The cost to the U.S. economy of not closing racial gaps on wages, education, housing and investment runs to $16 trillion, according to a new estimate that frames a pivotal social justice issue in economic terms.
The figure, coming from a Citi report, said $16 trillion would have been added to the U.S. economy if these gaps were closed 20 years ago. If the gaps were closed today, $5 trillion can be added to U.S. gross domestic product over five years, boosting the U.S. economy by about 0.4 percentage points each year.
How does the bank get to those numbers? Closing the Black racial gap in wages would have added $2.7 trillion; improving access to housing credit could have added 770,000 Black homeowners, adding $218 billion to GDP; improving access to higher education could have lifted lifetime incomes by up to $113 billion; and providing fair and equitable lending to Black entrepreneurs could have created an additional $13 trillion in billion revenue.
In the report written by Dana Peterson, who has left Citi to become the chief economist at The Conference Board, and Catherine Mann, the global chief economist, Citi points out the COVID-19 pandemic has made the racial disparity even clearer to see.
“While all racial and ethnic groups are suffering from the fallout of the pandemic, data reveal the burden is falling more heavily on certain demographics. Black persons, in particular, appear to have suffered greater job losses amid government ordered shutdowns; found themselves in industries that are essential but low paying; possessed more pre-existing factors leading to COVID-19 mortality; owned businesses that closed permanently or were unable to access Paycheck Protection Program loans; and reported elevated rates of food, income, and housing insecurity amid the crisis,” they say.