Addressing systemic inequality is usually framed as a philanthropic endeavour. The idea is simple: those with significant resources generously give money for the sole benefit of the disadvantaged. But in reality, the economics tell a very different story. A 2018 report by the W.K. Kellogg Foundation and Altarum looked at the potential effect to the entire U.S. economy of eliminating racial disparities in health, incarceration, education, and employment.
As the demographics of the country are shifting, the issue of racial equity is more and more critical. People of color are currently driving our population growth, but population growth alone does not create economic growth. Disparity in levels of education prevent our workforce from meeting the needs of businesses for qualified workers, limiting the competitiveness of the U.S. economy globally. The workforce is becoming increasingly diverse, but opportunity is still higher for certain demographic groups.
In Mississippi, the average black worker earns just 57 cents on the dollar compared to white workers. Closing that earnings gap just in Mississippi would create $8 billion in new purchasing power each year, with $2.7 billion spent on housing, $1.4 billion on automobiles and transportation, and $1 billion on food. $880 million would be generated in state and local tax revenues yearly, and tax revenues would increase by $1.2 billion by 2050.
Nationally, eliminating racial disparity could add $8 trillion to the GDP by 2050. If we don’t find solutions for systemic issues like unemployment, incarceration, health, education, and pay equity, we’re all leaving a lot of money on the table. But the potential for business leaders to make an impact both in the strength of the workforce and the problems of social inequality is huge.
From CEOs and COOs setting core values to HR directors and managers designing hiring practices and disciplinary policies, businesses are positioned to drive change. The Kellogg report highlighted three key areas that individuals and organizations can focus on to move the needle on racial equity:
- Reviewing hiring and work practices to eliminate bias and provide opportunities for learning and development.
- Making targeted investments in people and communities to support the development of the workforce, and to remove barriers to education and advancement for people of color.
- Supporting public policies that increase the ability for all to succeed.
In the same way that addressing systemic inequality would create massive economic growth, removing barriers and intentionally fostering equal opportunity can strengthen a business and spark growth. Developing clear and transparent career paths for frontline workers to advance in the company expands opportunity for individuals, but it also helps the business to develop a strong talent pipeline and retain motivated workers who might otherwise leave to move up.
Cultivating a company culture of openness and inclusivity can prevent minority workers from feeling unwelcome, excluded, or marginalized, but a healthy, positive work environment also promotes job satisfaction and increases productivity.
From the macro to the micro, the advantages of expanding opportunity for all workers are as profitable as they are socially just.