Two Recent Studies Show Racism Doesn’t Make Dollars Or Sense

For any given campaign season, a handful of social and political issues inevitably rise above the rest and there is perhaps no more contentious issue in 2016 than racism. While climate change, campaign finance, terrorism, LGBTQ equality, and general jurisprudence issues are all present this season, they have not incited the same kind of fervor in voters as has social justice. Racism and its institutionalized byproducts are not new endemics in American society, but social media and the Black Lives Matter movement have certainly made them much harder to ignore, and rightfully so.

Mass incarceration and lack of access to equal opportunities in healthcare, education, nutrition, employment, and financing are just some of the tentacles belonging to the monster that is systemic racism in the United States. There are plenty of statistics out there which prove that men, women, and children of color do not enjoy the same favorable circumstances as do White Americans, but a new report stands above the oversaturated and sometimes misleading statistics market by measuring discrimination in ways we can all understand: dollars and cents. That is, how much does racism actually cost? Not in terms of moral fortitude, political success, position within the global community, or other abstract, intangible measurements but in cut-and-dry numbers. The answer? Something like two-trillion dollars.

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That’s the figure put forth by Natasha Noman, a reporter for Mic in a recent article entitled “Race is a Big Topic at the 2016 DNC: Here’s How Much Racism Literally Costs America.” Based on figures Noman aggregated from a 2013 W.K. Kellogg Foundation study and a 2014 study by PolicyLink, the implications of “race-based pay discrimination” are not only detrimental to the short-changed employees, but also to the entire nation’s fiscal health. “America’s GDP would increase by around $2 trillion annually — or by 14% — if the racial income gap were closed,” she writes before offering up explanations of why that figure is so astronomical.

But first, it’s important to understand the numbers behind the numbers. As the cited PolicyLink study posits, “66 % of the racial income gap is due to wage differences, while 34 % is due to employment difference,” meaning a combination of the lack of equal pay for equal work across racial lines and a lack of access to higher-paying jobs is at play. The lower wages disproportionately affecting people of color translate into less spending by those who simply do not have disposable income. When workers are being paid less, it follows they will also be spending less and such a trend harms businesses. Compounding the problem is the fact that, according to PolicyLink, “[h]igh levels of inequality also skew politics, leading to underinvestment in the human capital and skilled workforce critical to economic growth and competitiveness.” The study quotes former Treasure Secretary Lawrence Summers who said warned that as people of color become the majority, “the failure to end their economic exclusion means a failure of the American economy.”

race and economics

Margaret Bourke-White – “Kentucky Flood,” 1937

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Another argument for eliminating the racial-income gap is put forth by the Kellogg study, which Noman refers to when saying “if people of color were to earn as much as White people in America, it would increase corporate profits and tax revenues — benefiting both the private and public sectors.” As the study in question reports, “[t]he earnings gain would translate into $180 billion in additional corporate profits, $290 billion in additional federal tax revenues, and a potential reduction in the federal deficit of $350 billion, or 2.3% of GDP.” Essentially, equal pay for people of color would only circulate more money in the U.S. economy, something that quite literally has no downside.

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While the reports cited by Noman are a few years old, their importance during the current political season makes them poignantly timely. Documentaries like Robert Reich’s “Inequality for All” have made the argument that equalizing economic opportunities for all Americans is a key component of addressing all other side effects of institutionalized racism, and many agree. Equal access to higher-paying jobs means more upward mobility, which means less crime, which means less incarceration, which means fewer broken families, which means healthier children, which means better education, and so forth.

The most promising news to come out of this story is that there are concrete, tangible, and immediate steps Heads can take towards eliminating economic disparity. For example, as Killer Mike has recently proven, helping the American economy can be as simple as moving one’s money to a locally owned bank. Taking one’s business to a Black-owned bank, for instance, can contribute wealth to a systematically underserved community, allowing it to elevate itself out of economic hardship and perhaps one day get on equal footing with the larger, mostly White-led financial corporations.

Another way individuals can help is – as President Obama recently urged in his speech at the Democratic National Convention endorsing Hillary Clinton – “don’t boo, vote.” By researching nominees for local office who have strategies to lessen the income-wage gap and voting them into office, Americans have an endless arsenal of real power at their fingertips. It’s not enough to complain. Action is a prerequisite for change.

For more information on how to get involved in an economic revolution, check out resources like the National Equity Atlas, the Economic Policy Institute, or the Institute for Policy Studies’