Racism Costs the U.S. Billions Every Year

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Closing the income gap between Whites and minorities, would boost earnings by 12 percent, an economic windfall of $1 trillion, for a nation burdened by debt and an anemic job market, according to a recent study by the W.K. Kellogg Foundation and the Altarum Institute.

The study titled, “The Business Case for Racial Equity” looks at the legacy of racism in the United States and how addressing racial disparities would have a significant impact on the American economy.

The study looked at a number of racial disparities that have plagued Blacks and other minorities, including health, housing, employment, income and wealth.

“There is a tendency to frame the disparities and the gaps as a burden to the nation seldom do we frame it as a business case,” said Gail Christopher, vice president of program strategy for the W.K. Kellogg Foundation. “We wouldn’t be having these deficit conversations, if we put our energy into making economic viability an option for people of color.”

The shifting demographics of the American population make the argument for racial equity even more compelling. The U.S. Census Bureau estimates that racial and ethnic minorities will account for more than 50 percent of the United States population by 2043. Minority births in the United States exceeded White births for the first time in 2012. Minority babies today will become the workforce of tomorrow, making critical contributions to entitlement programs largely enjoyed by a graying White population.

Yet, minority communities continue to suffer systemic discrimination that weakens the U.S. economy. The W.K. Kellogg racial equity report found that closing the earnings gap now would lift gross domestic product by $1.9 billion.

The report also analyzed what closing the earning gap would look like at 2030 and 2050 and found even more striking results.

“Minorities make up 37% of the working age population now, but they are projected to grow to 46% by 2030, and 55% by 2050. Closing the earnings gap by 2030 would increase GDP by 16%, or more than $5 trillion a year,” stated the report. “Federal tax revenues would increase by over $1 trillion and corporate profits would increase by $450 billion.”

According to the Kellogg study, if the income gap between Whites and minorities were closed by 2045, minority consumers would account for 70 percent of all purchases.

“A consumer driven economy requires people who have the income that enables them to fuel the engines,” explained Christopher.

Failing to address health disparities continues to eat away at the United States economy’s bottom line.

“An Urban Institute study found that the differences in preventable disease rates among African Americans, Hispanics, and whites cost the health care system $24 billion annually,” the Kellogg report stated. That price tag will double by 2050 if left unchecked.

The Affordable Care Act will have a disproportionate benefit for Blacks who currently survive with lower-levels of health insurance and lack access to quality health care, suffering and dying from largely preventable and chronic diseases. According to the report, 19.5 percent of Blacks lack health insurance compared to 11 percent of Whites.

The infant mortality rate for Blacks is more than double the rate for Whites. AIDS diagnoses are 10 times higher among Blacks community than Whites. Black women are 40 percent more likely to die from breast cancer than White women.

In the richest nation in the world with the highest health care costs, the life expectancy for Black men is almost five years shorter than the life expectancy of White men. Black women face a three year deficit when measured against  White women.

Discrimination in housing, once supported by federal policies, now permeates the balance sheets of the nation’s largest banks and continues to drive the wealth gap between Whites and Blacks.

“The black/white wealth gap increased from $85,000 in 1984 to $236,500 in 2009, driven primarily by the racial difference in the number of years of homeownership,” stated the report.

In 1934, Federal Housing Authority officials took actions that set up roadblocks homeownership opportunities for people of color.

According to the W.K. Kellogg study on racial equity, the FHA issued a manual to its loan officers that sanctioned “‘redlining,’ which made home purchases in many non-white, largely urban neighborhoods ineligible for FHA-backed mortgages, without consideration of the credit worthiness of the applicant.”

Most of the loans during the first decades of the program flowed to Whites living in middle class neighborhoods, forcing Blacks to live in resourced-starved, segregated neighborhoods.

“While housing discrimination in the U.S. was outlawed in the Fair Housing Act of 1968, legal forms of housing discrimination were built into, or sanctioned in, prior federal, state and local laws,” stated the report.

At the close of World War II, federal government officials actively steered home and business loans ,supplied through the GI Bill, to White veterans and deprived Black veterans of those same opportunities.

The racial equity report found that 44 percent of Black families owned homes compared to 74 percent of White families.

Christopher said that attempts to fully integrate neighborhoods, schools and the workforce failed, because people still believed in the false premise of a hierarchy of human worth based on physical characteristics; that Blacks and other minorities were inherently inferior and that they were less than human. In order to deal with racial inequality in the United States, Christopher said, Americans must confront the consequences of embedding that belief into the very DNA of our country.

“We have to be intentional and we have to have a strategy that is grounded in how we know how to change people’s minds and hearts,” said Christopher. “It’s an effort. It takes work, it takes reason, it takes research, it takes re-description, and it takes strategies to overcome resistance.”

Christopher continued: “It takes real world events that you are able to capitalize on and it takes resources.”

Those resources continue to be squandered in the political quagmire and obstruction, instigated by the far-right wing of the GOP that some critics argue, has reduced the effectiveness of Congress as they veer from one crisis to the next.  The recent federal budget agreement that ended the partial government shutdown, only delayed the inevitable, and set up two more battles over the budget and the nation’s debt limit at the top of next year.

“The cost of the health disparities, the cost of the educational and achievement gaps are going to bankrupt our country,” said Christopher. “And they have been overshadowed by these superficial political discussions.”

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