A persistent racial wealth gap hurts people, organizations, and the economy. Employers are instrumental in the effort to close the wealth gap, and one strategy is removing the barriers to career advancement into professional positions.-BY DEBORAH JENKINS

The U.S. Department of the Treasury addressed economic issues associated with racial equity, and although the Department focuses on Americans, the story is similar in many countries. The Federal Reserve Bank of St. Louis says that 2019 data shows the median wealth gap between Black and White families is wide, with the median white family having $184,000 in wealth compared to $23,000 for Black families. Wealth refers to financial assets, home equity, and financial assets. The projection was that the wealth gap would widen unless changes led to improvements. Change should not rely only on government policy interventions. The report said, “This research highlights the importance of structural solutions in reducing racial disparities in economic security. These solutions may include policies that seek to reduce discrimination and bias in the housing and labor markets, better support households in times of financial distress, and decrease gaps in access to retirement accounts or liquid assets.” Employers can and should play a significant role in closing the racial wealth gap by reducing discrimination and bias in recruiting, hiring, training, developing, and retaining Black talent. However, increasing Black employee representation in professional positions, from STEM roles to CEOs, is a strategy that can accelerate progress.

The Broken Rung

It is essential to recognize that racial and economic disparities often go hand-in-hand. Addressing one without the other may not lead to lasting change. By increasing diversity in the workplace and creating greater access to opportunities, employers can break down economic barriers and create a more equitable society.

It is no secret that economic disparities and lack of opportunities are at the root of many systemic social issues. The Economic Policy Institute found that Black workers are disproportionately disadvantaged in the labor markets. Though differences between education and skills are often used to explain the 2-to-1 disparity in unemployment, Black Americans have made substantial gains in high school and college completion over the last 45 years, yet the employment gap has not changed. Black workers also earn 24.4% less per hour than the typical white worker.

To create real change and tackle these issues head-on, employers must address the root causes. For example, they can ensure that the compensation schedule is not biased and that people doing the same job are paid equitably without regard for race. Another strategy is to create equitable opportunities for skills training and career development.

However, corporations can also accelerate closing the racial wealth gap by increasing diversity in their professional ranks. In the private sector, Blacks comprise approximately 12% of the entry-level workforce but only 7% of the managerial workforce. If Black workers continue to be considered primarily for entry-level jobs without career planning, they are unlikely to have opportunities to advance into professional positions. There is also continued discrimination in hiring for professional positions. The higher the position, the fewer Black professional employees are found. Black employees comprise about 5% of senior managers and vice presidents, 4% of senior vice presidents, and 1% of CEO positions in the Fortune 500. There is a broken rung between entry-level and manager positions.

Trickle Down Impact

The reasons include a lack of supervisor support and bias. When there is a lack of diversity in professional positions, it is easier for a non-inclusive culture to thrive. However, it is important to recognize that more than hiring and promoting diverse people into positions is needed. They also need the support of the leaders above them, and the CEO needs the support of the Board of Directors. Bias exists at every level of the organization. If Black professionals are not treated equitably, they will either fail through no fault of their own or will leave for a company with a more supportive culture.

Hiring or promoting Black workers into professional positions has a trickle-down effect. They become role models for aspiring younger workers of color. The Pew Research Center reviewed government data and found that Black Americans are underrepresented in STEM jobs. The Center asked the survey participants what would help to attract more young Black people to STEM, and the answer was that “…it would help a lot if people saw more examples of high achievers in these areas who were Black. About three-quarters of those with a college degree or more education think this would help a lot.” When asked if they found certain professional groups welcoming to Blacks, the Center reports that for business executive positions, “Just 17% of Black Americans see business executives as very welcoming to Black people in these jobs; 45% consider business executives as generally not too or not at all welcoming to Black people in these jobs.”

Four HBCU scholars were asked to participate in a learning community for a Goldman Sachs and Urban Institute project called One Million Black Women (IMBW) Research Partnership. The goal was to identify ways to close the racial wealth gap for Black women. Scholar Angelino Viceisza identified factors that lead to gender and racial disparities in Black women’s retirement readiness. They included employment discrimination, occupational segregation, and low-paying jobs. He supports accelerated C-suite programs to move more Black women into higher-paying professional positions. This strategy is one way to repair the broken rung.

People, Organizations, and Economies Benefit

Organizations benefit from increasing Black representation at the professional level. By hiring people from various backgrounds and life experiences, companies can bring fresh perspectives and ideas to the table. This not only benefits the company itself but also helps to create greater access to wealth for all. When more people have the opportunity to succeed, everyone benefits. Employers can implement diversity and inclusion initiatives and seek out candidates from diverse backgrounds. But the slow progress in increasing Black employee representation in professional and executive positions demonstrates that more can always be done.

Ultimately, creating greater access to wealth for all is a complex issue that requires a multifaceted approach. Closing the racial wealth gap is not likely to happen quickly, but organizations do not have to wait for government policies and requirements to become change agents. By establishing a talent process that is free of discrimination and bias and gives Black men and women equitable opportunities for career advancement, the organization not only benefits for the reasons mentioned. So does the economy, which delivers even more opportunities for corporations to grow. It is a win-win-win process.