The Economic Cost of Racism
“From Reconstruction, to Jim Crow, to the present day, our economy has never worked fairly for Black Americans—or, really, for any American of color.” – Janet Yellen
There’s a harsh reality. That reality is endured by people of colour. At work, at institutions, at organizations they face that reality in sometimes subtle ways. There are times when that reality presents itself as political systems that work against their advancement through regional policies and laws that hardly fosters equity. That reality is called racism. And while it may seem like there’s no outbound consequence, racism has its economic impact – and suffice it to say that it’s not negligible.
A study by CitiGroup breaks down how racism has cost the United States about $16 trillion in the last 20 years. That is generational wealth. But the tight clamps of racism stole the figure from our national reserves. Racism has always been a form of vice, limiting access to opportunities, distributing benefits based on a difference in skin tone, and shortening life (in the most extreme forms). Every vice has its price.
Systemic racism is the most present form of racism. Today more Black Americans experience the hardship that comes with fighting against policies that subtly fight against them. Fighting this battle of systemic racism is imperative. Perhaps showing how racism impacts the economy irrespective of geography is a good front to take.
Being a multicultural country, Canada is a good case study for how racism can impact economic and socio-economic activities. Have a look at these stats:
In Canada, Blacks are twice as likely to be unemployed compared to their white counterparts.
Wage gaps between Black and white employees have widened over the last decades, regardless of cost of living, productivity, or credentials.
Indigenous People in Canada have the highest level of poverty of any ethnic group.
There are large disparities between income, wealth, and property ownership between whites and people of colour.
Black residents of Canada have inferior or no access to healthcare, leading to poorer short-term and long-term outcomes.
That is not equality though the constitution demands it..
If you are white reading this, imagine a situation where you’re limited in your earning capacity irrespective of how much work you put in. Also, that your access to top-grade opportunities are slim because you’re part of a minority group not of your choosing. Or a world where your friends and family live in better neighbourhoods because of a policy that hinders your economic opportunity. Have you ever had to confront those things?
You see, everyone operating within a structured society has economic potential. Racism (in its original sense of discrimination) limits how people perform in work environments or places requiring productive output. People are more likely to complete activities that have economic benefits when there is a sense that their ideas and their person is accepted and respected, and they will not be judged by their natural characteristics. Racism (systemic or otherwise) prevents that acceptance.
A 2019 research by the Canadian Center for Policy Alternatives describes how only one-third of Black Canadians are in the top half of the income ladder. White/non-racialized Canadians have 47% higher investment income, and 29% more in capital gains compared to Blacks. The pattern is similar within the unemployment rates cycles with more Blacks being unemployed. This means less money in Black hands which translates to less money to sponsor Black-owned businesses and build the Black communities responsible for cultural growth.
Like Colin Lynch said, “[In Canada], the promise of “building back better” simply can’t be fulfilled if we don’t recognize and then tear down the systemic barriers that keep Black Canadians from fully contributing to our future economic prosperity.”
Systemic racism is best described as a merciless virus. It corrupts not just the minds of the vulnerable but steals from the potential we could all benefit from. That’s why we need to do more in supporting and investing in activities that promote diversity, inclusion, and equity. Justice too!
We need to work hand-in-hand to create work environments that provide opportunities to people based on their capabilities instead of physical characteristics. Our institutions need to demolish policies and invisible structures that divide or unfairly classify us such as streaming in education or housing segregation in major cities.
Removing racist policies and procedures from corporations and institutions is everyone’s responsibility. If we desire to scale growth to more than just the individual level, then we must take up activities that allow inclusion, and equity to prosper. Until then when we are all free to thrive, have access to the same opportunities and create the life we want, there will be a need to fight for and protect oppressed people.
"We believe we have a responsibility to address current events and to frame them with an economic lens to highlight the real costs of longstanding discrimination against minority groups, especially against Black people and particularly in the U.S." – Raymond J. McGuire (VC at CitiGroup Inc).
Tough Convos can help your organization better understand how to ensure your policies and procedures are not negatively affecting the economic prosperity of your Black or Brown employees nor the Black community you are directly involved in. Book a call with us to discuss where you are at on your DEI journey, and find out how you can ensure your next step is a powerful one in the direction of eliminating any biased or racist practices, and instead building an inclusive and equitable company where all thrive.