- A study released by McKinsey & Co. illustrates the harsh economic reality faced by Black Americans.
- More than 3 million Black American households were found to have a negative net worth.
- One key cause is that Black Americans command single-digit shares of high paying jobs.
- See more stories on Insider’s business page.
On the eve of the holiday Juneteenth, which celebrates the ending of slavery in the United States, management consulting firm McKinsey & Co. has warned that economic disparities facing Black Americans have stranded millions with negative net worths and reduced their life expectancies.
The new research, which underscores the harsh systemic challenges that continue to encumber the Black community, points to several factors.
For one, McKinsey said, Black workers comprise small, single-digit shares of the total number of professionals in highly-paid careers like physicians (5%) and software developers (4.5%), the global management consultant found.
It’s also tougher for members of the Black community to rise through the ranks of corporate America. For every 100 men in the US who are promoted into managerial positions, just 58 Black women are promoted into management roles, according to a study by LeanIn cited by McKinsey.
And while nearly 13% percent of the US private sector workforce is composed of Black workers, that demographic is pulling in just 9.6% of total US wages.
Perhaps most striking of the study’s findings were data points like this one: In a world in which racial pay gaps didn’t exist, Black wages in the US would be $220 billion higher annually, according to the study, which was previously reported by CNN.
What’s more, 19% of Black families – about 3.5 million in all – are now hindered by a negative net worth as a result of carrying excess debt, as compared to just 8% of white families who are in the same position, McKinsey said.
Among American families that do count a positive net worth, white families have a median net worth of $188,000, as compared to Black families, whose median net worth is $24,000.
The pandemic has inflicted further economic harm on Black Americans
McKinsey said that the coronavirus crisis has worsened the Black community’s economic anguish.
Indeed, the firm said that the fallout from COVID-19 has disproportionally cost Black workers their jobs; deprived them of their savings; and exposed them to significant health risks, given that frontline jobs which were largely held by Black employees left many workers vulnerable to the virus.
Geographically, the McKinsey research found that Black workers are primarily spread throughout southern states.
More than 56% of the Black labor force lives in states in the country’s southern region, like Texas, Florida, and Georgia. That left the authors to suggest that other regions, like states in the west and Pacific, would have to rethink their recruiting strategies to attract Black talent.
“Black workers are underrepresented in the highest-growth geographies and the highest-paying industries,” the study authors wrote. “They are overrepresented in low-growth geographies and in frontline jobs, which tend to pay less.”
The McKinsey study is far from the first to shed light on Black America’s economic reality.
One Pew Research Center analysis from 2018 looked at the standard income ranges of earners in both the Black and white communities in America.
The analysis found that earners at the 90th percentile of the Black community’s range generated just 68% of what earners at the 90th percentile of white community’s earnings spectrum did.
Looking forward, the authors of the McKinsey study said changes based on the findings could help make strides in the right direction.
“Addressing the wage disparities described in our research alone could propel an estimated two million Black Americans into the middle class for the first time,” they wrote. “This could reverse current trends, with cascading effects lifting the prospects of the next generation even future.”