In the midst of the debate on systemic racism in the United States, Citigroup Bank comes, with a report released Thursday, to bring its stone to the building by showing how racial discrimination has handicapped the American economy. And therefore affected everyone.
underlined the inequality of access to care. And a study by the American bank Citigroup, published Thursday, September 24, highlighted another pernicious effect of discrimination on American society: it has cost 16 trillion dollars to the economy over the past 20 years. “data-reactid =” 20 “> How much is racism costing the American economy? In recent months, the Black Lives Matters movement and protests against police violence have highlighted the social impact of racial discrimination by the forces of the United States. order in the United States. The disproportionately high cost paid by ethnic minorities to Covid-19 has, in particular, underlined the inequality of access to care. And a study by the American bank Citigroup, published on Thursday, September 24, highlighted another pernicious effect of discrimination on American society: it cost 16 trillion dollars to the economy over the past 20 years.
wrote 1976 Nobel Laureate in Economics Milton Friedman. Throughout a report of more than 100 pages, the economists of Citigroup set out to demonstrate the relevance of the quote from the famous thinker of liberalism in America today. “Data-reactid =” 21 “>” It is often considered that a person who discriminates against another on the basis of race, religion or sex does not suffer any economic consequences. […] It’s wrong”, wrote 1976 Nobel Laureate in Economics Milton Friedman. Throughout a report of over 100 pages, the economists at Citigroup set out to demonstrate the relevance of the quotation from the famous thinker of liberalism in America today.
the cost of discrimination by the consulting firm McKinsey. “data-reactid =” 23 “> It’s all about missed opportunities, note the authors of this paper. The most obvious, and most important, relates to wage inequality.” An African-American can expect earn a million dollars less than a white person during his life ”, recalled, already in 2013, another study on the cost of discrimination by the consulting firm McKinsey.
Wage differentials “have not narrowed since the early 2000s,” noted economists at Citigroup, who compiled data from the Federal Reserve and the Census Bureau. The failure of policies aimed at combating discrimination in the workplace means that, over 20 years, “the total income that could have been generated without his pay differentials amounts to an extraordinary amount of 2.7 trillion dollars. ”, Concludes the report.
So much money that could, in part, have fueled the consumer machine or used for investments in businesses or real estate. “In all we estimate that these losses of income because of discrimination deprive, each year, the United States of 0.2% more growth”, regret the economists of the American bank.
But the problem doesn’t end with wages, far from it. “The net wealth – that is, assets minus debt – of an African-American household is, on average, eight times lower than that of a white family, according to calculations by the Federal Reserve ”, Notes Citigroup.
One of the major components of Americans’ fortunes comes from the value of their home. And, in this regard, the discrimination is blatant and: “the gap between the percentage of black Americans who own property and that of whites has even widened since the 1960s,” the study notes. When these minorities manage to become homeowners, despite everything, it is generally in less upscale neighborhoods, which means that the value of their property increases more slowly, “further widening racial inequalities”.
If the banks are reluctant to grant real estate loans, they are just as cautious in financing the start-up projects of ethnic minorities. This is the other big missed opportunity due to racism for Citigroup: if financial institutions had “treated in a fair and equitable manner” the African-American entrepreneurs who came to ask for money to set up their businesses, “it could have generated up to ” to $ 13 trillion more revenue for the US economy [entre le chiffre d’affaires potentiel de ces entreprises et les rentrées fiscales pour l’État, NDLR] and create around 6 million jobs over the past 20 years, ”estimates the US bank.
This finding encourages Citigroup economists to advocate for an increase in representatives of ethnic minorities in the financial world and, more generally, among investors. This greater diversity would not only promote access to credit for ethnic minorities. It could also provide a better understanding of the economic needs of these communities, which would benefit the entire economy, say the study’s authors. Indeed, due to an overrepresentation of the white population in the business community, money is often poorly spent to provide the right services or products to these minorities. These are, according to Citigroup, “hundreds of millions of dollars in business opportunities” that are being overlooked for lack of knowledge of the market.
It is this accumulation of everyday racism and institutionalized discrimination that has cost the American economy dearly. Success in reversing the trend will not happen overnight, as these biases are deeply rooted in society, acknowledge the economists of Citigroup.
But the benefits could be substantial, as ending these ethnic inequalities could generate more than $ 5,000 billion in additional wealth for the US economy in five years. And the study even identifies simple measures that could have an immediate impact, such as prohibiting an employer from requiring a candidate’s salary history for a position. “If he does not know him, he will not be prompted, even unconsciously, to perpetuate the wage discrimination suffered by minorities,” Citigroup said. A small step that could have important consequences.