Kellogg Study CoverMoving toward racial equity is not only a matter of social justice; it could play a significant role in the nation’s future economic growth and fiscal outlook.

Initial research on economic impacts of racial inequities in the United States reveals trillions of dollars in lost earnings, avoidable public expenditures, and lost economic output. A new brief by Altarum, “The Business Case for Racial Equity,” summarizes the economic impact of racism and the benefits of advancing racial equity as the demography of our nation continues to evolve.

Funded by the W.K. Kellogg Foundation, the report details the potential benefits to business, government, and the economy of addressing racial inequities, specifically in housing, education, health, and criminal justice. The document outlines the history of discriminatory policies across these areas and the disparities that they created, going on to estimate the potential benefits of promoting equity, including an increase of almost $2 trillion in minority purchasing power and millions of job opportunities for college graduates.

“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.”

Altarum studied the impact of closing the minority earnings gap and found that if the average incomes of minority men and women at each age rose to the average incomes of Whites, total U.S. earnings would increase by 12%, representing nearly $1 trillion. By closing the earnings gap through higher productivity, gross domestic product (GDP) would increase by $1.9 trillion today. The earnings gain would translate into $180 billion in additional corporate profits, $290 billion in additional federal tax revenues, and a potential reduction in the federal deficit of $350 billion.

By 2050, closing the minority earnings gap would increase GDP by 20%. This is roughly the size of the entire federal budget, and a higher percentage than all U.S. health care expenditures.

As businesses, policymakers, and thought leaders attempt to track, analyze, and ultimately manage the impact of the U.S. shift to a “minority-majority” population, the availability of data on the progress within health, education, and criminal justice will be even more important.

Read the report from the W.K. Kellogg Foundation and Altarum’s Center for Sustainable Health Spending. For more information, contact Ani Turner, lead author.