Americans today are well aware of the disparities that exist when it comes to the racial wealth gap in this country. Most of us have seen the stats on how white citizens outpace their Black counterparts in most economic markers such as homeownership, savings and median income. This is the result of decades of social injustice compounded over time, which has systematically stifled many Black families in America from creating generational wealth.
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The position that Black Americans find themselves in today is far from “fair,” given the 400 years lost, and more, to accumulate that wealth. However, fairness is not a particularly strong argument or motivational driver, especially within American capitalistic culture. So why should we make strides and efforts to close the racial wealth gap? The answer is that there are billions of dollars being forgone for the economy on both a micro and macro level for each year that gap widens due to historical injustices.
Minorities as a consumer group represent nearly $4 trillion in buying power and consistently influence the mainstream more than other demographics. Further evidence shows that diverse companies are more profitable, have higher innovation revenue, and attract better talent.
Discriminatory practices and a bias toward companies primarily operated by white males has undercut over 1 million minority-owned businesses—that’s over 9 million potential jobs and $300 billion in collective national income that’s being left on the table. Closing the racial wealth gap would add up to $1.5 trillion to the U.S. economy by 2028. But the gap between the finances of Black and white Americans is still as wide in 2020 as it was in 1968. The net worth of more than 10 Black households combined commonly equals the net worth of a typical white U.S. household.
Black and minority workers have historically faced systemic and interdependent barriers to building wealth. Now, as the coronavirus pandemic—which has disproportionately killed Black people—and protests against police brutality and systemic racism in the U.S. continue, the spotlight is being turned on institutional bias throughout all corners of our society to enact change.
Tech and venture capital titans like Apple, Google, and Facebook, or Andreesen Horowitz and SoftBank pledged initiatives aimed at underserved entrepreneurs and workers of color. The lack of transparency and minimal progress to date has caused some Black leaders to call these recent moves nothing more than “diversity theater.”
Seventy-five percent of the global workforce will be made up of millennials within the next five years, 74 percent of whom believe the organizations they work for will be more innovative when they have a culture of inclusion. Hiring and keeping a robust millennial workforce means diversity is key, and the unique POV on diversity of this key demographic will drive true change.
This data shows that a new day is upon us. In order to continue to press ahead as a country we can no longer afford to underfund minority-owned businesses. By doing so, we are suppressing the potential of our own economy.
Moving forward, we need to see large enterprises make good on their promises to focus on hiring and promoting Black talent, especially to positions of influence like the C-suite and boardroom, to have a voice in decisions that ultimately affect us all. We also need to see an increased effort from the VC community in financially supporting minority-owned businesses in a meaningful way with both seed and long-term patient capital.
Companies must join diverse leaders to lessen the income inequality gap by catalyzing the success of minority-owned businesses and workers on the cutting edge of technology, innovation and creativity in the digital economy. The modern workplace can accurately reflect and support the population and, in turn, can become even more lucrative than before.
Keenan Beasley is an industry disruptor, marketing executive and serial entrepreneur with more than a decade of consumer marketing experience. After leading billion-dollar brands at Procter & Gamble, Reckitt Benckiser and L’Oreal, he launched a marketing agency, BLKBOX, in 2014. He currently serves as chairman and executive director of Walton Family Foundation grant recipient Venture Noire, a diversity, equity and inclusion partner helping entrepreneurs of color with non-dilutive grants and mentorship to launch and scale successful businesses. Keenan is also the founder and CEO of hair care brand Sunday II Sunday, which provides products for pre and post workout care for textured hair.
Illustration: Dom Guzman
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