The Economic Cost of Racism

During the height of the Ferguson uprising in 2014, activist Montague Simmons spoke passionately before thousands of demonstrators protesting the killing of Michael Brown and the systemic racism that allowed his death to happen with impunity. 

“We have to show them that the cost is too high,” Simmons said. 

He was absolutely right. 

Yet while making an ethical case for equity is valid, another argument is more likely to resonate and garner the attention necessary to encourage systemic change from the powers that be: the economic cost of racism. 

The data shows that the economic cost literally is too high to continue racial inequity against Black people and the nation’s self-interest. The financial toll is far-reaching and impacts every American citizen, regardless of their ethnicity. 

The moral expense of racism should be sufficient to upend the current power structures from their historical practices. But ours is a nation with power and wealth built on the foundation of unspeakable horrors involving people being sold as property and dehumanized in every way imaginable for centuries. And the current attempt at reconciliation for these crimes against Black Americans is to simply erase them from history books. 

But systemic racism in the United States is not something in the distant past. It remains deeply embedded in the DNA of this nation. Granted, there have been some more progressive responses to these challenges in different regions of the country in recent years — particularly the death of Black people by police. 

Slavery itself and the persistence of its successive forms of systemic racism make it clear that for many, the moral fabric of America is an afterthought when the bottom line is involved. If we see chattel slavery in this country as part of larger class interests, we can better understand the ideas, ideologies, and institutions that undergird ongoing systemic racism. 

Slavery in this country was monstrous and evil. But we must also understand that simply addressing the current manifestations of systemic racism as a moral imperative — no matter how important that is — will be futile if we cannot also make a convincing economic case for ending racial injustice. 

The evidence is compelling and speaks for itself. 

A study released by Citi in September 2020 concluded that $16 trillion was erased from the U.S. gross domestic product over the previous 20 years due to racial discrimination in education, housing, wages, and business investments. 

“Racial inequality has always had an outsized cost, one that was thought to be paid only by underrepresented groups,” said Citi vice chairman and report co-author Raymond McGuire. “What this report underscores is that this tariff is levied on us all.”

While the United States has always been a de facto multiracial country, it has never been a true democracy. The U.S. has always failed to address the harm done by its original sin — the enslavement of Black people — and its varied forms of ongoing racial discrimination despite its declared abolition after the Civil War. It has been Black Americans who have endured, and continue to endure, the brunt of this brutal, inhumane legacy. 

The population of Black America currently exceeds 50 million. Yet it remains a largely untapped resource for the country due to systemic barriers that prevent the realization of our full potential as a community. We are a fertile ground for greater innovation and excellence. But the nation has opted out of leaning more fully into the Black community so that the entire nation could reap from the harvest Black Americans would provide if given the opportunity. 

Instead, the country smothers our fertile soil with concrete — maintaining roadblocks that undermine the contributions Black America could make in helping reverse our nation’s diminishing status as a world superpower. 

In addition, a more recent study — a 2021 analysis by the Federal Reserve Bank of San Francisco — showed that racial and ethnic inequalities have cost the United States $51 trillion in lost output since 1990. This study cited persistent gaps in rates of employment, education, and earnings as the key drivers — and confirmed that these persistent gaps add up to a smaller economic pie for the nation as a whole. 

The wealth of a nation was cited as justification for the morally bankrupt policies that kept Black people enslaved for centuries and denied basic human rights for more than 150 years after our alleged emancipation.

In his commentary “Slavery Was About Profit,” New York Times columnist Jamelle Bouie wrote, “The point I want to make is that we should not think of the slave system or the slave trade as somehow about racism and hatred. It was about profit. That’s why — and how — it lasted so long.” That same priority can be a powerful, sustainable determinant to help make America a place with greater access, opportunity, and equity for all. The cost of the failure to act is too high — and is a threat to the nation’s future in the increasingly competitive global economy. 

Donald M Suggs is the publisher and owner of The St. Louis American