December 2, 2020 | Article
By Earl Fitzhugh, JP Julien, Nick Noel, and Shelley Stewart
Despite decades of efforts by public-, private-, and social-sector organizations, racial inequity has only increased. Can a concerted, coordinated effort reverse this trend?
2020 has been a year of losses. First, lives have been lost—around the world, and in the United States in particular. Those lost lives are disproportionately Black lives. 2020 saw the murders of George Floyd, Breonna Taylor, and countless others at the hands of police, and the deaths of more than 46,000 Black Americans from COVID-19. According to the American Public Media Research Lab, the novel coronavirus mortality rate for Black Americans is at least double that of white Americans. The disparity is profound: had Black Americans died of COVID-19 at the same rate as white Americans, more than 22,000 Black Americans would still be alive today.
The economic burden of the pandemic has also fallen more heavily on Black workers and Black business owners. As of October, the unemployment rate for Black Americans stood at nearly 11 percent, versus 6 percent for white Americans.2 The Federal Reserve Bank of New York found that more than 40 percent of Black-owned businesses in the United States closed between February and April 2020, versus about 17 percent of white-owned businesses. Over those three months, the number of Black business owners dropped by a staggering 440,000.3 The losses are likely to grow: in September, nearly half of Black business owners said that without federal support, they would only be able to remain in business for another six months.
The events of this year are emblematic of long-standing inequities and are rooted in a long history of systemic discrimination. According to the Federal Reserve, the typical Black American family has eight times less wealth than a white family. The racial wealth gap has profound consequences, both for Black families and for the US economy; our previous research revealed that it will cost the US economy between $1 trillion and $1.5 trillion in GDP output each year.
Despite all this—and in part because of all this—2020 has also emerged as a moment of opportunity, a possible inflection point for addressing inequity in a profound way. The global protests following the killing of George Floyd demonstrated the widespread awareness of inequity and a willingness to do something about it. Fortune 1000 companies have responded, committing $66 billion to racial-equity initiatives. But how can this potential be tapped in a way that delivers meaningful, systemic change?
We at McKinsey don’t have the answer to that question. But over the past few months, we have spoken with many leaders of organizations whose goal is to promote racial equity, as well as leaders of organizations that address similar issues, which once seemed intractable. Our research underscores that racial-equity organizations face many of the same challenges as other groups and movements. It has also made clear that collective action that brings together public-, private-, and social-sector stakeholders is the most promising way to create broad, permanent change on this complex issue. Such an approach would draw on the experiences and expertise of racial-equity organizations and Black communities, and could amplify their considerable strengths and capabilities.
In this article, we will explain why we believe that no single sector can solve this problem on its own. We will outline five key elements that are needed for a broad coalition of public-, private-, and social-sector entities to succeed. And we will announce the launch of the McKinsey Institute for Black Economic Mobility, which will aim to accelerate research, to convene people and organizations, and to develop tools and assets that can help advance racial equity and inclusive growth to safeguard the nation’s future and the lives of Black people around the world.
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