So, where do we start to address the racial wealth gap? There are many openings, but an important one is inequality in compensation.
A couple of years ago, McKinsey released a study sharing how the earning potential of black families in the United States was significantly lower than their white counterparts' families. The reference states, "A typical middle-class black family has a 55 percent lower household income; black workers are underrepresented in seven of the eight highest-paying industries; [and] black families are six times as likely to be unbanked."
Even though these communities are earning less, they give up to 4 times more to social causes. McKinsey Partner, Jason Wright, says he wants to see the "creation of a capability-building organization for black executives and entrepreneurs. [With the emphasis to] focus on both hard skills, such as analytics and automation, and soft skills, such as how to secure funding, develop institutional support for initiatives, grow talent." This would, in turn, help black families build up their living wages, and by default, continue to grow philanthropy.
The Urban Institute found that since 2010, black families contributed the most substantial proportion of their wealth to charity, including savings and other complex assets (see chart). This contribution is more than any other racial or ethnic group. It is not being suggested other groups are not just as generous as black communities. There are many more determinants of generosity not discussed in this article. However, these few statistics offer insight into how closing the racial wealth gaps can help the global community thrive.
So, where do we start to address the racial wealth gap? There are many openings, but an important one is inequality in compensation. While Jason Wright pointed out, there needs to be an emphasis on building hard and soft skills for the black communities, there also needs to be full disclosure from companies and organizations on pay. Sharing information about compensation is a major first step in bridging the compensation divide.
Harvard Business Review shared some ways to tackle the “racial wage pay gap”:
- Conduct a wage equity audit
- Commit to paying all of your employees a living wage- this is not the minimum wage, which the federal government has not raised in a decade, and therefore it has not kept up with inflation
- Eliminate last-minute shift scheduling, denying employees a 40-hour workweek
These tips are the right thing to do, and they help address the pay gap, as well as help philanthropy continue to prosper in your community.