Cost Of Racism: U.S. Economy Lost $16 Trillion Because Of Discrimination, Bank Says

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The American flag hangs in front of the New York Stock Exchange on September 21, 2020, in New York City. Citigroup estimates the U.S. economy lost $16 trillion over the past 20 years as a result of discrimination against African Americans.

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«We believe we have a responsibility to address current events and to frame them with an economic lens in order to highlight the real costs of longstanding discrimination against minority groups, especially against Black people and
particularly in the U.S., wrote Raymond J. McGuire, a vice chairman at the bank and the chairman of its Banking, Capital Markets, Advisory team.

Wall Street itself has also faced accusations for years of discriminatory practices against African Americans, such as limiting approval for mortgages or not providing enough banking options in minority neighborhoods, which are among the damaging actions identified by Citigroup researchers.

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Specifically, the study came up with $16 trillion in lost GDP by noting four key racial gaps between African Americans and whites:

$13 trillion lost in potential business revenue because of discriminatory lending to African American entrepreneurs, with an estimated 6.1 million jobs not generated as a result.

$2.7 trillion in income lost because of disparities in wages suffered by African Americans.

$218 billion lost over the past two decades because of discrimination in providing housing credit.

And $90 billion to $113 billion in lifetime income lost from discrimination in accessing higher education suffered by African American students.

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As a result, Citigroup urges a slew of actions to reverse discriminatory practices and boost GDP over the next five years, including addressing the wage gap suffered by African Americans and promoting diversity at the top within banks and companies.

Citigroup’s recommendations aren’t new: various studies have shown similar findings and experts have called for similar action for years, though so far progress has been slow.