Racism Literally Costs America $2 Trillion...Ready to Stop Payment?

The study from leading universities finds that bigotry has a real dollars-and-cents cost.
Dec 13, 2013· 2 MIN READ
Donnell Alexander was a staff writer for ESPN The Magazine, LA Weekly, and the SF Bay Guardian and authored the memoir "Ghetto Celebrity."

What we know: Racism has left a vast legacy of violence. Bigotry in America has marginalized a diverse range of minority culture. It dashes the hopes of children.

What we didn't know: Bias based on race costs the United States a shade under $2 trillion a year.

A more complete accounting of the toll taken by race-based chauvinism has arrived in the form of a W.K. Kellogg Foundation study that shows fallout from racism slashing the country's wealth. The study, released in October, posits that an income gap resulting in part from racism costs the country $1.9 trillion dollars each year.

The study, titled The Business Case for Racial Equity, was conducted with the institute and scholars from Johns Hopkins, Brandeis, and Harvard universities and demonstrates how “race, class, residential segregation and income levels all work together to hamper access to opportunity.”

Surprised not to have heard about the findings? Lead author Ani Turner of the Altarum Institute is right there with you.

“I was expecting it to get more attention as well, the numbers are so startling,” says Turner. “We all understand that removing barriers to racial equity is the right thing to do, but...(doing so doesn't just) benefit those who are currently being disadvantaged.”

Addressing factors such as health care inequities, unjustified incarceration disparities, and lesser employment and education opportunities would generate 12 percent more annual U.S. earnings, the study found.

Among the more striking findings cited are a U.S. Department of Commerce study estimating that minority purchasing power would increase from $4.3 trillion to $6.1 trillion in 2045 if income inequalities were eliminated. Research also indicated that “businesses with a more diverse workforce have more customers, higher revenues and profits, greater market share, less absenteeism and turnover, and a higher level of commitment to their organization."

By closing the earnings gap through higher productivity, the nation’s gross domestic product would improve substantially.

“The earnings gain would translate into $180 million 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 percent of the GDP.”

Among the remedies offered are an emphasis on minority home ownership in neighborhoods with increasing values, as well as school desegregation, drug law reform, and the sort of early health intervention programs the Affordable Care Act would deliver to participating states.

Turner stops short of calling the findings a road map to prosperity. They do not, for example, take into account income generators that critics consider racially exploitative, such as the prison industry or college football’s unpaid workforce. The Kellogg study opts to focus on racial inequity in arenas such as education and health care, where leveling the playing field creates inarguable gains.

“We didn’t want to frame it as winners and losers,” she said, “where if some groups have their life circumstances improved, will others be less well off.”

Instead, the report presents breathtaking figures. One last bit of statistical analysis: Altarum found that closing the minority earnings gap by 2030 would grow federal tax revenues by more than $1 trillion and that a 10 percent reduction in Medicaid and income support would reduce expenditures by almost $100 billion.

“When you look at the way our demographics are moving, the cost of inaction is very high,” Turner said. “The numbers we put out there are large, but we don’t have to get there all the way to have a substantial impact.”