Not often enough used, the carrot outperforms the stick over time. We value and pursue reward more than we fear consequences. This came to mind recently when statistics on racial economic disparity were in the news.
There are big gaps in average income and wealth between white populations and others. However, the business world has long understood that opportunity lies within problems, and there is a big opportunity in these income disparities if they are viewed from a different perspective.
The cause for today’s gaps in income and wealth metrics when filtered by race are complex but include past discrimination as well as greatly improved but lingering preconceptions.
The common goal is for justice, but assessment of the wealth gaps unfortunately often is sidetracked by blame-laying, friction, divisiveness and conflict.
A better way appears, though, if we manage to focus on the big rewards to be gained from finding ways to expand present economic opportunity and improve income and wealth across all sectors of our society. Those at artificially lower levels due to inequality will grow their incomes and wealth if given the opportunity.
Federal Reserve Board data in 2017 showed median wealth in America for Black and Hispanic families was one-tenth of white families, according to a McKinsey & Co. report.
This is low-hanging fruit, right? The choice almost always is not how to divide a finite pie but how to grow the pie that feeds us all.
McKinsey & Co. issued research on the economic impact of expanding opportunity equally to all Americans, labeling its report “The Economic Impact of Closing the Racial Wealth Gap,” but the point is even more universal.
The racial wealth gap dampens consumption and investment and has restricted gross domestic product growth for as long as we have measured economic growth. Closing it will boost GDP, and the results will permeate into all corners of our economy like oxygen in the air.
Estimates by economic experts place the benefits at trillions nationally and tens of billions in Kentucky alone—annually. McKinsey & Co. suggests a 4-6% uptick in GDP by 2028 from closing the wealth gap. It’s a tide that will lift all boats.
That means it should be our ongoing proactive goal to increase opportunity for all segments of society, and especially for those with less, because it benefits all of us.
We punish ourselves when we discriminate against others, which lamentably still happens. Tribal us-them viewpoints are part of our complex DNA and human nature. But the broader point to keep in mind is that we truly help ourselves when we broaden our perspective to help others.
We don’t live in a perfect world, but we do have legislation and case law against overt racism and public policy that requires percentages of public projects go to contractors owned by minority and women. Many corporations have policies to do the same and intentionally bring more minorities and women into leadership.
As Paul Czarapata, president of the Kentucky Community and Technical College System, says in this month’s Lane Report One-on-One interview, educators take up their calling because they know it creates permanent, positive change for families. Business leaders know that creating jobs and financial opportunity does the same.
Mark Green is editorial director of The Lane Report. Opinions expressed are those of the writer and not The Lane Report.