Updated study outlines potential gains to U.S. economy and a pathway for economic growth

Contact:
Rebecca Noricks
269.969.2079
rebecca.noricks@wkkf.org

BATTLE CREEK, MICH. – The United States economy could be $8 trillion larger by 2050 if the country eliminated racial disparities in health, education, incarceration and employment, according to “The Business Case for Racial Equity: A Strategy for Growth.” The gains would be equivalent to a continuous boost in GDP growth of 0.5 percent per year, increasing the competitiveness of the country for decades to come. The national study released today by the W.K. Kellogg Foundation (WKKF) and Altarum concludes that while racial inequities needlessly stifle economic growth, there is a path forward.

“More than half of U.S. workers and consumers will be people of color by 2050,” said La June Montgomery Tabron, president and CEO of the Kellogg Foundation. “Civic and business leaders who anticipate demographic shifts will be poised for growth. ‘The Business Case for Racial Equity’ makes the connection between today’s talent investment strategies and tomorrow’s workforce. We know that promoting racial equity has a powerful positive effect on the lives and futures of children and their families. The data in this report indicate that advancing racial equity in policies and practices holds the potential for significant economic growth as well.”

The report projects a tremendous boost to the country’s workforce and consumer spending when organizations take the necessary steps to advance racial equity. Better jobs, health and education would spark an additional $109 billion of food purchases each year, $286 billion on housing, $147 billion on transportation, $44 billion on entertainment and $30 billion on clothing and apparel. Federal tax revenues would increase by $450 billion annually and state and local tax revenues would increase by $100 billion.

The study is an update to an original report completed in 2013, and provides data and analyses that align racial equity with a clear strategy for economic growth. 

Some key findings:

• There’s a potential economic gain of $135 billion per year if racial disparities in health are eliminated, including $93 billion in excess medical care costs and $42 billion in untapped productivity.
• Greater opportunity has already led to economic growth. Researchers at Stanford University and the University of Chicago have estimated that more than 25 percent of the growth in productivity from 1960 through 2008 was associated with reducing occupational barriers faced by Blacks and women. Further reducing barriers to opportunity will help drive the level of economic growth possible over the next 50 years.
• The U.S. economy would be $2.3 trillion larger by 2050 if the educational achievement of Black and Hispanic/Latino children was raised to that of White children.
• Nine million potential jobs would be created if people of color owned businesses at rates comparable to Whites.
• State and federal prison costs would be cut $30 billion annually if Blacks and Hispanics/Latinos were incarcerated at the rate of Whites. Currently Black men are incarcerated at nearly six times the rate of White men, while Hispanic/Latino men are incarcerated at twice the rate of White men.

Led by Dr. Ani Turner, co-director of Sustainable Health Spending Strategies at Altarum, researchers analyzed data from public and private sources, including the U.S. Census, Johns Hopkins University, Georgetown University, Brandeis University and Harvard University. Their methodology included applying established models to estimate the economic impact of the disparities faced by people of color. 

The study will be accompanied by a similar analysis and reports for WKKF’s four U.S. priority places: Michigan, Mississippi, New Mexico and New Orleans that will be released in May. Informed by local, leading researchers, the additional reports highlight the distinct history, challenges, and potential economic gains in each location.

“To remain competitive in a global economy, we need the full creative and economic potential of all our people,” said Ani Turner of Altarum, lead author of the report. “Greater racial equity will not only improve individual lives, it will increase the size of the economic pie for everyone.”

Download and read the full report at http://www.businesscaseforracialequity.org.

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About the W.K. Kellogg Foundation
The W.K. Kellogg Foundation (WKKF), founded in 1930 as an independent, private foundation by breakfast cereal pioneer, Will Keith Kellogg, is among the largest philanthropic foundations in the United States. Guided by the belief that all children should have an equal opportunity to thrive, WKKF works with communities to create conditions for vulnerable children so they can realize their full potential in school, work and life.

The Kellogg Foundation is based in Battle Creek, Michigan, and works throughout the United States and internationally, as well as with sovereign tribes. Special emphasis is paid to priority places where there are high concentrations of poverty and where children face significant barriers to success. WKKF priority places in the U.S. are in Michigan, Mississippi, New Mexico and New Orleans; and internationally, are in Mexico and Haiti.

About Altarum
Altarum is a nonprofit organization dedicated to transforming health and health care through ideas and action that increase value and affordability, access, and equity of care. We drive change through strategies in patient and provider incentives, population health, and practice transformation. Our headquarters are in Ann Arbor, Michigan, with locations in Washington D.C. and Portland, Maine. Altarum has two wholly owned subsidiaries: KAI Research, a contract research organization and health research company based in Rockville, MD; and Palladian Partners, a full-service health communications firm in Silver Spring, MD. Learn more at altarum.org