McKinsey study: Racial gap in wealth, wages, cost US economy $220B annually

According to a new McKinsey & Company study, an estimated 19% of black Americans, about 3.5 million people, have a negative net worth due to a history of discriminatory policies from government and private industry that have hindered the accumulation of wealth over time. . Thursday.

By comparison, only 8% of white Americans today have a negative net worth, according to a global management consulting firm’s comprehensive report on the economic state of Black America. The study authors said an additional 4.3 million black Americans have a net worth of less than $10,000.

An analysis conducted earlier this year examines major occupational and economic gaps facing black Americans. Black workers make up 12.9% of the nation’s labor force, but earn only 9.6% of total American wages, the study authors said.

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Inequalities hurt the broader economy

Racial-based employment disparities cause an annual gap of $220 billion between the wages black Americans earn today and what they would earn if their occupational numbers in occupational sectors were proportional to their percentage of the US population, the study said.

“Achieving this scenario would increase total black wages by 30 percent and create jobs for approximately one million additional black workers,” the study said.

Study lead author Shelley Stewart III says that addressing the major wealth disparities between black and white households in the United States has major implications for the living conditions of all Americans.

“lack of participation” [by Black Americans] This has significant economic implications for the broader US economy,” Stewart told CNN Business.

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The study also points out that black Americans, who make up about 13% of the US population, are concentrated in low-paying occupations and under-represented in high-paying careers. Black workers represent only 5% of the nation’s physicians and 4.5% of its software developers.

Yet about 35% of all American nursing assistants, an occupation with a median salary of only $23,000, and one-third of all security guards and school bus drivers are black.

Racial pay disparity is the product of both representational imbalances and pay gaps within occupational categories, and is a surprisingly concentrated phenomenon, the study authors wrote.

The double barrier of sexism and racism

McKinsey says the advancement of black women to higher-paying status is key to addressing these inequalities because of the many economic roles they play in their families. They cite a September McKinsey analysis of 590 US corporations that determined that for every 100 men of all races, only 58 black women are promoted to management roles.

“Women of all races are underrepresented in leadership roles, but women of color face the twin barriers of sexism and racism,” the study authors wrote.

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Stewart says these imbalances cannot be resolved by black Americans alone. A combination of interventions from both government and private industries is important.

“We have a special moment, which was unfortunately driven by the disproportionate impact of the killing of George Floyd and the impact of COVID 19 on black Americans,” he said, “to really re-examine how we are in this frame of macroeconomic approach racial justice through participation.”

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