Racial inequality has cost America trillions of dollars
The estimated economic impact of racial bias in the U.S. since 2000.
When you quantify the economic impact of racial bias and inequity, the picture isn't pretty. That's what a former Citigroup global economist learned in her analysis of racial inequality between Black and white Americans. Dana Peterson's work is all about numbers, so she turned her attention and spreadsheets to quantifying the cost of racism. The resulting report is damning.
Peterson found that the United States could have generated an additional $16 trillion if it began bridging the chasms between opportunities for Black and White Americans 20 years ago. That figure is especially saddening when you consider the economic devastation brought on by COVID-19 that's resulted in bipartisan squabbling over stimulus solutions while the country's poorest bear the brunt of the economic downturn.
A look at the past 20 years — Let's consider wages. Peterson analyzed that the wage gap between Black and white Americans has left the former group behind significantly — if the gap had been addressed, an additional $2.7 trillion would have been added to the nation's gross domestic product on an annual basis.
The pyramid problem — Higher education, too, get scrutinized by Peterson, and she found that access to better education — and thus better employment opportunities — would have increased lifetime incomes by between $90 and $113 billion. Housing access is also an issue. According to Peterson and multiple studies on banks denying house loans to Black Americans, more access would have created 770,000 Black homeowners. This would have resulted in $218 billion in sales, and fresh possibilities to create intergenerational wealth.
Black entrepreneurship — Aspiring Black business owners and entrepreneurs have also witnessed their share of racial inequality and gatekeeping from venture capitalists. If the racial gap had been decreased in that area, Peterson says there would have been an additional $13 trillion in business revenue. It could have created 6.1 million jobs on an annual basis for the American economy.
The power of numbers — While economic analyses have their own importance and necessity, it's unfortunate that economists have to push granular data to make their case against racism and how systems that enable it drag down society as a whole.
But, if reports like these can convince legislators, educators, business owners, and the like to rethink their positions, Peterson is happy to try that route. "Some people don’t really contemplate there being a problem," Peterson told Bloomberg. "So that was the value of adding numbers, because numbers take some of the emotion out of it. If you can relate to someone in their language, then it means something."