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Racial inequality is harmful to the United States innumerably, of course, many of them are difficult to directly calculate. But now, Citi puts at least one aspect of social injustice on the numbers. In a new study, it found that due to discrimination, the United States’ GDP has fallen by $1
The report’s findings are based on an analysis of factors such as wages, education, housing, and fair loans to black entrepreneurs.
Raymond McGuire, Citigroup’s vice chairman and one of the authors of the report, said: “The cost of racial inequality is always too high, and it is believed that it can only be made up for by underrepresented groups. “What this report emphasizes is that the cost of imposing such tariffs on all of us, especially in the United States, has a real and tangible impact on our country’s economic output.”
Most of the $16 trillion lost was due to a lack of loans to black entrepreneurs. Citi estimates that this created $13 trillion in business income for black Americans and lost 6.1 million new jobs every year. Due to the wage gap between black races, another US$2.7 trillion in income was lost, and the lack of opportunities for black students to receive higher education may increase their lifetime income by US$90 billion to US$113 billion. Finally, the lack of equal access to housing credit may result in an additional 770,000 black homeowners and a loss of $218 billion.
In addition, the study found that if the racial inequality gap is resolved today, it could add $5 trillion to the economy in the next five years.
The report was released at the same time that Citigroup announced that it would invest more than US$1 billion over the next three years to reduce the racial gap between rich and poor.
It is called the “Promotion of Racial Equality” and it will focus on increasing investment in black-owned businesses and promoting the growth of black home ownership.
Citigroup CEO Michael Corbat said in a statement: “Solving racism and reducing the racial gap between rich and poor are the most critical challenges we face in building a fair and inclusive society. Know that more things will not be done.” The company is committed to using its resources and influence to “fight the impact of racism on our economy.”
-CNBC’s Michael Bloom and Courtney Connley contributed reporting.
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