Financial and Monetary Systems

Wage gaps are costing the U.S. economy trillions of dollars

The earnings gap between white men and Blacks and Hispanics is also colossal. Image: Unsplash

Niall McCarthy
Data Journalist, Statista
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Financial and Monetary Systems

  • Citigroup estimates that the US has lost around $16 trillion dollars since 2000, due to racial inequality.
  • If the white male-white female wage gap had been closed two decades ago, it would have generated $5 trillion for the U.S. economy.

Citigroup has published a new report which estimates that racial inequality cost the U.S. economy $16 trillion since 2000 while the failure to close wage gaps has resulted in $12 trillion in lost GDP. The research arrived at the initial figure by finding that the provision of fair and equitable lending to Black entrepreneurs would result in $13 trillion in revenue. Closing the Black wage gap would add a further $2.7 trillion to the economy while improved access to housing and education would result in a further $218 billion and $113 billion being added, respectively.

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While the level of racial disparity highlighted by the report is jarring, the pandemic has made it worse. Race is a big part of the problem but there are other elements. If the white male-white female wage gap was closed two decades ago, it would have generated $5 trillion for the U.S. economy. Likewise, the earnings gap between white men and Blacks and Hispanics is also colossal and it would have led to a $7 trillion gain in GDP if it was eliminated 20 years ago. According to Citigroup, $5 trillion would be added to the U.S. econonomy over the next four years if the above gaps were closed today, leading to an annual growth rate of 0.4 percentage points.

Wage gaps are costing the U.S. economy trillions of dollars.
Wage gaps are costing the U.S. economy trillions of dollars. Image: IMF
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