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How Racial Equity Can Make Cities Richer

The largest metros would have seen a 24 percent bump in economic growth in 2012 if racial employment disparities didn't exist.

Income gaps between different race groups are bad for the economy. (Flickr/mSeattle)

What would happen if everyone in America—black, white, Hispanic, Asian—was on a level playing field?

For one, our cities would be richer.

"As America becomes a majority people-of-color nation, racial inclusion isn't just the right thing to do—it's an absolute economic imperative," says Angela Glover Blackwell, founder and CEO of PolicyLink, which has released new research showing the economic potential of racial equity.

The brief presents a universe where everyone has the same access to education, career paths, and opportunities, says Sarah Treuhaft, deputy director of PolicyLink and one of the authors of the brief. The study examines what the 2012 economic output would have looked like if incomes of all race groups were lifted to the average income of the white population. (Data note: They didn't assume that everyone had the same income, just that the average income distribution adjusted by age didn't differ for different races.)

The result? In the 150 largest metro areas, total GDP hikes up by 24 percent. Cities such as Portland, Maine, and Springfield, Missouri, that are 90 percent white only show a 2 percent increase. Brownsville, Texas, where people of color make up 88 percent of the population, doubles its growth—it shows a 131 percent increase. Basically, any city with a diverse population stands to gain.

How much different city economies would gain.

In fact, the whole country's GDP climbs up 14 percent, because metro economies drive national growth.

Those cities with more people of color have more to gain economically. (PolicyLink)

The argument that equity is a driver of growth is gaining traction everywhere, says Manuel Pastor, professor for Sociology and American Studies & Ethnicity at University of Southern California. The two biggest drags on sustainable growth are income inequality and racial segregation, he says.

The study pinpoints the problem areas in the country. Lower wages and higher unemployment widen the income gap; which of these is more of a contributor depends on the city. In Flint, Michigan, the income gap is solely due to unemployment, but in Santa Barbara, it's because of low wages for people of color.

Income gaps depend on high unemployment and low wages.  (PolicyLink)

The nature of industry plays into it. In the Midwest and Northeast, for example, people of color face barriers to employment because the cities here have struggled to revamp their job markets in the post-industrial era, the report says. The coastal and sunbelt cities, on the other hand, employ their large immigrant populations in the service sector, paying them extremely low wages.

The restaurant industry is a great example of an industry where the problem of low wages is visible. It's the nation's second-largest private employment sector, with almost 11 million workers. It's also the lowest paying employer of people of color, says Saru Jayaraman, director of the Food Labor Research Center at the University of California at Berkeley. Two million of these jobs actually pay well, she says. These fine-dining and bartending jobs are almost exclusively held by white men. In general, white workers earn four dollars more per hour than employees of color in this industry.

To combat racial inequity, the researchers recommend growing new jobs in industries such as infrastructure development, raising the minimum wage, and removing barriers to employment. Many cities have already started, Glover Blackwell says. In the Twin Cities, improving transit is being seen as a way to improve accessibility to opportunities. New Orleans is trying to boost employment among African-Americans. Other cities interested in following suit can take advantage of PolicyLink's new data tool, she says.

These and other recommendations may improve the quality of life for people of color. Latinos and African Americans, for example, could earn an income more than 70 percent higher than they currently are if racial gaps are bridged. But really, everyone is going to be a little bit better off.

How much race groups will gain on elimination of income gaps between races. (PolicyLink)

About the Author

  • Tanvi Misra
    Tanvi Misra is a staff writer for CityLab covering demographics, inequality, and urban culture. She previously contributed to NPR's Code Switch blog and BBC's online news magazine.