Racism has cost US $16 trillion: Citigroup study
Inequities in education, housing, wages and business investment between Black and White Americans over the past 20 years have cost the United States $16 trillion, new research concludes.
The study by Citigroup released this week is the latest in a body of studies that aim to quantify the economic effect of systemic racism.
In its study, Citigroup said that Black workers have lost $113 billion in potential wages during the past two decades because they were not able to obtain a college degree.
And because Black applicants could not take out home loans, the housing market lost $218 billion in sales, the study noted.
In addition, since Black entrepreneurs could not have access to bank loans, nearly $13 trillion in business revenue never flowed into the economy, according to the study.
And finally, the US could earn $5 trillion in gross domestic product within the next five years if those gaps and others were closed today, the study predicted.
"Racial inequality has always had an outsized cost, one that was thought to be paid only by underrepresented groups," Citigroup Banking Chair Raymond McGuire said in a statement. "What this report underscores is that this tariff is levied on us all."
Meanwhile, Federal Reserve data show that White households' net worth increased by 43% reaching $61,200, between 1995 and 2016, while it constantly remained at $35,400 for Black families.
According to Moody's Investor Service, 44% of Black households owned their homes in 2019, while home ownership was 74% for white households.
The new study also puts emphasis on the "real costs of long-standing discrimination against minority groups, especially against Black people and particularly in the US," Citigroup economist Catherine Mann said in a statement.
What hindered the US from making strides in closing this gap include incarceration rates among Black Americans, voter suppression efforts and conscious bias in hiring, Citigroup said on Wednesday.
Last year, McKinsey, a consulting firm, released another study which explored how these and other inequities have decreased the US’ wealth.
The country’s GDP — the total value of goods and services — could be up to 6% higher by 2028 if there was no racial wealth gap, the firm said in its study.
It said that US lawmakers must pass targeted policies in order to increase household income for Black Americans so that the issue could be addressed.
"The country has over a trillion dollars to gain from the effort," according to the McKinsey study.
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