
“The current racial gaps in income, housing, education, ownership and financing of businesses and wealth are due to centuries of prejudice and institutionalized segregation, producing not only societal losses, but also real economic losses, ”notes the study.
“However, the future gains from closing these gaps are enormous: they benefit not only individuals, but the US economy as a whole, with positive spillover effects on the global economy.”
If racial differences were eliminated, Citi estimates that over the next 5 years, approximately $ 5,000 billion could be added to the country’s GDP.
That’s an average of 0.35% GDP growth each year.
Goldman Sachs released a report in July claiming that reducing racial income inequalities “could also increase the level of US GDP by about 2%, which currently equates to just over $ 400 billion a year.”
The benefits would not only stay at the national level: the study also notes that growth of 0.09% would add to global growth.
Citi on Wednesday announced plans to spend over $ 1 billion to help solve racial inequality over 3 years. The plan would include programs to help increase access to banking and credit services for black and brown communities, who are traditionally underbanked. The initiative would also aim to increase investment in black-owned businesses and help more black households. buy houses.
In its report, Citi wrote: “The persistence of racially biased attitudes, coupled with the implementation and maintenance of policies embodying those attitudes, constitutes what is often referred to as systemic racism. Bias can be conscious or unconscious. Nonetheless, the result of policies creating and perpetuating bias produces inequalities. Even when prejudices fade, policies can persist, making inequality multigenerational as it intertwines with the way things are done: in society at large, government, business and / or the institutions. “
“We are in the midst of a national race calculation and words are not enough,” said CFO Mark Mason. “We need awareness, education and action that generates results.”