The racial wealth gap in the United States is staggering.
In 2016, white families had an average net worth of $171,000; Black families averaged a net worth of $17,150—almost exactly 10 times less than their white counterparts. That divide can make all the difference in education, healthcare, professional opportunities, and more, studies show.
As the nation reckons with its treatment of Black people following the police killing of George Floyd, business leaders are examining ways to reduce the wealth gap amid the coronavirus pandemic that has contributed to a 41 percent decline in the number of Black business owners from February to April. White business owners, meanwhile, saw just a 17 percent decline during the same period.
This disparity was the topic of discussion at Thursday’s Fortune Bold virtual conference, in partnership with McKinsey & Company, and moderated by senior editor Ellen McGirt. Joining her was John Rogers, chairman, co-CEO and chief investment officer of Ariel Investments, and Lareina Yee, senior partner and head of diversity and inclusion at McKinsey & Company. The question at hand: How can businesses help reduce the Black wealth gap?
“It’s a very, very complicated question, but the one key thing I always start with is that the wealth gap is getting worse and worse,” Rogers said. The coronavirus pandemic has further contributed to this, recent studies have shown.
It’s true, Rogers acknowledged, that some corporations have created supplier diversity programs pledging to work with African American companies. “But in reality, they typically do that only in the supply chain part of the spend,” Rogers said. “Construction, catering, janitorial services, corporate gifts—the lowest margin part of the spend. And as we know, our economy has moved to a professional services, financial services and a technology-based economy. That’s where all the high margins are. That’s where the cash flow is. That’s where the jobs are.”
The solution, Rogers said, was to get rid of “supplier diversity” and focus more on “business diversity.” That will be challenging in itself, he added, because of implicit biases against Black people. “So it’s not just language. People continue to think that we’re not qualified to do the complicated tasks, the legal services, the counting services, money management,” Rogers said. “When people close their eyes and think about an African American leader, they think about someone in sports or entertainment, not an investment banker.”
At the end of the day, Rogers said, education about implicit biases cannot just be done in one seminar. Rather, it needs to be taught continually at companies on a regular basis to hold employees—including CEOs—accountable. Another aspect of education that Black people need more access to: financial literacy.
At the current rate of progress, said McKinsey’s Yee, it would take 35 years for Black employees in the U.S. and U.K. to “to see any sense of racial equity,” she said, citing McKinsey data.
“By then, John and I will have been retired for a long time. And when you look a little more closely at the …read more