Skip to Content
Business as a Platform for Change

Racial and Economic Inequality Is Costing the U.S. Trillions

There’s a huge price tag to inequity that we’re not discussing. Here’s why we should be using data to relieve its economic impact on us all.

image of Sarah Treuhaft at PolicyLink
Sarah Treuhaft leads the research practice at PolicyLink, a nonprofit organization that rallies around the belief that data can help remove barriers to equity. [Photography by Cayce Clifford]

I’ve spent most of my working life researching the stain of structural inequality on our society. I started out as a Peace Corps volunteer in Togo, a country in West Africa, where I discovered the power of community mapping to capture local wisdom about inequities to remedy and assets to build upon. Throughout my career, I have found that consequences of inequality ripple out and impact us in ways we don’t even notice. 

I think the author Heather McGhee put it best when she wrote, “When any of us are held down, we’re all held back.” At PolicyLink, the nonprofit where I lead our research practice, we have rallied around the belief that data can help remove barriers to equity. But the first time I really saw that mantra in action was in 2010, when I stepped in to helm our National Equity Atlas partnership with the University of Southern California’s Equity Research Institute. This experience enabled me to train an entire data team and promote a new narrative about racial equity as both a moral and an economic imperative. It was a pivotal moment in my career, an opportunity to do work that brought data science together with activism on behalf of communities bearing the burdens of racism and inequality.

The high price of inequity

Inequity costs all Americans. Despite the deeply-seeded fears across populations, data tells us that one group’s success does not come at the expense of another.

Labor market disparities by gender and race cost the United States $2.6 trillion in foregone GDP in 2019, according to research by the San Francisco Federal Reserve Bank. The data tells us that structural inequality – an umbrella term that encompasses everything from practices such as redlining to disparities in healthcare access – prevents us from leveraging the talent, contributions, and innovations of our population.

Labor market disparities by gender and race cost the United States $2.6 trillion in foregone GDP in 2019, according to research by the San Francisco Federal Reserve Bank.

If we take a data-centered approach to addressing structural racism and removing barriers to prosperity, our communities will grow stronger economically. 

One way we do this is by breaking down complex data and making it actionable so local leaders have the tools they need to advocate effectively for their own communities. Here are commonly overlooked themes we’ve discovered that leaders should be mindful of.

Target the needs of the most vulnerable to benefit everyone 

Sometimes a seemingly small change can make a big difference. Even something you don’t usually notice. Take sidewalk ramps, for example. These curb cuts, as they are often called, were initially meant to benefit people using wheelchairs. But they also allow mobility for strollers and grocery carts. 

This example can be applied to how we help those who need it most. Systematic changes designed to help the most vulnerable people have rollover advantages that ripple through and benefit society at large. Angela Glover Blackwell, the founder of PolicyLink and one of my most important mentors, calls it the “curb cut effect.”

The data tells us that structural inequality – an umbrella term that encompasses everything from practices such as redlining to disparities in healthcare access – prevents us from leveraging the talent, contributions, and innovations of our population.

We see it in the corporate world, too. More than 30 years ago, Sam Farber designed an ergonomic potato peeler for his wife, Betsey, whose arthritis made it difficult to prepare her favorite dishes. It turns out there’s a market for comfortable cookware. Sam founded OXO, a kitchen utensil company that designs products not only for differently abled people but for any kitchen aficionado interested in smart design and a gentler touch. The bottom line is that when we build products with diverse communities in mind, we help our society at large. 

The need to correct these inequities remains urgent. Just look at research from McKinsey, which points out that due to systemic racism and historic inequities, Black households start with less family wealth and face day-to-day discrimination and scrutiny that make career advancements and promotions more difficult to achieve. Meanwhile, the fastest-growing group of entrepreneurs in the United States is Black women, whose ascendance in the small business world impacts the economy broadly. 

If organizations hold themselves accountable and reimagine how they not only hire but also advance employees from historically excluded communities, they can begin to address a deep injustice – while causing, like those curb ramps, a more widespread positive impact.

The data behind equality and prosperity

Research from the Organization for Economic Cooperation and Development and others indicates that more inclusive countries and regions are also stronger economically. Low wages mean less of the consumption that drives business growth and creates jobs. Our own National Equity Atlas data shows that if we raise the average income of underrepresented racial groups, total earnings and purchasing power would increase significantly. We say that equity is the superior growth model.

We can begin to address this problem by focusing on cities. According to a 2012 report from McKinsey, 80% of the United States’ economic activity takes place in its 150 largest cities. Because they are home to more diverse populations, those cities also stand to gain more from a focus on racial inclusion. For example, absolute gains from closing the wage gap would range from $287 million per year in Springfield, Missouri to $510 billion per year in Los Angeles.

Data tells us the persistence of structural racism leads to missed opportunities.

This attention to data can also help us identify policy fixes that will advance racial equity. For instance, our team was asked by Raise the Roof, a community coalition in the Bay Area, to determine how many people were at risk of eviction in Contra Costa County during the initial months of the coronavirus pandemic. We found that more than 20,000 families were at risk of losing their homes – disproportionately low-wage workers of color. Our data influenced county leaders to extend the rent freeze and eviction ban. 

Data tells us the persistence of structural racism leads to missed opportunities. When we exclude people – intentionally or unintentionally – we cut off a critical source of new ideas and new solutions to our biggest societal challenges. In my career at PolicyLink, I have come to believe that data is also the key to doing better. That’s why we are launching a National Equity Atlas Fellowship, which will be open to people of color working in grassroots community organizations who want to apply data to their work. We’ll work with fellows to create reports and dashboards that they can take back into their communities to help power change now, and fellows will build skill sets that will allow them to continue to do so for a lifetime.


Sarah Treuhaft, vice president of research at PolicyLink, develops the research agenda to support PolicyLink policy priorities, oversees research, and expands research partnerships. Treuhaft oversees the National Equity Atlas partnership with USC Dornsife Equity Research Institute (ERI). She also launched the All-In Cities initiative, the Jobs for All campaign, and the Bay Area Equity Atlas. She’s worked with grassroots advocates, academics, and national organizations to use data to advance policies to achieve racial and economic equity. Publications she’s written for include The New York Times, Shelterforce, and Yes! Magazine. She holds master's degrees in city planning and international and area studies from the University of California, Berkeley, and she is a part of the UCLA Housing Justice in Unequal Cities Network.

More by Sarah

Related Stories

Astro

Get the latest stories from The 360 Blog, every week.

Get the latest stories from The 360 Blog, every week.

Enter a valid e-mail address
Select your Country
Select a state
Please read and agree to the Master Subscription Agreement

Yes, I would like to receive the Salesforce Weekly Brief as well as marketing communications regarding Salesforce products, services, and events. I can unsubscribe at any time.

Salesforce values your privacy. To learn more, visit our Privacy Statement.