If the U.S. had worked on closing the gender and race gaps back in the 1990’s, it would have generated close to $70 trillion in cumulative gains by 2019, according to a new report from Bank of America Global Research.
The coronavirus pandemic has caused upheaval in nearly every corner of the U.S., but it could also be the catalyst that gives the nation another shot at getting it right on racial and gender equality. “Not closing the inequality gap and a lack of [diversity and inclusion] has an economic price tag,” wrote Bank of America analysts.
The country’s racial wealth gap nearly tripled from $84,400 in 1984 to $245,000 in 2013, according to the report, which focuses on diversity and inclusion. (The median wealth for Black families is $24,100, or about one-eighth of that for white families at $189,100, according to a recent LendingTree study, which draws on data from the Bureau of Labor Statistics, the 2020 Economic Policy Institute report, and various Federal Reserve reports.)
Only three Black male executives are at the helm of America’s Fortune 500 companies: TIAA CEO Roger Ferguson (who is retiring this month), Merck CEO Kenneth Frazier (retiring as CEO on June 30, but continuing as Executive Chairman), and Lowe’s CEO Marvin Ellison. “Stakeholders, management, and companies must...do better,” wrote BofA analysts.
Gender and racial biases limit the U.S. economy
Gender and racial biases, a key contributor to those disparities, both in education and employment restrict the U.S. economy. The failure to hire and promote qualified women and racially diverse workers is making it impossible for the labor market to reach its full potential, the BofA report found.
Since the 2000’s, men have benefitted from larger employment gains than women. Bureau of Labor Statistics data shows that on average, the employment population ratio for prime age men (25-54) has been 14 percentage points higher than that of women. Broken down by race, Black workers face about a 7 percentage point lower employment population ratio than their white prime age counterparts. (The employment population ratio is a measure of the number of people employed against the total working-age population of that group.)
Closing the gender employment gap would provide an additional $600 billion in labor compensation annually (or 3% of GDP), while closing the racial gap would generate an additional $150 billion (1% of GDP), according to Bank of America estimates.
In a recent Federal Reserve Bank of San Francisco report about economic gains that flow from equity in the labor market, Fed President Mary Daly and her colleagues pointed out that the U.S. would have been able to generate $2.6 trillion more in economic output in 2019 by closing the gender and race gaps.
While Bank of America concedes that the San Francisco Fed’s estimates may be on the high end due to, for instance, labor market factors impacting wages which weren’t factored into the report, the bank highlights Daly’s research to illustrate how the cost of inequality is undeniably high.
Covid has only worsened gender and racial inequality in America as minorities and women have beared the brunt of job losses in 2020. Among the 96 million people projected to fall into extreme poverty because of the pandemic, 47 million of them will be women, according to BofA.
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