Professional Documents
Culture Documents
Citi Racism
Citi Racism
INEQUALITY GAPS
The Economic Cost of Black Inequality in the U.S.
Citi is one of the world’s largest financial institutions, operating in all major established and emerging markets. Across these world markets, our employees conduct
an ongoing multi-disciplinary conversation – accessing information, analyzing data, developing insights, and formulating advice. As our premier thought leadership
product, Citi GPS is designed to help our readers navigate the global economy’s most demanding challenges and to anticipate future themes and trends in a fast-changing and
interconnected world. Citi GPS accesses the best elements of our global conversation and harvests the thought leadership of a wide range of senior professionals
across our firm. This is not a research report and does not constitute advice on investments or a solicitations to buy or sell any financial instruments.
For more information on Citi GPS, please visit our website at www.citi.com/citigps.
Dana M Peterson Director, is a Global Economist with Citi Research. Her goal is to provide high value,
accurate and timely analysis that informs Citi’s top tier clients in their investment, risk, and business planning
decisions. Dana has specific responsibility for identifying, analyzing, and publishing research papers on
important global economic themes having direct financial market implications. Such global economic themes
include, monetary policy, fiscal and trade policy, debt, taxation; ESG; and demographics. Dana also
examines U.S. themes using granular data. Dana and her research have been featured by U.S. and
international news outlets in print and on television, including the CNBC, Bloomberg, Thomson-Reuters,
WSJ, the Financial Times (FT), Fox Business News Network, BNN-Bloomberg, Globe and Mail, CBC, and
National Post.
Please note: This is the last report written by Dana Peterson in her role as Global Economist at Citi. We
thank Dana for her insights and dedication to global thematics and in particular her work on this important Citi
GPS report. We wish her all the best in her new role as Chief Economist at The Conference Board.
Catherine L Mann is the Global Chief Economist at Citigroup where she is responsible for thought leadership,
research guidance of a global team of economists, and cross-fertilization of research across macroeconomics,
fixed-income, and equities. Prior to this position, she was Chief Economist at the OECD, where she also was
Director of the Economics Department and was Finance Deputy to the G20 (2014-2017). Prior to the OECD,
she held the Barbara '54 and Richard M. Rosenberg Professor of Global Finance at the International Business
School, Brandeis University, where she also directed the Rosenberg Institute of Global Finance (2006-2014).
She spent 20-plus years in Washington, DC (1984-2006) where her positions included Senior Fellow at the
Peter G. Peterson Institute for International Economics; Economist, Senior Economist, and Assistant Director in
the International Finance Division at the Federal Reserve Board of Governors; Senior International Economist
on the President's Council of Economic Advisers; and Adviser to the Chief Economist at the World Bank. Dr.
Mann received her PhD in Economics from the Massachusetts Institute of Technology and her undergraduate
degree is from Harvard University.
+1-212-816-6498 | [email protected]
3
Today, more than at any time since Dr. King’s assassination, we are bearing witness to
the grave injustices affecting our fellow citizens. Black, Latinx, and Native Americans
have been hospitalized for COVID-19 at a disproportionately high rate, a direct result of
what the Centers for Disease Control and Prevention has identified as “long-standing
systemic health and social inequities.” Blacks and People of Color are also bearing a
disproportionate share of the pandemic’s economic devastation. And the killings of
Ahmaud Arbery, Breonna Taylor, and George Floyd have finally shaken the U.S. and the
world awake to the egregious racial inequities in our criminal justice system.
Raymond J McGuire
Vice Chairman, Citi As Dr. King noted, these injustices affect all of us. Higher rates of infection among some
Chairman, Banking, Capital Markets, affect the health of all, and the loss of health, life, and livelihood among communities of
Advisory color diminish everyone’s economic security. No one should want to live in a society that
incarcerates or kills so many of its citizens just because they are black or brown.
The privileges we enjoy by working for Citi come with responsibilities. While elected
officials and community activists must do their part, so must we. One important thing we
can do is to show the costs of racial inequality through objective analysis which is what
the authors of this report have sought so effectively to demonstrate. Our overarching
goal for the Citi GPS series is not only to tackle the key opportunities and challenges of
the 21st century, but also to address complex societal questions and to not shy away
from difficult subjects. As such, we believe we have a responsibility to address current
events and to frame them with an economic lens in order to highlight the real costs of
longstanding discrimination against minority groups, especially against Black people and
particularly in the U.S.
The analysis in the report that follows shows that if four key racial gaps for Blacks —
wages, education, housing, and investment — were closed 20 years ago, $16 trillion
could have been added to the U.S. economy. And if the gaps are closed today, $5 trillion
can be added to U.S. GDP over the next five years.
I write this forward as Citi’s Vice Chairman and Chairman of our Global Banking, Capital
Markets and Advisory business, but my journey began at the bottom. My two brothers
and I were raised in Dayton, Ohio by our single mom and her parents, who had migrated
from Georgia to escape the injustice and terror of Jim Crow. They worked tirelessly as
janitors, social workers, and leaders at our local church to give us every opportunity. At
any given time, we shared our home with five to eight foster siblings.
Yet even today, with all those credentials and as one of the leading executives on Wall
Street, I am still seen first as a six-foot-four, two-hundred-pound Black man wherever I
go — even in my own neighborhood. I could have been George Floyd. And my wife and
I are constantly aware that our children could have their innocence snatched away from
them at any given moment, simply for the perceived threat of their skin color. I hope that
the analysis in this report brings sober perspective as well as hope to our readers as we
collectively find substantive and sustainable opportunities to address the gaps we
identify.
© 2020 Citigroup
A Path Towards Equality
NOT ADDRESSING RACIAL GAPS BETWEEN BLACKS AND WHITES HAS COST
THE U.S. ECONOMY UP TO $16 TRILLION OVER THE PAST 20 YEARS
If these racial gaps were closed today, we could see $5 trillion of additional GDP over the next 5 years, or an average
add of 0.35 percentage point to U.S. GDP growth per year and 0.09 percentage point to global growth per year.
UTILIZE
ADVOCATE POLITICAL
AND JOBS FOR ONE’S POWER
CAREER
ED WAGES, INCOMES
PROVIDE GUARANTE
IMPLEMENTNTA X REFORM
CIAL INCLUSION
PROMOTE FINA RE
DECOUPLE HEALTHCA
ENC OU RASIGNE WO RKS
G INCENTIVE
EMENT HOU
IMPL
T IN WE ALTH B UILDINGN
INVESPROTECTIONS AGAINST DISCRIMINATIO USE EDUCATION EMBRACE DELAYED
INVEST IN
IMPLEMENT SALARY
HISTORY BANS AS A PATHWAY GRATIFICATION AND
FOR SUCCESS RISK TO GENERATE
WEALTH
© 2020 Citigroup
ATTITUDES AND POLICIES THAT UNDERMINE EQUAL ACCESS ARE
AT THE ROOT OF THE RACIAL GAPS PLAGUING U.S. SOCIETY
50 70
Voting
60
40 Over past 10 years, 25 of 50 States have
50
implemented voting restrictions which
30 40
disproportionately affect Black voters.
30
20
20
10 10
0
0
15-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75+
Of the 3.1 million American adults
1900
1920
1940
1960
1980
2000
2020
Source: Census Bureau, FRED Source: The Sentencing Project Source: Census Bureau, Federal Reserve
ENGAGE IN DISMANTLE
SUPPORT DIVERSITY ADDRESS SOCIAL
CORPORATE
AND INCLUSION
RACIAL GAPS
RESPONSIBILITY STRUCTURAL
IN HIRING, BARRIERS TO HIRING
INITIATIVES FROM RETENTION, BLACK TALENT
THE TOP AND FIRING
RECRUIT
M O RE
K
BLAC
BOARD DEVELOP
MEMBERS METRICS TO
ANALYZE,
REPORT,
AND REACT
6
Contents
The Economic Costs of U.S. Racial Inequality 7
COVID-19 Shines Light on Racial Disparities 9
Why Gaps Exist: Racism and Inequality Are Little Improved 18
Bias 19
Housing & Education 21
Policing & Voting 26
Income and Wealth 32
Closing Gaps Generates Growth 36
Racial Wage Gap 37
Racial Labor Segmentation Gap 40
Racial Education Gap 43
Racial Wealth Gap 48
Racial Housing Gap 52
Racial Investment Gap 59
How Do We Close the Gaps: Future Policy 66
What Can Governments Do? 67
What Can Companies Do? 79
What Can Individuals Do? 89
© 2020 Citigroup
7
A plethora of data, studies, and societal ills indicate the U.S. has yet to achieve the
point of racial equity, given the prevalence of major gaps in economic opportunity,
education, income, housing, and wealth that run along racial fault lines.
The COVID-19 pandemic and the deaths of several Black people while in police
custody in rapid succession have laid bare the United States’ longstanding problem
of discrimination against minority groups, especially against Black people.
Moreover, it has laid bare how inequality has produced real economic costs and
social losses.
These costs are most evident in racial gaps: wide numerical differences in key
social and economic indicators between Black and white Americans. These gaps
are apparent in unemployment, net worth, debt levels, wages, peak income,
financing for businesses, spending on education, and rates of imprisonment and
sentencing levels. The gaps in many cases remain wide 60 years after the Civil
Rights Movement. In some cases, including in homeownership rates and college
degree attainment, the gaps are wider now than in the 1950s and 1960s.
This report (1) identifies the underlying causes of the racial and economic
gaps exacerbated by the COVID-19 pandemic; (2) discusses the value of
closing gaps; and (3) outlines how governments, corporations, and
individuals can work together to eliminate gaps for good.
We discover that closing racial gaps is a pareto improvement to both the U.S.
economy and society. If racial gaps for Blacks had been closed 20 years ago, U.S.
GDP could have benefitted by an estimated $16 trillion. If we close gaps today, the
equivalent add to the U.S. economy over the next five years could be $5 trillion of
additional GDP, or an average add of 0.35 percentage points to U.S. GDP growth
per year and 0.09 percentage points to global GDP growth per year.
Closing the Black racial wage gap 20 years ago might have provided an
additional $2.7 trillion in income available for consumption and investment.
Providing fair and equitable lending to Black entrepreneurs might have resulted
in the creation of an additional $13 trillion in business revenue over the last 20
years. This could have been used for investments in labor, technology, capital
equipment, and structures and 6.1 million jobs might have been created per year.
1 “Racial Equity Primer,” Federal Reserve Bank of San Francisco, June 12, 2020.
© 2020 Citigroup
8
Closing the wage, housing, education, and business investment racial gaps can
help narrow the wealth gap, which is significant for facilitating homeownership,
business, and job creation, plus establishing a pipeline for intergenerational
wealth accumulation.
Figure 2. The Economic Case for Closing Racial Gaps is Highly Compelling
© 2020 Citigroup
9
Source: Shutterstock
Dual health and economic crises resulting The dual health and economic crises resulting from the coronavirus lays bare long
from the coronavirus lays bare long simmering racial tensions and inequities that have plagued the U.S for centuries.
simmering racial tensions and inequities in The overlay of deep job cuts, threat of eviction, hunger, business closures among
the U.S. minority groups, and uneven fiscal supports, with high rates of infections and
deaths, plus repeated incidences of police brutality involving Black Americans has
proven too great to ignore. The result not only has precipitated protests in the
streets, but also a general reassessment of the very soul of the nation. Specifically,
how past and current biases have embedded themselves into the economy and
society, and what should be done to rectify them.
Data reveal the burden from the pandemic While all racial and ethnic groups are suffering from the fall-out of the pandemic,
has fallen disproportionately on Black data reveal the burden is falling more heavily on certain demographics. Black
Americans and tangible and emotional persons, in particular, appear to have suffered greater job losses amid government-
hardships from the virus spilled into national ordered shutdowns; found themselves in industries that are essential but low
outrage after several high profile deaths of paying; possessed more pre-existing factors leading to COVID-19 mortality; owned
Blacks during altercations with police businesses that closed permanently or were unable to access Paycheck Protection
Program (PPP) loans; and reported elevated rates of food, income, and housing
insecurity amid the crisis. The tangible and emotional hardships of the virus impact
spilled over into national outrage about the deaths of several Black people during
altercations with the police. Most notably, the video-taped death of George Floyd.
The combination of the pandemic and deadly community policing tactics leads us to
revisit the problem of racial gaps in the U.S., and the case for closing them. First we
review the disproportionate impact of the virus on minority groups, and Black
persons in particular, plus the linkages to preexisting racial gaps.
© 2020 Citigroup
10
Health Divide
In NYC, ethnic minorities were more likely to Ethnic minorities were more likely to contract and perish from COVID-19. Death
both contract COVID-19 and die from rates tallied by the U.S. Center for Disease Control (CDC) for New York City — a
COVID-19 particularly hard hit region — showed mortality figures for Black/African American
persons (92.3 deaths per 100,000 population) and Hispanic/Latino persons (74.3)
were substantially higher than that of white (45.2) or Asian (34.5) persons. A Federal
Reserve Bank of New York study reveals there is a high significance of death from
COVID-19 and the existence of various conditions, including belonging to a low
income group, living in a densely populated urban area, and/or being a member of a
major minority group (Figure 4).2 Indeed, an overlay of COVID-19 deaths and U.S.
counties having large minority populations indicates a higher prevalence of
perishing from COVID-19 if one belongs to a racial minority: Black, Hispanic, and
Native American plus select Asian and Pacific Islander population groups (Figure 5).
Figure 4. Being a Minority with Low Income, and/or Residing in Densely Populated Urban Areas
Raised the Likelihood of Death from COVID-19
Federal data corroborate the racial disparity Federal data corroborate the racial disparity of COVID-19 deaths. The Centers for
of COVID-19 death Disease Control (CDC) stated that contributing factors included living conditions
(densely populated, residential segregation, multi-generational households,
incarceration), work circumstances (critical workers, lack of paid sick leave), and
underlying health conditions (lack of access to health insurance, serious underlying
medical conditions, stigma, and systemic inequalities). Regarding health conditions,
the SHADAC analysis of the American Community Survey (ACS) Public Use
Microdata Sample (PUMS) files reveals that although the number of uninsured
persons has fallen since passage of the Affordable Care Act in 2012, ethnic
minorities are still less likely to have health insurance (Figure 7).
© 2020 Citigroup
11
Figure 5. U.S. Counties with Large Number of COVID-19 Deaths Tend to Overlap with Counties Having Large Minority Populations
Figure 6. Persons Belonging to Minority Groups, Especially Black Figure 7. Insurance Coverage has Improved Since Obamacare Passage,
Persons, Suffered More Deaths Per Capita than White Persons But Minorities Are Still More Likely to be Uninsured
U.S. COVID-19 Deaths (Feb-Jun 2020) U.S. Uninsured Rates for the Nonelderly Population
by Race & Ethnicity
140,000 Deaths per 100,000 Persons (RHS) 140 35
Deaths (number) ACA/Obamacare
120,000 120 30
100,000 100 25
80,000 80 20
60,000 60 15
40,000 40 10
20,000 20 5
0 0 0
Hispanic American Asian Black More Native White 2008 2010 2012 2014 2016 2018
or Latino Indian than One Hawaiian African-American/ Black Asian
or Alaska Race or Other Hispanic/ Latino Other/ Multiple Races
Native Pacific
Islander
White
Source: CDC, Census Bureau and Citi Research Source: SHADAC analysis of the American Community Survey, Citi Research
Wealth and income gaps between Black The eroded sentiment among minorities amid the pandemic, and Black Americans
families and Hispanic, Asian, and white in particular, reflects not only policing and health care inequities, but also long
families have remained wide for last 40 simmering economic disparities. Both the wealth and income gaps between Black
years and Hispanic families and white and Asian families have remained wide over the
last 40 years for which the U.S. Census Bureau has collected data. The real median
income (Figure 8) and wealth (Figure 9) disparities continue to be stark for Black
Americans. These gaps have been exacerbated by business shutdowns amid the
coronavirus pandemic. In the latest Bureau of Labor Statistics (BLS) employment
report, the civilian unemployment rate in the U.S. continues to edge lower.
Nonetheless, jobless rates are falling for white persons faster than for other
minorities, and the unemployment rate for Black workers at 13.0 percent is the
highest (Figure 10). Moreover, the NBER reported there was greater business
destruction over the February-April 2020 span for Black-owned firms, in terms of
percentage decline, than for businesses owned by other ethnicities (Figure 11).
© 2020 Citigroup
12
Figure 8. Income Gaps for Black and Hispanic Figure 9. Wealth Gaps for Black And Hispanic Figure 10. Jobless Rate Remains Most Elevated
People Remain Wide People Have Not Improved for Black People in August 2020
U.S. Real Median Household Income U.S. Average Annual Interest, Dividend, U.S. Unemployment Rate: 16-Years+
(2018 CPI-U-RS Adj $) Rent & Property Income (2020, Seasonally Adjusted)
$3,000 20%
$90,000
$80,000 $2,500
15%
$70,000 $2,000
$60,000
$1,500 10%
$50,000
$1,000
$40,000 5%
$30,000 $500
$20,000 $0 0%
1972 1981 1990 1999 2008 2017 2003 2006 2009 2012 2015 2018 Jan Feb Mar Apr May Jun Jul Aug
White (Non-Hispanic) Black White/ All Other Races Black
Asian Hispanic White Black Asian Hispanic
Asian Hispanic
Source: Census Bureau, Citi Research Source: Census Bureau, Citi Research Source: Census Bureau, Citi Research
Insecurity
Black households have had more difficulty Managing the basics of daily living have been more difficult for Black households
managing the basics of daily living amid the amid the COVID-19 pandemic. Food sufficiency has been a greater challenge for
COVID-19 pandemic select households of color, and Black households in particular, during the COVID-19
pandemic. The Census Bureau’s Household Pulse Survey revealed that in June
2020, it was more likely the case for Black, Hispanic, and Other Racial category
households to have inadequate access to food during the pandemic than was the
case for white and Asian households. Black households were more likely to say that
they sometimes or often did not have enough to eat (Figure 12). Meanwhile, it was
more likely the case that Black, households fell behind on rent or mortgage
payments amid the coronavirus pandemic than white households (Figure 13). Black
households were also less confident they could make future housing payments than
were white households.
Figure 11. Black-Owned Businesses Suffered Brunt of COVID-19 Figure 12. Black Households Had Significant Challenges Related to
Disruptions Lack of Adequate Access to Food During the Coronavirus Pandemic
Demographic Group Losses of Businesses Due Food Sufficiency for Households
to COVID-19 Over Last 7-Days (June 2020)
Immigrant
100%
Female
Native
Latinx
White
Asian
Black
Total
Male
80%
0%
60%
-5%
40%
-10%
-15% 20%
-20% -17% -18%
-20% 0%
-25% -22% Hispanic White Black Asian Other
-25% -26% Races
-30% Did not report
-35% -32% Often not enough to eat
-36% Sometimes not enough to eat
-40% Enough food, but not always the types wanted
-45% -41% Enough of the types of food wanted
Source: NBER, Citi Research Source: Census Bureau Household Pulse Survey, Citi Research
© 2020 Citigroup
13
Figure 13. Black Households Are More Likely to Have Deferred Housing Payments and Have “No Confidence” that Future Payments Will be Met
Owner Housing: Deferred Mortage Payment Renter Housing: Deferred Rent Payment 'No Confidence' On Next Housing Payment
(% of Homeowner Population by Race) (% of Homeowner Population by Race) (% of Total Owners or Renters)
6% 4% 20%
5%
3% 15%
4%
10%
3% 2%
2% 5%
1%
1% 0%
Hispanic White Black Asian Other
0% 0%
Races
Hispanic White Black Asian Other Hispanic White Black Asian Other
No Confidence Mortgage Will Be Paid Next Month
May-20 Jun-20 Races May-20 Jun-20 Races
No Confidence Rent Will be Paid Next Month
Source: Census Bureau Household Pulse Survey and Citi Research
© 2020 Citigroup
14
Figure 14. Low-Pay Jobs Also Most Vulnerable to COVD-19 Disruption Figure 15. Minority Groups Slightly Harder Hit by Pandemic Layoffs
Vulnerable Private Production and Non-Supervisory Jobs Vulnerable COVID-19 Disruption Sectors
(Number of Jobs, Millions) (YoY Change in 2Q 2020 Employment & % of Employed Population by Race)
White Black Asian Hispanic
Sports & Entertainment 0 0%
-4%
Food Manufacturing (4,000)
-6%
Membership Associations & Orgs (6,000)
-8%
Education (8,000)
-10%
Automobile (10,000)
-12%
Travel & Attractions (12,000) -12%
-14%
Source: U.S. Private Sector Job Quality Index® (JQI), and Citi Research Source: Bureau of Labor Statistics and Citi Research estimates
Only 20% of Black workers were able to For Black persons who maintained their jobs, the split between essential and non-
work from home during the pandemic and essential work highlighted that the most hazardous jobs were also among those
Blacks tended to cluster in essential jobs with the lowest pay. According to the U.S. Bureau of Labor Statistics (BLS), only 30
with high exposure to infection percent of U.S. workers are able to telework (work-from-home or WFH). Hispanic
and Black workers were the least able to WFH (16 percent and 20 percent,
respectively). (Figure 16). The BLS also reported laborers who are below the 50th
percentile in terms of wage level were the least likely to WFH: <25th percentile (9
percent) and 25th to 50th percentile (20 percent) (Figure 17). Moreover, many of the
jobs deemed essential by governments were the least amenable to WFH (Figure
18). Of essential jobs with high exposure to infection, many of them are low wage
jobs in which Black workers are clustered (Figure 19). Healthcare, food service, and
child care stand out as low-wage, essential occupations employing large numbers
of Black employees.
© 2020 Citigroup
15
Figure 16. Only 20% of Black Workers Can Figure 17. Low Income Workers Less Likely to Figure 18. Low Wage Industries Less Amenable
Work from Home Work from Home to Work from Home
Share of Workers Who Can Telework Share of Workers Who Can Telework Share of Workers Who Can Telework
(by Race & Ethnicity, 2017–2018) (by Wage Level, 2017–2018) (by Industry, 2017–2018)
40%
37% Leisure & Hospitality 9%
Source: Bureau of Labor Statistics, Citi Research Source: Bureau of Labor Statistics, Citi Research Source: Bureau of Labor Statistics, Citi Research
Figure 19. Black Workers Are Overrepresented in Many of the Lowest Wage Jobs Considered High-Contact, Essential Services
Black Americans in High-Contact Essential Services
Nursing, Psychiatric & Home (By Annual Income, % Share)
Health Aides
40% Cooks
35%
Agriculture and Food Processors
30%
Childcare Workers
25% Medical Assistants
Retail Salespersons
20% Food Prep Workers Food & Beverage
15% Service Workers
10%
5%
0%
$28,540 $25,200 $28,480 $23,240 $33,610 $23,730 $24,200 $21,700
Note: Dotted line denotes Black workers as a percent of the civilian non-institutional population 20 and over or 12.6 percent.
Source: McKinsey Global Institute analysis, U.S. Bureau of Labor Statistics, Citi Research estimates
© 2020 Citigroup
16
Uneven Relief
From the perspective of recovery, minority- The CARES Act of 2020 legislated the Paycheck Protection Program (PPP), which
owned firms received Federal government provided loans to businesses suffering coronavirus disruptions. The potentially
supports later forgivable loans were designed to encourage firms to invest and retain workers until
domestic demand improved. A Bloomberg News analysis of Small Businesses
Association (SBA) data revealed that in the initial wave of the program, minority-
owned firms received fewer loans as a share of the total number of minority-owned
businesses (17 percent) than did white-owned firms (27 percent). The percentages
improved and largely evened out in the second tranche of PPP loans at 75 and 72
percent, respectively (Figure 20). Nonetheless, minority firms found themselves
shut-out of the initial rounds of relief and struggled to receive funding from large
financial institutions at the outset of the pandemic disruptions, as the availability of
community banks expedited lending (Figure 21).
Figure 20. Minority-Owned Firms Received COVID-19 Relief Later than White-Owned Firms
First Round: Percentage of small businesses receiving PPP Second Round: Percentage of small businesses receiving PPP
loans in majority white & predominantly minority Congressional loans in majority white & predominantly minority Congressional
districts (April 3-16) districts (through June 30)
40
35
30
25
20
15
10
0
1 2 3 4 5 6 7 8 9 10 11 12
Week
Source: Bloomberg News
© 2020 Citigroup
17
Simmering Tensions
The U.S. has been gripped by protests In addition to the disruption from COVID-19, the U.S. has also been gripped by
fueled by a conflagration of inequality, protests fueled by a conflagration of inequality, racism, and police brutality. The civil
racism, and police brutality unrest comes against a backdrop of disproportionately higher numbers of deaths for
minorities, especially Black persons from COVID-19, and elevated unemployment
figures for Black Americans amid the pandemic-induced U.S. recession. Roughly
1,000 people per year die during altercations with the police (Figure 22). Nearly half
of them are racial minorities, and Black persons have a higher share of fatalities per
capita (Figure 23). A number of these deaths have come on account of mishandling
by police forces, which have been linked at times to long-standing social and racial
issues. In general, the U.S. has lost ground relative to other advanced economies,
and even the world, in terms of discrimination and violence against minority groups
(Figure 24).
Figure 22. Roughly 1,000 People/Yr Die in Altercations with the Police Figure 23. Police-Related Deaths Per Capita is Highest for Black People
Number of People in Fatal Police Shootings People in Fatal Police Shootings
500
0.8% (Deaths per Capita)
400
0.6%
300
0.4%
200
100 0.2%
0 0.0%
White Black Hispanic Other Unknown 2017 2018 2019 2020
2017 2018 2019 2020 White Black Hispanic
Source: Statista.com, Citi Research Source: Statista.com, Citi Research
Figure 24. The U.S. Has Lost Ground Relative to Other Advanced Economies and the World
Regarding Discrimination and Violence Against Minority Groups
Discrimination & Violence Against Minorities
(0=low, 10=high)
8
2
2013 2014 2015 2016 2017 2018
U.S. World Canada Germany
France U.K. Australia Japan
Source: The Social Progress Imperative, Citi Research
© 2020 Citigroup
18
Closing racial gaps in the U.S. 20 years ago Moreover, societal inequities have manifested themselves into economic costs,
could have generated $16 trillion in GDP which have harmed individuals, families, communities, and ultimately the growth
and well-being of the U.S. economy. If the racial gaps in wages in the U.S. had
been closed two decades ago, there might have been an additional 0.2 percentage
point to real GDP growth per year. Adequate access to housing credit might have
produced 770,000 new Black homeowners. More Black students with university and
advanced degrees might have generated an additional $90 to $113 billion in income
that could have contributed to consumption. More than 6 million jobs per year might
have been added and $13 trillion in cumulative revenue gained if Black-owned firms
had equitable access to credit. The global implications are also apparent given the
U.S. contributes a one-third share of growth to the world economy.
Figure 25. What the United States Could Have Gained by Closing Racial Gaps 20 Years Ago
© 2020 Citigroup
19
Bias
The results of policies creating and The persistence of racially-biased attitudes, coupled with the implementation and
perpetuating bias produce inequality maintenance of policies enshrining these attitudes, constitute what is often termed
as systemic racism. Biases may be conscious or unconscious. Nonetheless, the
result of policies creating and perpetuating bias produce inequality. Even when the
biases fade, the policies may linger, rendering the inequality multi-generational as it
becomes interwoven with the way things are done: in broader society, government,
corporations, and/or institutions.
Bias plays a central role in economic and Bias, whether conscious or unconscious, plays a central role in economic and social
social outcomes for Black Americans outcomes for Black Americans. Building upon the bias seen in businesses financing,
there are numerous cases of bias within the hiring spectrum and moreover from a
consumption prospective. As discussed by Greenwald and Krieger, 78 percent of
those who took the Harvard Implicit Association Test (IAT) displayed implicit bias,
with 85 percent of whites showing bias against Blacks. The overarching message in
the study was that most people possess bias, and due to its infinitely engrained
status, people are generally unware of their own bias despite its profound impact
upon behavior and attitude.3 One study, which sent out resumes with traditionally
white-sounding names like Emily and Greg and also resumes with Black-sounding
names like Lakisha and Jamal, found a white applicant was 49 percent more likely
than their Black counterpart to receive a call back in Chicago and 50 percent more
likely in Boston.4 This kind of systematic discrimination is inherently exclusionary of
Black people from the workforce, demonstrating the significant impact of bias, be it
unconscious or not. A 2015 experiment involving baseball card auctions on eBay
again highlighted the significant difference racial bias can have on economic
outcomes. Baseball cards held by dark-skinned/African American hands sold for
approximately 20 percent less than cards held by light-skinned/Caucasian hands,
despite the cards held by the African American hand being more valuable on
average.5 Without addressing bias directly, the challenge of equality will remain
profound.
© 2020 Citigroup
20
The Civil Rights Movement that began in the late 1950s won African Americans basic rights long denied to them,
inspired other discriminated groups to fight for their own rights, and had a deep effect on American society.
After the Civil War, the 13th, 14th, and 15th amendments to the Constitution were supposed to guarantee equal rights
for African Americans. But in the South, segregation of the races, the denial of opportunities to African Americans, and
their disenfranchisement continued in a system known as "Jim Crow laws." In 1896, in a controversial decision, the
United States Supreme Court, in the case Plessy v. Ferguson, upheld the "separate, but equal" facilities for the races.
During World War II, some progress on equality was made as President Roosevelt outlawed discrimination in the
defense industry. Moreover, as the country fought for freedom around the world, many African-Americans began to
wonder why they did not enjoy those freedoms at home. In 1954, a series of landmark cases testing segregation
pressed by the National Association for the Advancement of Colored People (NAACP) culminated in the Supreme
Court's ruling in the Brown v. Board of Education case, which unanimously outlawed segregation of public schools.
On December 1, 1955, the modern civil rights movement began when Rosa Parks, an African-American woman, was
arrested in Montgomery, Alabama for refusing to move to the back of the bus. A new minister in town, Martin Luther
King, Jr., organized a community bus boycott, which eventually led to the desegregation of the bus line and launched
protests across the South. In 1960, spontaneous sit-ins by students began at lunch counters throughout the South,
and in 1961, "Freedom Riders" boarded inter-state buses to test and break down segregated accommodations. These
protests were peaceful, but they were met with violent, and often, brutal force — televised images helped win support
from sympathetic whites in the North. In 1963, TV viewers saw hundreds of thousands of African Americans and
whites march on Washington, DC to end racial discrimination. It was there that Martin Luther King, Jr. delivered his
famous "I Have a Dream" speech.
After the assassination of President Kennedy and the landslide election of Lyndon Johnson, Congress passed the
landmark Civil Rights Act of 1964 and the Voting Rights Act of 1965, which outlawed racial discrimination in public
accommodations and schools and removed obstacles to voting. As part of the Civil Rights Act, the Federal
government would withhold funds from any state that did not desegregate, and as Health, Education & Welfare
Secretary, John Gardner was the man holding the purse strings. In 1967, he threatened to cut off $95.8 million in
Federal welfare funds to the state of Alabama unless it complied with desegregation guidelines. As Gardner
remembers, "Civil rights was real hardball."
The passage of the Voting Rights Act, in particular, prompted a massive effort to register African Americans
throughout the South to vote. Again, this was often met with violent resistance. After 1966, the Civil Rights Movement
began to fracture between those who favored non-violent means to achieve integration and younger, more radical
leaders who wanted to fight for "Black power." This split alienated some white allies, a process that was accelerated
by a wave of rioting in Black neighborhoods in Northern cities throughout 1965 and 1967.
After Dr. King was assassinated 1968 and more rioting ensued, the Civil Rights Movement as a cohesive effort
disintegrated. Yet the push for civil rights continued, with African Americans making gains economically, politically, and
socially. Moreover, other discriminated groups were inspired by the Civil Rights Movement and borrowed its tactics.
Over the 1960s and 1970s, gays and lesbians, women, Native Americans, and people with disabilities pushed for their
own inclusion in American society. Source: PBS.org.
© 2020 Citigroup
21
Housing Segregation
Housing discrimination from 1940 through Past discriminatory housing practices have contributed to economic inequality for
the 1960s prevented Black Americans from Black Americans in the present. According to the Economic Policy Institute (EPI),
owning homes and subsequently building systemic and legalized housing discrimination over the 1940 to 1960 period
intergenerational wealth prevented Black families from achieving homeownership, a critical staple for
building intergenerational wealth.6 Moreover, the disparity in homeownership was
perpetuated by continued discrimination in housing, through government, private
sector, individual, and even technological choices and actions, keeping the racial
gap wide (Figure 26). As recently as 2019, a popular Internet platform was cited for
discriminatory practices by its search engines according to the Fair Housing Act.7
Figure 26. The Gap Between Black and White Homeownership Rates Remains Wide
New Deal policies predating WWII enshrined In an effort to combat a housing shortage in the mid 1930s the Federal Housing
modern housing segregation and Administration (FHA) refused to insure mortgages in and near Black neighborhoods,
discrimination in the U.S. a practice known as redlining. The most desirable neighborhoods for mortgages
were designated green, and the least, typically predominantly Black neighborhoods,
were designated red.
6 da Costa, P., “Housing discrimination underpins the staggering wealth gap between
blacks and Whites,” Economic Policy Institute, April 8, 2019.
7 Aranda, C., “Fighting Housing Discrimination in 2019,” Urban Institute, April 1, 2019.
© 2020 Citigroup
22
Prior to the Fair Housing Act in 1968, One study revealed that between 1934 and 1968, 98 percent of home loans
policies by the government as well as approved by the Federal government were given to white applicants.8 The FHA also
individual and private sector choices subsidized builders creating large tracts of housing in suburban areas as long as
perpetuated housing segregation those projects excluded Black homebuyers. Meanwhile, minorities were directed to
urban housing projects. These urban neighborhoods, where Black family housing
was permitted, were often cut off from resources and subject to underinvestment.9
Individual and private sector choices also perpetuated housing segregation. Prior to
the Fair Housing Act of 1968, residents of neighborhoods were allowed to create
contracts called restrictive covenants to establish and maintain a particular racial
makeup. Minorities, particularly Black persons, were prevented from moving into the
suburbs or predominantly white sections of metropolitan areas either legally or
through intimidation. Maps of Black neighborhoods were redlined and/or persons
wishing to leave these neighborhoods for majority-white neighborhoods were
threatened with violence.10 Realtors were threatened with the loss of their licenses if
they showed homes to Black families outside of prescribed areas. These activities
not only upheld segregation, but also concentrated poverty and underdevelopment
in geographic locations.
Housing discrimination became less overt Housing discrimination did not end with the Fair Housing Act. Tactics used to
after the Fair Housing Act including reinforce segregated neighborhood boundaries and majority-white suburbs became
practices like gentrification, which decreased less overt. Real estate agents would show potential Black home purchasers houses
the affordability of homeownership for in predominantly Black neighborhoods and decline to show many, if any, in other
Blacks neighborhoods. Banks would continue to decline to provide financing for mortgages
to Black homeowners, and insurance companies would refuse to insure mortgages
assumed by Black owners. “Gentrification” in urban areas contributed to the
decrease in affordability of housing for Black households. Realtors, renovators, and
builders played a role as neighborhoods formerly populated by a certain racial or
ethnic group were renamed, homes were upgraded to “luxury” status raising the
price point, or upscale homes were built in low-income neighborhoods, inviting other
such projects. These developments can lead to the displacement of current
residents resulting in a change in demographics.11 Governments can frustrate
affordable housing availability via zoning laws limiting construction of multi-family
units or expansion of neighborhood boundaries. Even positive community
revitalization activities by governments, such as investment in transit infrastructure,
can have the negative externality of inviting gentrification that affects Black
communities.
Barriers to homeownership have resulted in Fifty years of barriers to Black home ownership means that Black families have
Black families holding the least amount of missed out on the benefits of home price appreciation — a key ingredient to wealth
housing wealth accumulation. The Federal Reserve’s Survey of Consumer Finances reported that
as of 2016, Black homeowners continued to hold the least amount of housing
wealth compared to other racial groups (Figure 27). The median amount of housing
wealth for a Black family was $124,000, while the median amount for white families
was $200,000, Hispanic households $158,000, and other households $240,000.
8 Fulwood III, S., “The United States’ History of Segregated Housing Continues to Limit
Affordable Housing,” Center for American Progress, December 15, 2016.
9 Gross, T., “A 'Forgotten History' Of How The U.S. Government Segregated America,”
© 2020 Citigroup
23
Black homeowners also don’t see the same A Princeton University study notes that even among Black families owning homes,
price appreciation in their homes as other properties do not appreciate at the same rate as properties held by other ethnic
homeowners groups.12 This is a reflection of the location of Black-owned homes in areas with
generally lower home values and/or bias in the way others view Black homeowners.
Even though the Great Recession’s housing crisis featured a wave of foreclosures,
in the subsequent ten years, white homeowners were more likely to see some home
price appreciation (+3 percent on average) versus Black families who didn’t see a
recovery (-6 percent on average) (Figure 28).13 Indeed, past housing policies have
concentrated Black families into higher-poverty neighborhoods with fewer of the
amenities that help raise home values. Moreover, even higher-income Black
families are still more likely to own homes in impoverished, predominately Black
neighborhoods (Figure 29). Black families have also not benefited from tax
incentives related to homeownership, including mortgage interest deductions
(Figure 30).
Figure 27. Black Families Hold the Least Amount of Housing Wealth Figure 28. Black Homeowners Experienced Home Price Depreciation
Nonfinancial Assets: Holdings of Primary Median Percentage Change in Home Price Index
Residence (Median, $) Among Black and White Borrowers
$350,000 (by Borrower Income Level, 2006 - 2017)
6% 5%
$300,000 4% 3%
2% 1%
$250,000
0%
$200,000 -2%
-2%
$150,000 -4%
-6%
$100,000 -6%
-8%
-8%
$50,000 -10%
Low (up to 80% of Moderate (81% to High (morethan
$0 area median 120% of area 21% of area
1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 income) median income) median income)
White Black Hispanic Other/Multiple Races Black Borrowers White Borrowers
Source: Federal Reserve Survey of Consumer Finances, Citi Research Source: Center for American Progress, Citi Research
© 2020 Citigroup
24
Figure 29. Wealthier Black Families Live in Black Neighborhoods Figure 30. Homeowners Benefit From Special Tax Treatment in the U.S.
Average Black Population Percentage in Census Foregone Tax Revenue Due to Tax Relief for
Tracts Where Borrowers Bought Homes Access to Home Ownership
(by Census Tract Income Level (2013-2017) (Percentage of GDP, 2019 or latest year available)
45% 1.6%
40% 1.4%
35% 1.2%
30% 1.0%
25% 0.8%
20% 0.6%
0.4%
15%
0.2%
10%
0.0%
5%
Canada
U.S.*
Norway
U.K
Mexico
New Zealand
Australia*
Netherlands
Belgium
Finland
Poland*
Chile
Sweden*
Luxembourg*
0%
Low (up to 80% of Moderate (81% to High (more than
area median 120% of area 21% of area
income) median income) median income)
High Income Black Borrowers High Income White Borrowers Other types of tax relief Mortgage interest deduction
Source: Center for American Progress, Citi Research Note: * indicates that spending is missing for one of the policy instruments and the
reported amount is therefore a lower-bound estimate. Source, OECD, Citi Research
14 Chingos, M. M. and Kristin Blagg. 2017. “Do Poor Kids Get Their Fair Share of School
Funding?”, Urban Institute.
15 Bhargava, S., 2018. “The Interdependence of Housing and School Segregation,” Open
© 2020 Citigroup
25
Figure 31. Greater Racial Housing Segregation Often Means Less Public School Funding
School Funding Per Student ($) vs. Degree of Racial
Housing Segregation (0=No Segregation)
$2,000 AK
Student ($)
DE MS NY RI
$1,400 KY VT
WY AR PA
TN AL TX AZ IL
$1,200 CA MI
SC ME NE GA MO
FL
NC OK IAIN KS OH
$1,000 NV MA
ID WA MDNH WI
OR CT NJ
$800 MN VA
CO
UT
$600
0.00 0.10 0.20 0.30 0.40
Dissimilarity Index (0.0-1.0)
Source: Urban Institute, U.S. Department of Education, National Center for Education Statistics, Common Core of
Data (CCD), "National Public Education Financial Survey," 2016-17
Figure 32. More Than One-Third of States Rely on Property Taxes as a Major Source of Public School Funding
Revenues for Public Elementary & Secondary Schools Revenues for Public Elementary & Secondary Schools
(by Source of Funds & State or Jurisdiction, 2016-17) (by Source of Funds & State or Jurisdiction, 2016-17)
New Hampshire Georgia
Connecticut Mississippi
Nebraska Utah
Massachusetts California
Maine Michigan
New Jersey Washington
New York Montana
Rhode Island Kentucky
Illinois Wyoming
Texas Indiana
Missouri Maryland
South Dakota
Nevada
Pennsylvania
North Dakota
Wisconsin
Delaware
Florida
North Carolina
Ohio
Idaho
Colorado
Tennessee
Oregon
Virginia Louisiana
South Carolina Minnesota
Arkansas Kansas
Iowa Alabama
West Virginia New Mexico
Oklahoma Alaska
Arizona Vermont
District of Columbia Hawaii
0 20 40 60 80 100 0 20 40 60 80 100
Federal State Other Local Property Tax Private Federal State Other Local Property Tax Private
Source: U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "National Public Education Financial Survey," 2016-17
© 2020 Citigroup
26
Community Policing
The War on Drugs enhanced prosecution of Extraordinary levels of incarceration as a consequence of bias within the criminal
Blacks through disparate application of justice system are evident from movements such as the War on Drugs. Following
punishment the Rockefeller drug laws of the 1970s and born from the Reagan era, the War on
Drugs has become interchangeable with the enhanced prosecution of Blacks. The
perceived injustice is only amplified when considering the disparate application of
punishment when associated with crimes committed predominantly by Blacks, such
as the abuse of crack-cocaine, with 88 percent of Federal crack defendants Black
by 2012, in comparison to crimes committed predominantly by whites crime
(powdered cocaine) (Figure 33).16 Though the original 1986 100-1 ratio (500 grams
of powdered cocaine and just 5 grams of crack cocaine incurred the same five-year
sentence) has been reduced by the 2010 Fair Sentencing Act, a significant disparity
remains with the current ratio standing at 18-1.17 According to recent Bureau of
Justice Statistics, there has been material improvement in incarceration rates in the
U.S., with the rate for Black Americans declining the most; down 34 percent since
2006.18 Nonetheless, the share relative to the entire Black population remains
stubbornly high (Figure 34).
Figure 33. Drug Offences for Black Prisoners Are Overwhelmingly for Crack Cocaine
Powder Crack Meth-
Cocaine Cocaine Heroin Marijuana amphetamine Other
White 12.6 4.2 12.5 24 48.3 50.9
Black/African American 32.3 88.1 38.8 13.9 2.5 28.4
Hispanic/Latino 54.2 7.1 48 59 45 9
Asian/Pacific Islander 0.5 0.3 0.7 1.7 3 10.8
American Indian/Alaska Native 0.4 0.3 0.1 1.5 1.2 0.8
Source: Bureau of Justice Statistics, Citi Research
Unequal application of drug-related Reductions in incarceration rates notwithstanding, Black Americans remain far more
sentencing has led to mass-incarceration likely to be imprisoned than their other racial counterparts — almost twice as likely
leading to a much higher likelihood of Black as Hispanic Americans and five times more likely than white Americans. As a result,
incarceration the United States prison population is disproportionally Black dominated (33
percent) relative to their presence in the U.S. total population (12 percent). A similar
trend can be seen with the Hispanic population (23 percent of prison population vs
16 percent of U.S. population), in contrast to white Americans who make up just 30
percent of the prison population despite being 63 percent of total U.S. population.
Startlingly, one in every three Black boys born can expect to be sentenced within
16 Banks, R. R., 2003. “Beyond Profiling: Race, Policing, and the Drug War.” Stanford
Law Review, Vol. 56, (3), pp. 571–603. "Cruel and Unusual: Disproportionate Sentences
for New York Drug Offenders, 1997 " Human Rights Watch Vol. 9 (2) (B). Internet.
Available: http://www.hrw.org/summaries/s.us973.html.
17 U.S. Department of Justice. “Drug Offenders in Federal Prison: Estimates of
© 2020 Citigroup
27
their lifetime, versus one in every six Latino boys and one in every seventeen white
boys.
This disparity is even more apparent when reviewing individual age ranges, with 1
in 20 Black Americans between the ages of 35 and 39 in either State or Federal
Prison. Moreover, several studies have shown the percentage difference in
sentence length for Black versus white prisoners can be from 5 to 20 percentage
points (Figure 35). Though only accounting for 5 percent of the global population,
the U.S. is home to 25 percent of the world’s prison population, recording the
highest incarceration rate globally. Aside from the racial inequality, the cost of
maintaining this system is outsized, costing $81 billion in 2012 alone (with the rate
of spending three times that on Pre K-12 education over the last 30 years).19
Figure 34. Imprisonment Rates Have Fallen, But Still Remain Elevated Figure 35. Sentences for Black Prisoners Can Exceed Those of White
for Black U.S. Residents Offenders by 5 to 20 Percentage Points
Imprisonment Rates of U.S. Residents Differences in Sentence Length for Male Offenders
(Per 100,000 in Each Demographic Group) (%) (% Difference in Sentence Length)
1,800 25
White
1,600 Black 20
1,400 Hispanic
15
1,200 10
1,000 5
800 0
600
-5
400
-10
200 Black Male vs. Hispanic Male vs. Other Male vs.
White Male White Male White Male
0
2008 2010 2012 2014 2016 2018 Koon PROTECT Booker Gall Post-Report
Source: Bureau of Justice Statistics, Citi Research Source: US Sentencing Commission,1999-2016 data files, Citi Research
Incarceration limits an ex-offenders ability to Incarceration also limits the ability of Black ex-offenders to obtain employment, earn
obtain employment, earn income, and build income, and build wealth. The Brookings Institute highlights several key facts linking
wealth low job prospects to incarceration and vice-versa. Former prisoners fare poorly in
the labor market, with only 55 percent earning any income in the first year of release
and median earnings of only $10,090. Prisoners generally had poor labor market
prospects before becoming incarcerated. An estimated 51 percent of prime-age
men were employed two full years prior to imprisonment, with median earnings of
only $6,250. Growing up in poverty dramatically increased the likelihood of
incarceration. Boys raised in families in the bottom decile of the income distribution
were 20 times more likely to be in prison in their early 30s than those born in the top
decile. Notably, boys from the poorest families were 40 times more likely to be
imprisoned than boys from the wealthiest families. Brookings finds that an
astounding one-third of men age 30 without any annual earnings are either
incarcerated or ex-prisoners. Moreover, where one grows up is highly correlated
with the likelihood of incarceration. Imprisonment rates can vary by a factor of 30
between zip codes in the same city.20
© 2020 Citigroup
28
Bias against ex-prisoners leads to a poor A poor earnings trajectory post-imprisonment is linked to bias. Unemployment
earnings trajectory post-imprisonment following incarceration is often a consequence of the “prison penalty,” where
employers discriminate against persons with criminal records. Evidence of a
criminal record reduces employer call-back rates by 50 percent.
Studies suggest that formerly incarcerated persons do desire to work: among 25-44
year olds, 93.3 percent were active in the labor market compared to 83.8 percent of
the general population of the same age. However, unemployment rates for formerly
incarcerated persons can be five times that of persons who were never imprisoned.
Unemployment rates for Black female former inmates were 44 percent before
COVID-19, and the rate for Black males was 35 percent. Black women are also
more likely to work part-time jobs after imprisonment than other racial groups.
Figure 36. Incarceration and Poor Earnings Prospects Are Interrelated Figure 37. Ex-Prisoners Are 5x More Likely to be Unemployed
Income Before and After Incarceration Pre-COVID-19 Unemployment Rates
60% 45%
(% of Incarcerated Population) (% of Civilian Labor Force) 44%
51%
40%
50%
45% 35% 35%
40% 36% 36% 30%
25%
30% 23%
20%
18%
20% 15%
11% 10%
10% 6% 8%
5% 5%
2% 1%
0% 0%
No 1 to $15,001 to $25,001 to $50,001+ General Population Formerly Imprisoned
Earnings $15,000 $25,000 $50,000 Population
Earnings 2-Years Ahead of Imprisonment Black Women Black Men
First Year After Imprisonment White Women White Men
Source: Brookings, Citi Research Source: Prison Policy Initiative, Citi Research
Voting Power
Felony disenfranchisement has a This cycle of mass incarceration becomes increasingly problematic when
disproportionate impact on Black Americans considering the impact of felony disenfranchisement and its disproportionate impact
due to the cycle of mass incarceration on people of color. As of 2016, one in every thirteen Black American adults could
not vote due to felony convictions, with more than 20 percent of Black adults in four
states (Florida, Kentucky, Tennessee and Virginia) disenfranchised.21 There is a
sense of cyclicality within disenfranchisement as 27 percent of non-voters were
rearrested versus only 12 percent of voters. It has been argued that political
elections would have seen differing outcomes should disenfranchisement not have
been established, including seven Senate races between 1970 and 1998, as well as
the infamously tight Gore-Bush Presidential election of 2000.22 Though there has
been significant progress, with 25 States modifying their felony disenfranchisement
provisions since 1997 (10 repealing or amending lifetime disenfranchisement laws),
it still stands that of the total 3.1 million American adults estimated as banned from
voting, 2.2 million are Black Americans.23
2010.”, DC: The Sentencing Project., Uggen, C., Larson, L., & Shannon, S. 2016. “6
© 2020 Citigroup
29
The forced reduction in political clout is only compounded by already lower voter
turnout rates for Black and minority voters versus their white counterparts.
Excluding record turnout in 2008 (69.1 percent) during the Obama election cycle,
Black voters have underperformed white voters with regards to turnout; 51.4
percent vs. 54.2 percent on average from 2000-2018.24
With the U.S. set to become minority white The Black and minority vote is set to become increasingly significant as the U.S. is
by 2045 based on demographic trends, the forecast to become minority white by 2045.25 With white voters at less than 50
Black and minority vote will become percent for the first time, the influence of minority voters will be enhanced with the
increasingly significant Black vote making up 13.1 percent of the vote, Hispanic 24 percent and Asian 7.9
percent. This trend is compounded by the emergence of Gen Z as part of the
electorate. As a group, ‘minority majority’ is set to potentially be reached in Gen Z
as early as this year (2020), with the 18-29 age range achieving this by 2027.26
Perhaps unsurprisingly Gen Z voters are set to be some of the most ‘liberal’ yet,
essentially reflecting Millennial positioning on key issues.
Younger voters (Gen Z) are more ethnically What is apparent is that Gen Z voters from both sides of the aisle are more
diverse and are more consolidated around consolidated around core social issues than their older counterparts. Significantly,
core social issues than older voters over 60 percent of both Gen Z and Millennial voters view increasing racial and
ethnic diversity as a good thing for society, versus only 48 percent of Boomers.
25 Frey, W.H., “The US will become ‘minority White’ in 2045, Census projects,” Brookings
© 2020 Citigroup
30
More importantly, even amongst Republican Gen Z voters, a majority still agree with
that statement, versus only 30 percent of Republican Boomers.27
This disparity between younger and older Republicans can be found elsewhere,
with a majority of Republican Gen Z also in favor of the government having a larger
role in society. Sixty-six percent of American Gen Z and Millennials also hold the
opinion that the Black population in the U.S. is treated less fairly than the white
population vs. only 50 percent of Gen X. As the younger generations gain
prominence amongst the voting population, first as a support to the already
established Millennial voting trends and then in their own right, they will demand
more political attention. With Gen Z voters composing 9 percent of the 2020
electorate (up from 4 percent in 2016), versus the declining share of Baby Boomers
(from 68 percent in 2016 to only 4/10 in 2020), policymakers may need to be more
conscientious of this new group of voters.28
Figure 39. Minority Voters Are Gaining Ground Figure 40. Potential Voters Are Skewing Younger (i.e.,<40 Years of Age)
Race of Voters in Mid-Term Elections Eligible Voters by Age in 2020
(% of total) 30%
1% 1% 28%
100% 2% 2% 2% 2% 3% 27%
4%
4% 4% 5% 5% 25%
6% 7% 7% 25%
90% 10% 9% 10%
11% 11% 10%
80% 11% 12%
12%
20%
70%
60%
15%
50%
85% 85% 82% 82%
40% 80% 78% 76% 10%
73% 10% 9%
30%
20% 5%
10%
0% 0%
1990 1994 1998 2002 2006 2010 2014 2018 Boomer Millenial Gen X Silent + Gen Z
White Black Hispanic Asian (1946-64) (1981-96) (1965-80) (pre-1946) (After 1996)
Source: The Pew Research Center, Citi Research Source: The Pew Research Center, Citi Research
Recent events have rallied and inspired the political activism of many young and
Black voters — traditionally two groups with lower-than-average voter turnout.
Given the demographic makeup of Gen Z is increasingly diverse (minority majority
by 2020 with Blacks (14 percent) and Hispanics (25 percent) the largest minority
groups), its unsurprising that movements such as ‘#BlackLivesMatter’ had the
support of over 60 percent of Millennials and Gen Z, versus only 37 percent of
Boomers.29 Should young minority voters translate this intensified interest in
addressing the issues most prominent to themselves into presence at the polls, then
there is a real argument to stress the significance and impact this group can have.
27 Parker, K., Graf, N., and Ruth Igielnik “Generation Z Looks a Lot Like Millennials on
Key Social and Political Issues”, Pew Research Center, January 17, 2019.
28 Parker, K. and Ruth Igielnik.“On the Cusp of Adulthood and Facing an Uncertain
Future: What We Know About Gen Z So Far”, Pew Research Center, May 14, 2020.
Cilluffo, A. and Richard Fry “An early look at the 2020 electorate,” Pew Research Center,
January 30, 2019.
29 Parker, K., Graf, N., and Ruth Igielnik “Generation Z Looks a Lot Like Millennials on
Key Social and Political Issues”, Pew Research Center, January 17, 2019.
© 2020 Citigroup
31
Voter suppression, although less blatant Voter suppression remains a persistent threat to full participation of Black voters in
than during the Jim Crow era, still exists the U.S. democratic process. The connection between voter suppression and race
today did not end in the 1960s. Tactics that disenfranchise voters of color, and particularly
Black voters, are still in existence today, although they are less blatant than those
deployed during the Jim Crow Era. The Voting Rights Act of 1965 significantly
curtailed voter suppression. In 1966, the Supreme Court invalidated poll taxes.
However, a 2013 Supreme Court decision Shelby County v. Holder vacated key
provisions of the Voting Rights Act opening the door for state and local governments
to erect barriers to voting for racial minorities. The main element in the 2013
decision ended the requirement of state and local governments to obtain
preclearance from the Federal government before changing voting rules. Over the
last 10 years, 25 of 50 states have implemented new voting restrictions. Ten of
those states have sizable Black populations: Mississippi, Alabama, Florida, Georgia,
North Carolina, South Carolina, Virginia, Illinois, Michigan, and Tennessee
according to the Brennan Center.
States have enhanced barriers to voting New restrictive voting rules include requiring voters to present government-issued
since 2013 photo IDs, which disproportionately affects the youngest and oldest voters, as they
are less likely to have a driver’s license or permit (Figure 41). There is even
disparity among types of IDs. In Texas for example, handgun licenses, which are
predominantly held by white persons (82 percent), are permissible (Figure 44). But
student IDs are disallowed, despite more than half of the students of the University
of Texas system being racial or ethnic minorities (51 percent). While the stated aim
of voter rules is to combat voter impersonation fraud research by the Brennan
Center for Justice has found scant evidence of such types of behavior. Other
barriers to voting include restrictions on early voting, which is largely used by
minority voters; third party voter registration drives that often target Black voters;
voter list purges, which have eliminated 33 million voters from the rolls over the
2014-2018 period (Figure 43); and exact matches of voter registration form data
and IDs. Other tactics include not upgrading technology; moving or closing polling
stations without notifying voters; shortening voting hours; restricting early voting on
weekends when Black voters are likely to vote; shutting Departments of Motor
Vehicles (DMVs) in minority communities where heavy voter registration takes
place; and/or not properly training poll workers. Federal courts have ruled that many
voting restrictions have been implemented with the aim to racially discriminate.
Figure 41. Black Voters Are More Likely to Not Figure 42. In Some States, Like North Carolina, Figure 43. Several States with Notable Minority
Have Government Issued Photo IDs Black Voters Are More Likely to Vote Early Populations Are Engaged in Heavy Voter
Registration Purges: Percent of Lists Purged
Voting-Age Citizens in U.S. Without Percentage of Early Voters in 2012
Current Government-Issued Photo ID North Carolina Elections
Source: Brennan Center. Citi Research Source: Brakebill vs Jaeger, Citi Research Source: Brennan Center. Citi Research
© 2020 Citigroup
32
Figure 44. Handgun Licenses Are Acceptable Forms of ID for Voting in Figure 45. Many States with Large Minority Populations in the South
Texas, but Student IDs Are Not and West have Closed Polling Stations
Texas: Number of Handgun Licenses Issued (2018) Number of Polling Places Closed (2012-2018)
1,713 8,406 18 29 6
1% 2% 28,359 214 1% 2% 0%
8% 6,033 13%
2%
72 320
15,496
4% 20%
5%
96
6%
Source: Texas Department of Public Safety, Citi Research Source: The Leadership Conference Education Fund, Citi Research
Peak Income
Peak earnings are lower for Black and An extended history of job discrimination, plus unequal access to quality education
Hispanic males than white males and occur in the U.S., have capped lifetime income prospects for many Black Americans.
at a younger age Census Bureau data reveal that as of 2018, it was still the case that male Black and
Hispanic workers would see peak income earlier in their careers (age 40s), and at a
far lower level (~$40,000) than their white male peers (early 50s and ~$65,000)
(Figure 46). The gap between peak income between Black and Hispanic workers is
even greater relative to Asian male workers (~$80,000), even though Asian males
experience peak income around the same age. For women the peak age is about
the same as males, and the gaps in income between races is smaller. Moreover,
peak earnings for Black women are about $5,000 higher than for Black men.
Nonetheless, women in general earn notably less over a lifetime than do men
(Figure 47), having significant negative implications for retirement income which
must typically be stretched over a longer period for women than for men.
© 2020 Citigroup
33
Figure 46. Peak Income Occurs Sooner and Lower for Black Males Figure 47. Income Prospects Over a Lifetime are Worse for Women
Median Income by Race & Age Median Income by Race & Age
(2018, $) $90,000 (2018, $)
$90,000
$80,000 $80,000
$70,000 $70,000
$60,000 $60,000
$50,000 $50,000
$40,000 $40,000
$30,000 $30,000
$20,000 $20,000
$10,000 $10,000
$0 $0
15- 25- 30- 35- 40- 45- 50- 55- 60- 65- 70- 75 15- 25- 30- 35- 40- 45- 50- 55- 60- 65- 70- 75
24 29 34 39 44 49 54 59 64 69 74 yrs+ 24 29 34 39 44 49 54 59 64 69 74 yrs+
yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs
White Male Black Male White Female Black Female
Hispanic Male Asian Male Hispanic Female Asian Female
Source: Census Bureau, Citi Research Source: Census Bureau, Citi Research
Lower lifetime income for Black families Income is key to accumulating liquid assets, which are important for smoothing
caps retirement funds, limits spending consumption. Lower lifetime income prospects not only cap retirement funds, but
options, and reduces cushions needed also limit spending options over the course of a lifetime, and especially during
during recessions and shocks economic downturns. The Bureau of Labor Statistics’ Consumer Expenditure
Survey shows that Black families spend slightly more of their incomes than other
ethnic and racial groups on budgetary staples, including on housing (20 percent)
and utilities (8 percent) (Figure 48). Black families (69 percent) are highly likely to
be faced with unaffordable child care options, as are Hispanic families (72 percent),
which can often consume as much as 11 percent of a family’s monthly income
(Figure 49).30 Importantly, the level of family income is important for creating liquid
assets (i.e., savings in the form of cash or easily convertible instruments like
certificates of deposit (CDs)).
Savings are paramount for helping families to smooth their consumption over a
lifetime, particularly during recessions, and shocks including job loss and illness.
According to the Federal Reserve Board’s Survey of Consumer Finances, the
median amount of liquid assets held by Black families in 2016 (the most recent
reading), was $11,400 (Figure 50). This is roughly one-third of what white families
held ($29,200), suggesting that Black families are potentially more vulnerable to
hardship during tough economic times. Hispanic families were worse off, with just
$6,500 in liquid assets.
30Baldiga, M., Joshi, P., Hardy, E., and Dolores Acevedo-Garcia. 2018. “Data-for-Equity
Research Brief, Child Care Affordability for Working Parents,” Institute for Child, Youth
and Family Policy, Heller School for Social Policy and Management Brandeis University;
Malik, R. 2019. “Working Families Are Spending Big Money on Child Care,” Center for
American Progress, June 20, 2019.
© 2020 Citigroup
34
Figure 48. Black and Hispanic Families Spend Slightly More on Housing Figure 49. Black and Hispanic Families Are More Likely to Experience
than White and Asian Families Challenging Child Care Options
Spending Shares of After-Tax Income Unaffordable Care Indicator for Working Parents
40% (2018) (by Race/Ethnicity (2014-2017)
80% 72%
35% 2% 69%
2% 70% 63%
2% 6% 60%
30% 5% 60%
3% 53%
25% 8%
8% 7% 5% 50%
20% 6% 4% 40%
15% 30%
10% 20% 20% 18% 20%
17%
5% 10%
0% 0%
White Black Hispanic Asian Total Hispanic Black White Asian
Shelter Utilities Health Care Education
Note: The sample is parents working full time and year round with four or fewer
children and at least one child under age 14 (N=71,981).
Source: Current Population Survey, 2014-2017 March Annual Social and Economic
Source: Bureau of Labor Statistics Consumer Expenditure Survey, Citi Research Supplement, Public Use Microdata Files, IPUMS-CPS, University of Minnesota,
estimates www.ipums.org.
Figure 50. Black Families Hold Roughly One-Third of the Liquid Assets that Are Key to
Smoothing Consumption than White Families Hold
Liquid Assets
(Median, 2016)
$35,000
$30,000 $29,200
$25,000
$20,000 $19,000
$15,000
$11,400
$10,000
$6,500
$5,000
$0
2016
White Black Hispanic Other/Multiple Race
Note: Liquid Assets include transaction accounts, certificates of deposits
Source: Federal Reserve Survey of Consumer Finances, Citi Research
© 2020 Citigroup
35
A myriad of factors contribute to the racial Building wealth is not just a function of higher income, but the ability to save out of
wealth gaps in the U.S. income once basic needs are met. The outsized debt-to-asset ratio for Black
families indicates that a number of families have insufficient income to meet needs
and are financing expenditures with credit. This indicates a lack of disposable
income available for saving and investing. Other factors contributing to wealth
accumulation include (1) intergenerational transfers of wealth within families; (2)
conditions where one lives, such as poverty rates, home values and housing
segregation;(3) geographic and financial barriers to human capital formation (e.g.,
elevated costs for education; limited job prospects in region); (4) discrimination in
labor markets and/or racially motivated segmentation; and (5) racial biases in
policies and practices of government, institutions, and the private sector.31 Without
amelioration, each of these factors discussed above will perpetuate racial wealth
gaps.
Figure 51. White Families Have 8x More Wealth than Black Families Figure 52. Leverage Ratios for Black Families Have Remained Elevated
Household Net Worth Debt-to-Asset Ratio
$250,000 40%
35%
$200,000
30%
$150,000 25%
$100,000 20%
15%
$50,000
10%
$0 5%
1989 1993 1997 2001 2005 2009 2013 2017 1989 1993 1997 2001 2005 2009 2013 2017
White Black Hispanic Other/Multiple Race White Black Hispanic Other/Multiple Race
Source: Federal Reserve Survey of Consumer Finances, Citi Research Source: Federal Reserve Survey of Consumer Finances, Citi Research
31 (i) (e.g., Meschede et al. 2017; Chiteji and Hamilton 2002; McKernan et al. 2014b); (ii)
(e.g., Chetty et al. 2019; Perry et al. 2018); (iii) (e.g., Dobbie and Fryer 2011; Jackson
and Reynolds 2013; Addo et al. 2016) ; (iv) (e.g., Grodsky and Pager 2001; Bertrand &
Mullainathan 2004); (v)(e.g., Oliver and Shapiro 2013; Katznelson 2005; Robles et al.
2006; Bayer et al. 2014; Asante-Muhamm).
© 2020 Citigroup
36
The business case for eliminating racial The business case for eliminating racial gaps is well established. Some firms
gaps is well established believe continuing to focus on Diversity & Inclusion (D&I) as part of their COVID-19
recovery strategy is a luxury. However evidence shows firms who do not abandon
D&I protocols may fare better. Companies in the top quartile for both gender and
ethnic diversity are 12 percent more likely to outperform companies in lower
quartiles. Top quartile companies outperformed those in the fourth by 36 percent in
terms of profitability (up from 33 percent in 2017, 35 percent in 2014).32
The economic case for closing racial gaps is The economic case for closing racial gaps is equally compelling. Present racial
equally compelling gaps in income, housing, education, business ownership and financing, and wealth
are derived from centuries of bias and institutionalized segregation, producing not
only societal, but also real economic losses. However, future gains from eliminating
these gaps are enormous: benefiting not only individuals, but also the broader U.S.
economy with positive spillover effects into the global economy. If four key racial
gaps had been closed 20 years ago, then the additional GDP that could have been
added to the U.S. economy might have summed to as much as $16 trillion. Casting
this amount forward into the future, a global economic model suggests roughly $5
trillion could be added to U.S. GDP through 2025 from closing the gaps. The
consequent additions to U.S. and global GDP growth averages roughly 0.4
percentage point and 0.1 percentage point per year, respectively. These gains do
not reflect the potential narrowing of the wealth gap experienced by Black persons
in the U.S., which would inevitably also lead to additional economic gains.
32Hunt, V., Layton, D., and Sara Prince “Why diversity matters,” McKinsey, January 1,
2015.
© 2020 Citigroup
37
Figure 54. Black and Hispanic Men and Women Make Fewer Cents on the Dollar than White Men and Women
Wage Comparisons Persons Ages 25-54 Wage Comparisons Persons Ages 25-54 Wage Comparisons Persons Ages 25-54
(Cents on the Dollar Relative to White Males) (Cents on the Dollar Relative to White Males) (Cents on the Dollar Relative to White Males)
1.4 1.4 1.4
1.3 1.3 1.3
1.2 1.2 1.2
1 1 1
Individual wage losses over the past 20 Individual wage losses due to gaps over the last 20 years have been substantial.
years have been substantial — between The gap in terms of aggregate income for white female wages (i.e., all white women
$175,000 and $360,000 — due to racial and nationwide) compared to white male wages has been narrowing as a share of U.S.
gender gaps GDP over the last 20 years (Figure 55). Some of this reflects slower GDP growth in
general, but also a slight increase in white female wages. However, for Black and
Hispanic male and female workers, their gaps as shares of GDP have not improved.
The presence of gaps denote significant opportunity loss in terms of wages that
could have been used for personal consumption, home buying, or investment in
small businesses. As the wage gap with white males was not collapsed for white
females 20 years ago, the typical individual white female worker missed out on
roughly $175,000 in additional income. For Black males, the loss was approximately
$225,000, for Black females and Hispanic males about $300,000, and for Hispanic
females roughly $360,000 (Figure 56).
© 2020 Citigroup
38
Figure 55. Wage Gap has Narrowed Somewhat for White Women but Figure 56. Accrual of 20 Years of Lost Income Due to Wage Gap is
Not for Black, Hispanic and Other (Non-Asian) Minority Groups Acute for the Representative Black and Hispanic Worker
Annual Wage Gap with White Male Salary Approximate Individual Loss in Income
(% of GDP) (2000 to 2020)
6%
White Black Black Hispanic Hispanic
White Female Gap Female Male Female Male Female
Black Male Gap $0
5% Black Female Gap
Hispanic Male Gap
Hispanic Female Gap ($50,000)
4%
($100,000)
3% ($150,000)
($200,000)
2%
($250,000)
1% ($300,000)
($350,000)
0%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 ($400,000)
Source: Bureau of Labor Statistics, BEA, Citi Research estimates Source: Bureau of Labor Statistics, Citi Research estimates
© 2020 Citigroup
39
Figure 57. Closing Wage Gaps for White Women and Minorities Could Have Contributed to GDP
Growth in Most Years Post-Great Financial Crisis (GFC)
Wage Gap With White Male Salary
(Contribution to Real GDP Growth)
0.3
0.2
0.1
0.0
-0.1
-0.2
-0.3
White Female Gap
Black Male Gap
-0.4 Black Female Gap
Hispanic Male Gap
Hispanic Female Gap
-0.5
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Note: Red rectangles denote U.S. recessions
Source: Bureau of Labor Statistics, Bureau of Economic Analysis (BEA), Citi Research estimates
Figure 58. Gaps with White Male Salaries Remain Wide in 2020 Figure 59. Lost Wages Add Up to Trillions of Dollars in Foregone GDP
Annual Wage Gap with White Male Salary
(Real $bn, % of GDP, 1Q 2020)
$300 1.6%
1.4%
$250
1.2%
$200
1.0%
$150 0.8%
0.6%
$100
0.4%
$50
0.2%
$0 0.0%
White Black Black Hispanic Hispanic
Female Male Female Male Female
Gap Gap Gap Gap Gap
Source: Bureau of Labor Statistics, BEA, Citi Research Source: Bureau of Labor Statistics, BEA, Citi Research
© 2020 Citigroup
40
Almost half of Black workers are employed Black workers are more likely to be situated in jobs requiring lower skills and/or are
in jobs potentially subject to automation more susceptible to automation. Skill requirements and the risk of automation
appear to be drivers of wage differences between more technical and less technical
occupations. A study by Carl Benedikt Frey and Michael Osborne highlighted in the
Citi GPS report Technology at Work noted that 47% of U.S. jobs were at risk due to
automation. Among Black workers, close to half (46 percent) work in jobs that are
subject to potential automation compared to those that are not (54 percent), and
only 3 percent of Black workers are in technical jobs, leaving the other 97 percent in
non-technical jobs that could be automated to some degree (Figure 63).
Figure 60. Black Workers Are Underrepresented in Management, Figure 61. Black Workers Comprise Small Shares of Occupations that
Business, financial, Professional and Related Occupations Typically Pay Higher Wages Compared to White and Asian Workers
Distribution of Labor by Race (% of employed, 2019) Distrbution of Labor in STEM, Finance, Legal,
Medicine & Management Jobs (%)
100
Science 6.4
80
Heatlhcare 12.7
60
Finance 10.1
40 Architecture &
6.9
Engineering
20 Legal 8.4
Computer &
8.9
0 Mathematics
White Black Asian Hispanic
Management 7.9
Transport/Material-Moving Production
Installation/Maint./Repair Construction/Extraction
Farming/Fishing/Forestry Office & Administrative 0 20 40 60 80 100
Sales & Related Service
Professional & Related Management/Business/Financial White Black Asian Hispanic
Source: Bureau of Labor Statistics, Citi Research Source: Bureau of Labor Statistics, Citi Research
© 2020 Citigroup
41
Figure 62. Black Workers Are More Concentrated in Jobs that Pay Less than $25/hour and May Also Require Fewer Skills
Median Hourly Wage Rate vs. Number of Black Persons in Profession
$60 ($/hr, '000s)
Management
$50
Computer &
Mathematical
Legal
Business & Financial
Healthcare
Life, Physical & Social Operations Practitioner &
Science Technical
$30 Arts/Design/
Entertainment/Sports/
Media Education, Training &
Community &
Social Services Library
Installation, Construction &
Maint. & Extraction Office & Admin
$20 Repair Protective Support
Service Production Sales & Transport & Material
$0
0 500 1,000 1,500 2,000 2,500 3,000
Number of Black Persons in Profession ('000s)
Source: Bureau of Labor Statistics, Citi Research
Figure 63. Black People are More Likely to Work in Jobs That Are Susceptible to Automation
Workers in Workers in Workers in Workers in
Jobs Jobs Not Tech Jobs Non-Tech
Susceptible to Susceptible to Jobs
Automation Automation
Worker Population 58.7 Million 77.7 Million 7.2 Million 129.2 Million
Number of Workers 39 years 41 years 41 years 40 years
Median Age $17.37 $26.94 $39.68 $21.88
Mean Hourly Wage $14.26 $22.06 $36.76 $17.16
Percent of workers in the below groups who hold jobs of the specified type:
Total Workers 43.0% 57.0% 5.3% 94.7%
Male 44.1% 55.9% 8.1% 91.9%
Female 41.9% 58.1% 2.4% 97.6%
Asian, non-Hispanic 35.9% 64.1% 15.9% 84.1%
Black, non-Hispanic 46.4% 53.6% 3.0% 97.0%
Hispanic 54.1% 45.9% 2.3% 97.7%
White, non-Hispanic 40.0% 60.0% 5.6% 94.4%
Other, non-Hispanic 45.2% 54.8% 4.9% 95.1%
Graduate Degree 11.3% 88.7% 10.6% 89.4%
Bachelor's Degree (BA) 26.9% 73.1% 11.3% 88.7%
Some College, but less than a BA 46.7% 53.3% 3.9% 96.1%
High School Degree or Less 60.7% 39.3% 1.0% 99.0%
Source: U.S. Government Accountability Office, BLS and Citi Research
© 2020 Citigroup
42
Figure 64. Select Occupations Are More Susceptible to Automation Figure 65. College Degrees Produce Notable Wage Benefits
Occupations Projected to Experience Declines in Share of College Wage Premium, Experience Premium, & Share of Labor
Industry Employment Due to Automation (2016-2026E) Supplied by College-Educated Workers (1964–2018)
150% 60%
Other
100% 40%
Farming, Fishing, & Forestry
© 2020 Citigroup
43
Figure 66. Students Earning Bachelor or Advanced Degrees Earn More Lifetime Income
Estimated Earnings Over 40-Year Career
(2010 to 2050E)
$4,000,000
$3,500,000
$3,000,000
$2.0mn
$2,500,000 $1.3mn
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
Less Than High School Some College Bachelor's Advanced
High School Diploma or Associates Degree Degree
Diploma Degree
Access to Pre-School
Black children are more likely to attend full- Education literature suggests that children who receive a pre-school education
time pre-school than other children perform better once in grades K-12. Pre-school programs also serve as an
important form of childcare for working parents. A Brookings Institute report
summarizing early education studies found that high-quality programs produced
short-term gains in cognitive functioning and longer-term gains in school
achievement and social adjustment. Moreover, pre-school education yields higher
school achievement, fewer children being ‘left-back’ in a grade, reduced need for
special education, and a reduction in neighborhood crime. Early childhood
education can also save governments between $13,000 and $19,000 per child over
and above the cost of the pre-school program. The National Center for Education
Statistics reported that in 2018, 26 percent of Black children aged 3-5 years old
attended full-time pre-school, exceeding every other racial group (Figure 67).
Slightly more white children overall (43 percent) attended either full- or part-time
pre-school, compared to 38 percent of Black children. Nonetheless, a sizable
number of Black children overall attend pre-school.
© 2020 Citigroup
44
But access to high-quality, adequately- However, access to high quality, adequately-funded pre-school remains challenged
funded pre-school varies by state…and poor in terms of availability, quality, funding, and training of teachers. State-funded (as
funding is directly linked to quality of opposed to private) pre-school programs serve just 22 percent of 4-year-olds and 3
education percent of 5-year-olds. Only three states — Florida, Georgia, and Oklahoma —
make pre-school available to all 4-year-olds. Twelve states with state-funded pre-
school do not offer programs to 3-year-olds, and 12 states have no state-funded
pre-school at all (Figure 68). Overall state spending on pre-school is disparate,
ranging from $1,600 per child to $10,000, and the average amount of spending
($3,600 per child) is roughly one-third of the average spend on public school
students in K-12. Quality of education also varies. The National Institute for Early
Education Research (NIEER) reports only 17 states meet eight or more of their ten
quality-checklist criteria. Poor funding is directly linked to quality according to
NIEER, and programs serving primarily poor students tend to receive less funding
than those who serve more middle-class students. Relatedly, while 76 percent of
pre-school teachers have a Bachelor’s degree, only roughly 56 percent have a
teaching certificate to teach young children. Moreover, pre-school teachers earn
less than half of that earned by elementary school teachers, and 70 percent report
earnings below 200 percent of the Federal poverty guidelines.
These figures are important, as state programs comprise 70 percent of all early
childhood education centers, and the states with the least funding and poorest
quality tend to host large Black populations.
Figure 67. Black Children More Likely to Attend Full-Day Pre-School Figure 68. Few States Have High Quality Pre-School Programs
Percentage of 3- to 5-yr Olds Enrolled in Pre-School Programs Ten States Meet All Four Process-Quality Focused Quality Standards Benchmarks
(by Race/Ethnicity & Attendance Status, 2018)
50%
40%
22% 12%
30%
13% 16% 16%
20%
26%
10% 21% 21% 20% 19%
0%
White Black Hispanic Asian Two or more
races
Full-Day Part-day
Note: Idaho, Montana, New Hampshire, North Dakota, South Dakota, Utah and
Wyoming have no state pre-school program.*These multi-program states have
Source: Census Bureau, Citi Research programs with different quality standards. Data in map is for largest state program.
Source: National Institute for Early Education, NPR, Citi Research
© 2020 Citigroup
45
The difference between the revenue received for funding low-poverty white districts
($14,121 per student) and all non-white districts ($11,853) is more than $2,200 per
student (Figure 70). EdBuild estimates the national average difference in revenue
per student between non-white and white districts is $2,226. This difference this
difference sums to $22.5 billion ($2,226 times 10,126,150 affected students). States
that stand out in terms of the severity of the funding gap between non-white and
white school districts include California, Texas, New Jersey, and Arizona (Figure
71).
Figure 69. White and Non-White Districts Serve Same Number of Kids Figure 70. Non-White Districts are Chronically Underfunded
School District Demographics Average Revenue Per Student ($)
(Percent of National Enrollment) $16,000
$14,121
$14,000 $12,987
$12,205
20% $12,000 $11,500
High Poverty, Non-
White Districts
$10,000
Low Poverty, Non-White
47% 7% Districts $8,000
High Poverty, White
5% Districts $6,000
Low Poverty, White
$4,000
Districts
21% All Other Districts $2,000
$0
High Poverty, Non-White Districts Low Poverty, Non-White Districts
High Poverty, White Districts Low Poverty, White Districts
Source: EdBuild, Citi Research Source: EdBuild, Citi Research
Figure 71. Funding Gaps Between White and Non-White School Districts Remain Wide
Reliance on property taxes for school Where a student resides can determine whether they will face a funding
funding means wealthier municipalities will disadvantage. The Federal government spends roughly $23 billion a year on K-12
have potentially greater resources to finance education. While a sizable figure, it only constitutes 10 percent of total funding for
their school districts public schools. The remaining $660 billion is raised at the state and local
government level. The gap in school funding reflects a combination of past housing
segregation policies and a patchwork of current district financing schemes that
value local control.
© 2020 Citigroup
46
According to EdBuild, nearly all states rely upon property taxes to fund schools.
Hence wealthier municipalities will have potentially greater resources to finance
their school districts. Fifteen states also generate funds through locally-raised sales
taxes, six permit locally-governed income taxes and many states use revenues from
lottery gaming programs. Just over half of all states employ a student-based
formula, while the remainder fund schools based upon a variety of formulas.
Figure 72. U.S. Students in General Are Taking Fewer Credits in STEM Courses than Non-STEM Courses
Average High School Credits Earned by Subject Areas Average High School Credits Earned by Subject Areas (by
(by Race/Ethnicity, Number of Credits, 2013) Race/Ethnicity, Number of Credits, 2013)
14
STEM 14 Non-STEM
12
12
10
10
8
8
6
6
4 4
2 2
0 0
White Black Hispanic Asian Two or More White Black Hispanic Asian Two or More
Races Races
Math Science Computer & Info Sciences Engineering & Tech English Social Studies Foreign Lanugage Fine Arts
STEM jobs generally pay more than many ‘middle-class’ non-STEM jobs. Even
within the STEM fields, jobs requiring greater skills pay notably more than the U.S.
national median annual salary of $38,640 (Figure 74). It’s logical for young students,
to not only pursue more difficult jobs in the STEM, finance, and legal fields, but to
also aim for those requiring greater mental and/or technical acuity within these fields
given the enhanced potential for increased lifetime earnings. Access to high quality
education and opportunities throughout one’s academic career, as well as guidance
by mentors and exposure to higher paying occupations early in one’s working
career are key to closing the gap.
© 2020 Citigroup
47
Figure 73. Black People Have the Smallest Share of STEM Graduates Figure 74. STEM Jobs Pay More than Many Middle-Class Jobs
STEM Bachelor’s Degrees as % of Total Bachelor’s Degrees Annual Median Salary ($/Year)
Conferred by Post-Secondary Institutions,
(by Race/Ethnicity, Academic Year, 2015–16) $38,640
Paralegals &
35 33 Legal Assistants
30 Lawyers, Judges
25 Insurance Agent
20
20 18 Actuary
15 15 14
15 Engineering
12 Technicians
10 Engineers
5 Computer
Support Specialist
0 Database &
White Black Hispanic Asian Pacific Native Two or Systems Admin
Islander American More
Races $0 $40,000 $80,000 $120,000
Source: National Center for Education al Statistics, Citi Research Source: National Center for Educational Statistics, Citi Research
Figure 75. The Gap Between Black and National Degree Attainment Has Figure 76. Closing the 10 Percentage Point Gap 20 Years Ago Might
Been Fairly Steady at Around 10 Percentage Points Have Generated an Additional $90 to $113 Billion in Black Income
Rates of Bachelor's Degree Attainment Among Persons Closing the Black Post-Secondary Degree Gap
40% Age 25 and Over (1940 - 2018) Additional Income for Consumption ($bn)
10% $40
5% $20
0%
1940 1975 1987 1991 1995 1999 2003 2007 2011 2015
$0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
All Persons Age 25 and Over Black All Bachelor Degrees All Advanced Degrees
Source: National Center for Educational Statistics, Citi Research Source: National Center for Educational Statistics, Citi Research
© 2020 Citigroup
48
Financial Assets
Black families have one-third, and Hispanic Black families have one-third, and Hispanic families one-fourth the financial assets
families one-fourth the financial assets of of white families. Financial assets are dependent on income, job benefits, the ability
white families to accumulate savings, and generational (inherited) wealth. The ability to invest
depends on initial conditions including inherited wealth, the ability to work in a high
wage job that facilitates savings needed for investment, a higher tolerance for risk,
and financial savvy. The sections above explain the challenges for Black and
Hispanic families regarding inheritances and high wage employment. Linked to high
wage employment are benefits including retirement benefits and pooled investment
funds like 401K plans, which are an easy way to accumulate financial wealth. Black
and Hispanic workers are almost equally likely to participate in traditional pension
plans, but less likely to participate in 401K plans relative to their white counterparts
(Figure 78). Jobs that have unions which bargain for pensions may explain some of
the similarity in rates of participation among racial groups. Greater labor force
participation in jobs that are non-unionized, part-time and/or lacking in benefits
among Black and Hispanic workers may explain the disparity for 401K plans (Figure
79).
© 2020 Citigroup
49
Figure 78. Black and Hispanic Workers Are Less Likely to Participate in Figure 79. Black Men are Slightly More Likely to Work Part-Time than
401(k) Plans White Men; Black Women More Likely to Work Part-Time than Men
Asian
33
Black
17
Black
51
White
21 White
Nonfinancial Assets
Black families have fewer assets in every Black families have fewer assets in every category of nonfinancial wealth compared
category of nonfinancial wealth compared to to other races, with elevated barriers to attaining such wealth via property holdings.
other races Nonfinancial assets depend upon income and wealth (Figure 80), but also equal
access to credit. The largest contributors of nonfinancial wealth are related to real
estate (primary residence, other residential property and nonresidential property).
Property is typically acquired through inheritance, or a combination of savings (from
earned income and financial assets) and access to credit, which is often dependent
upon one’s savings, proof of a perpetual source of income (wages), and credit
history. Black families are trailing other races on nearly all of these fronts, rendering
the path towards building wealth through nonfinancial assets difficult to attain
(Figure 81).
Figure 80. Black Families Have One-Third of the Financial Assets of Figure 81. Black Families Have Fewer Assets in Every Category of
White Families Nonfinancial Wealth Relative to Other Races
Financial Wealth by Race Nonfinancial Wealth by Race
(Median Values in $, 2016) $700,000 (Median Values in $, 2016)
$500,000
$600,000
$400,000
$500,000
$300,000 $400,000
$200,000 $300,000
$200,000
$100,000
$100,000
$0
$0
White Black Hispanic Other/
White Black Hispanic Other/
Multiple
Multiple
Transaction Accounts Certificates of Deposit
Savings Bonds Stocks Other Business Equity
Pooled Investment Funds Retirement Accounts Equity in Non-Residential Property Other Residential Property
Cash Value Life Insurance Other Managed Assets
Other Primary Residence Vehicles
Source: Federal Reserve Board, Citi Research Source: Federal Research Board, Citi Research
© 2020 Citigroup
50
Figure 82. Wealth and Income Ratios of Black and White Means in the Figure 83. Contribution to Factors of Wealth Gap Over Time
Survey of Consumer Finances Reveal Persistently Wide Gaps
Source: Federal Reserve Bank of Cleveland: What Is Behind the Persistence of the Source: Federal Reserve Bank of Cleveland: What Is Behind the Persistence of the
Racial Wealth Gap? Racial Wealth Gap?
Intangibles also matter significantly for Black and Hispanic families are less likely to have exposure to financial markets
wealth accumulation and peer groups of successful investors, which help provide the financial literacy
required to make informed decisions. Black and Hispanic people are few and far
between in finance jobs, which would facilitate education and access to peer groups
(Figure 84). Moreover, financial literacy coursework is still far from fully included in
academic curriculums, which is problematic for all students, not just for students of
color. According to the Council for Economic Education, only 21 states require high
school students to take a course in personal finances, and only a handful of states
require standardized testing around financial literacy (Figure 85). Compounding
these barriers are the lower levels of tolerance for risk among Black and Hispanic
families which is strongly associated with the level of net worth (i.e., higher net
worth allows for a higher risk tolerance) (Figure 86 and Figure 87).
© 2020 Citigroup
51
Figure 84. Black People Represent Small Share of Financial Workers Figure 85. Few States Mandate Financial Literacy Coursework
Persons Employed in Financial Services
(2019)
Securities,
Commodities,
Funds, Trusts, & Other FIs
Nondepository
Credit & Related
Activities
Savings
Institutions
(incl Credit
Unions)
Banking &
Related
Activities
Source: Bureau of Labor Statistics, Citi Research Source: Council for Economic Education
Figure 86. Average 2013 Family Wealth by Attitudes Toward Saving and Figure 87. Wealth, Race, and Attitudes Toward Saving and Investing:
Investing (Family Head Ages 35 to 59) Distribution of Attitudes by Race
Net Worth Risk Tolerant Long Horizon Luxury Borrower
Tolerant of risk $ 1,079,478.00 White 23% 71% 18%
Not tolerant $ 375,608.00 Black 15% 53% 21%
Hispanic 15% 52% 17%
Long time horizon for saving and investing $ 748,093.00 Total 21% 67% 18%
Short or medium time horizon $ 183,354.00
© 2020 Citigroup
52
Figure 88. Black Homeownership Rates Are Below That of All Other Racial Groups
Mar-05
Mar-94
Mar-96
Mar-97
Mar-98
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
White Black Hispanic Asian Other
Access to Credit
Black families continued to be the most The path towards Black family home ownership is limited by reduced access to
likely racial group to be denied a credit. The Consumer Financial Protection Bureau (CFPB) reported in 2019, Black
conventional or nonconventional mortgage families continued to be the most likely racial group to be denied a conventional or
nonconventional mortgage for home purchase or refinance (Figure 89). The denial
rate for Black families remained above 15 percent for home purchase and was
roughly 35 percent for refinance, compared to just above 5 percent and 15 percent,
respectively, for white families. The higher denial rate for Black families largely
reflected elevated debt-to-income ratios, poor credit histories, and incomplete
applications (Figure 90).
© 2020 Citigroup
53
Figure 89. Black People Continue to Experience the Highest Level of Mortgage Loan Denials
Home Purchase: Denial Rates for Mortgage Loan Refinance: Denial Rates for Mortgage Loan
(Conventional & Nonconventional) (Conventional and Nonconventional)
35% 65%
30% 55%
25% 45%
20% 35%
15% 25%
10% 15%
5% 5%
2004 2006 2008 2010 2012 2014 2016 2018 2004 2006 2008 2010 2012 2014 2016 2018
All Applicants Asian All Applicants Asian
Black or African American Hispanic White Black or African American Hispanic White
Non-Hispanic White Other Minority Non-Hispanic White Other minority
* Consists of applications by American Indians or Alaska Natives, Native Hawaiians or other Pacific Islanders, and borrowers reporting two or more minority races.
Source: Consumer Financial Protection Bureau, Citi Research
Figure 90. Elevated Debt-to-Income Ratios, Poor Credit Histories, and Incomplete Applications Are the Main Drivers of Loan Application Denials
for Black Homebuyers and Mortgage Loan Refinancers
Home Purchase: Reasons for Mortgage Loan Denial Refinance: Reasons for Mortgage Loan Denial
(Conventional & Nonconventional, 2019) (Conventional & Nonconventional, 2019)
100% 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
Asian Black or Hispanic Non- Other Asian Black or Hispanic Non- Other
African White Hispanic Minority African White Hispanic Minority
American White American White
Debt-to- Employ- Credit Collateral Insuf- Debt-to- Employ- Credit Collateral Insuf-
income ment history ficient income ment history ficient
ratio history cash ratio history cash
Unveri- Credit Mortgage Other Unveri- Credit Mortgage Other
fiable app ins. fiable app ins.
info incom- denied info incom- denied
plete plete
* Consists of applications by American Indians or Alaska Natives, Native Hawaiians or other Pacific Islanders, and borrowers reporting two or more minority races.
Source: Consumer Financial Protection Bureau, Citi Research
© 2020 Citigroup
54
Figure 91. Traditional and Nontraditional Banking Services by Concentration of Minority Populations
© 2020 Citigroup
55
Figure 92. Even Traditional Banking Can Cost More for Minority Communities
Average Required Opening Deposit Average Required Minimum Balance Avg Maintenance Fee as % of Median Income
(by Majority Race in Community) (by Majority Race in Community) (by Majority Race in Community)
$1,200
$120
0.7% Deposit Amounts
$97 $1,000 $957
$100 $871 0.6% Balance Amounts
$81 $749
$80 $800 0.5%
$69 $69 $626
$60 $600 0.4%
0.3%
$40 $400
0.2%
$20 $200
0.1%
$0 $0 0.0%
White Black Hispanic Other White Black Hispanic Other White Black Hispanic Other
Source: New America (David H Montgomery/Bloomberg CityLab)
Figure 93. Black Consumers Are More Likely to be Unbanked or Figure 94. There is a Notable Relationship Between Alternative
Underbanked Financial Services Use and Low Credit Scores
Banking Status by Race (2017) Alternative Financial Service Use vs. Credit
45% Score
Other 57% 28% 13% 3% Black
40%
Alternative Financial Service Use
Hispanic Other
White 77% 14% 3%6% 35%
30%
Asian 67% 18% 3% 13%
25%
Hispanic 49% 29% 14% 8% Asian
20%
White
Black 46% 30% 17% 7% 15%
10%
0% 20% 40% 60% 80% 100% 660 680 700 720 740 760
Banked Underbanked Unbanked Unknown Average Credit Score (300 to 850)
Source: FDIC National Survey of Unbanked and Underbanked Households,
Source: FDIC National Survey of Unbanked and Underbanked Households Shiftprocessing.com, Citi Research
© 2020 Citigroup
56
Figure 95. Black Persons Are More Likely to Have Student Loan Debt Figure 96. Black Persons Tend to Have Higher Average Student Loan
Than Other Racial and Ethnic Groups Debt Regardless of Housing Situation
Share of People Ages 25 to 55 With Student Loan Debt Average Student Loan Debt
(2019) (People Ages 25-55, 2019)
45% 43% $20,000
40%
$15,000
35%
30% 26% $10,000
24% 23%
25%
20% $5,000
15% $0
10% Two or Black Hispanic Other White,
5% More Non- Non-
0% Races Hispanic Hispanic
White, Non- Black, Non- Hispanic Other Neither own nor pay rent Own home w/o mortgage or loan
Hispanic Hispanic Own home w/ mortgage or loan Pay rent
Source: Federal Reserve Board Survey of Household Economics and Decisionmaking, Source: Federal Reserve Board Survey of Household Economics and Decisionmaking,
Citi Research Citi Research
Affordable Housing
In many metropolitan areas with large Black Even when income and credit conditions are met, lack of affordable housing
populations, geographic segregation is remains a major constraint to homeownership for many Black families. Data from
compounded by lack of available affordable the Census Bureau and real estate agency Zillow reveal that in many metropolitan
housing areas with large Black populations, geographic segregation is compounded by lack
of available affordable housing. The dissimilarity score is a metric that measures the
extent to which racial groups are clustered in geographic areas. Again, many of
these clusters are a result of past policies including housing discrimination and
redlining. Cities with sizable Black populations including New York, Los Angeles,
Washington DC, Boston, Miami, Philadelphia, Atlanta, Houston, and Detroit are not
only quite segregated (dissimilarity scores closer to 1 than 0.5) but also have wide
gaps between the least and most expensive homes (Figure 97). A Trulia real estate
agency study also revealed the widening gap between the median home valuation
and most homes in large metro areas appeared to be occurring at the lower end of
the market. In other words in most markets affordable housing is disappearing.
© 2020 Citigroup
57
Figure 97. Affordable Housing Gap is Highly Pronounced in Metro Areas with Large Black Populations
Home Value Gap vs. Geographic Segregation in Metro Areas With Large
Black Populations
8
Black Population
San Francisco, CA
6
Distance Between Top and Bottom Home Valuation
(Standard Deviations from Mean)
Los Angeles-Long…
4 New York, NY
Washington, DC
Miami-Fort Boston, MA
2 Lauderdale, FL
Baltimore, MD
Atlanta, GA Philadelphia, PA MI
TX Detroit,
Houston,
LASt. Louis, MO
Orleans,
Cleveland, OH
New
Chicago, IL
0
0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
-2
-4 Dissimilarity Index
(0=Least Segregated Geographically; 1=Most Segregated Gegraphically)
Source: Census Bureau, Zillow, Blackdemographics.com, Citi Research
© 2020 Citigroup
58
Figure 98. 770,000 Additional Black Homeowners Might Have Added Figure 99. Black Homeowners Might Have Generated an Additional $65
Another $154 Billion in Spending on Housing Since 2000 billion in Consumption on Housing-Related Expenditures
Estimate of Additional Home Purchases Estimate of Additional Expenses
($bn) ($bn)
$160 $70
$140 $60
$120
$50
$100
$40
$80
$30
$60
$20
$40
$10
$20
$0
$0
2006
2007
2008
2000
2001
2002
2003
2004
2005
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2000
2003
2016
2019
2001
2002
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2017
2018
Figure 100. Seventeen Percent of the Black-White Homeownership Gap Remains Unexplained
Oaxaca Decomposition: Estimated Explanatory Power For
Black-White Home Ownership Gap at the MSA Level
Unexplained 17.0%
© 2020 Citigroup
59
Figure 101. Phases of Private Business Financing Figure 102. Black Businesses More Likely to Die Due to Inadequate
Sales and/or Access to Financing
Reasons a Business Ceased Operations
100%
3% 3%
98% 5% 5%
96%
3%
5%
94% 2%
3%
92%
86%
White Black Asian Hispanic
Operations ceased for another reason
© 2020 Citigroup
60
Figure 103. Black Entrepreneurs Are More Dependent Upon Sources of Capital from Friends, Family, and Own Resources for Capital
Sources of Start-up Financing: White Sources of Start-up Financing: Black
Entrepreneurs Entrepreneurs
65.4 70.6
Figure 104. Black Founders Are More Likely to Figure 105. Friends and Family Yield Limited Figure 106. Black Founders Receive Less
Produce their Own Resources for Start-ups Resources for Both Black and White Founders Funding for Projects Above $100,000
Distribution of Firms Distribution of Firms Distribution of Firms
80% (by Owner Financing Amounts) (by Family, Friends & Employees (by Banks & Financial Institutions
30% Financing Amts) 40% Financing Amts )
70%
25% 35%
60%
30%
20%
50%
25%
30% 15%
10%
20% 10%
5%
10% 5%
0% 0%
0%
White Black Asian Hispanic White Black Asian Hispanic
White Black Asian Hispanic
$250,000 or more $100,000 to $249,999 $250,000 or more $100,000 to $249,999 $250,000 or more $100,000 to $249,999
$50,000 to $99,999 $25,000 to $49,999 $50,000 to $99,999 $25,000 to $49,999 $50,000 to $99,999 $25,000 to $49,999
$10,000 to 24,999 $5000 to $9,999 $10,000 to 24,999 $5000 to $9,999 $10,000 to 24,999 $5000 to $9,999
$1 to $4,999 $1 to $4,999 $1 to $4,999
Source: SBA, Census Bureau Annual Survey of Source: SBA, Census Bureau Annual Survey of Source: SBA, Census Bureau Annual Survey of
Entrepreneurs, Citi Research Entrepreneurs, Citi Research Entrepreneurs, Citi Research
© 2020 Citigroup
61
Black-owned forms also tend to receive less The Fed also found that underfunding is affecting financing. While Black-owned
in funding than white-owned firms firms are roughly equivalent with white-owned firms in the percentage who decline
to apply for loans due to discouragement, Black founders are still less likely to say
that they had sufficient funding in place (Figure 108). The Fed reports that even for
those Black-owned firms who are approved for financing, they typically receive less
than half of what was requested. According to the Fed, minority-owned businesses
in recent times are still facing potentially large unmet financing needs. Census
Bureau data confirm this. When complaints of underfunding are tabulated across
different types of financing, Black founders routinely state that they received fewer
dollars than requested.
Figure 107. Black Entrepreneurs Are Less Likely to Receive Loans from Traditional Banks Despite High Likelihood of Applying to Traditional Banks
Likelihood of Applying at Lending Source Likelihood of Approval for at Least Some ReportedReason for Not Submitting Credit App
(by Race/Ethnicity of Firm Ownership, %, 2018) Financing at Lending Source (by Race/Ethnicity of Firm Ownership, %, 2018)
90 (by Race/Ethnicity, %) 85 83
60 82 60 56
80 74 78 76
50 70 65 67 50 47 46 45
60 59
40 40
50 45
30 40 30
20 30 18
20 12 13 13
20
10 10 10
0 0 0
Overall Large Small Online CDFIs Overall Large Small Online Discourage From Sufficient Financing in
Banks Banks Lenders Banks Banks Lenders Applying Place
White Black Asian Hispanic White Black Hispanic White Black Asian Hispanic
Note: CDFI stands for Community Development Financial Institutions
Source: Federal Reserve Board, Citi Research
© 2020 Citigroup
62
Figure 108. Black Business-Owners Routinely Receive Less Funding than Requested from Financing Sources
Percent of Firms Who Established New Funding Relationship, but Who Did Not Receive Amount of Funding
Requested by Source
60%
50%
40%
30%
20%
10%
0%
Owner(s) Friends, Banks, Credit Home Equity Credit Trade Angel Venture Other Crowdfunding Grants
Family Unions Loans Cards Credit Investors Capitalists Investor Platform
Employees or other in name of Businesses
Financial Business
Institution Owner(s)
White Black Asian Hispanic
Asymmetric information and a narrow Studies suggest that the sparse amount of investments by Black angel and VC
pipeline limit investment in Black-owned investors reflect a combination of asymmetric information — in that Black
businesses entrepreneurs are not aware of these sources of funding — and/or a narrow pipeline
of incoming investors. With respect to information, SEC regulation prohibits
business founders from publicly advertising fundraising. Communication of these
opportunities are limited to a network of accredited investors. Accredited investors
must have $1 million in net worth, not including a home, or income exceeding
$300,000, which can be prohibitive for many would be angel investors. Hence, a
lack of information and wealth-limits create barriers for entrepreneurs and potential
investors. Regarding the pipeline, many VCs have backgrounds in investment
banking, which have struggled with diversity given in part to recruiting from elite
schools that are also lacking in diversity. Indeed, 40 percent of venture capitalists
attended either Harvard or Stanford University. Over the last 30 years Harvard
Business School had a Black population averaging about 5 percent. The high cost
of a business school education is one prohibition for Black students.
© 2020 Citigroup
63
Figure 109. Black Investors Represent a Figure 110. Black Investors Are Underrepresented in the Venture Capital Space, Both in
Nominal Share of Angel Investors Leadership and the Overall Workforce
Angel Investors by Race Venture Capital Sector Venture Capital Sector
Overall Workforce by Race Leadership by Race
5%
2% 3% 4% 3%
3%
6%
1%
15%
17%
88%
76% 80%
White Black Asian Hispanic Other White Asian Black Hispanic White Asian Black Hispanic
Source: Wharton Entrepreneurship and Angel Capital Source: NVCA, Deloitte, Citi Research
Association, Citi Research
Investor Bias
Unconscious bias may also be at the root of Venture capital is a relationship-based business, so the leaders decide which other
the dearth of investment in Black-owned investors are invited into the fold, and which firms receive capital. This proves
businesses problematic if the perception of Black founders and their business ventures are
tinged by unconscious bias. Anecdotal assertions of bias include investors not
trusting that Black entrepreneurs have viable and sustainable businesses, and/or
lack an understanding of the product or customer Black founders are serving. Even
for professional investors choosing to invest in VC funds, data-based evidence of
bias is revealed in a Stanford University study which determined when venture
capital funds are managed by a person of color with strong credentials, professional
investors judge them more harshly than their white counterparts with identical
credentials (Figure 111). The study found investors were able to easily distinguish
between stronger and weaker white-led teams, where the stronger team received
the higher ratings and the weaker team lower ratings. However, investors were
unable to distinguish between stronger and weaker Black-led teams. Strong white-
led teams were expected to raise more funds than strong Black-led teams,
suggesting lower funding prospects for Black-led fund teams, and consequently
financing for Black-owned businesses (Figure 112).
© 2020 Citigroup
64
Figure 111. Higher Performing Black-Led VC Funds Rated Lower than Figure 112. Professional Investors Less Able to Distinguish Between
White-Led VC Funds by Professional Investors Weak and Strong VC Funds, Projecting Lower Funding Prospects
5 300
0 0
Weaker Stronger 1 2 3 4 5
One-Pager Quality Competence
Source: Stanford University, PNAS Source: Stanford University, PNAS
Eliminating bias will be more difficult. However, if lenders and professional investors
changed their views towards minority-owned firms, there might be greater access to
capital. More capital helps ensure the survival of Black-owned firms, and greater
revenue, which currently trails that of white-owned firms in every industry except
manufacturing (Figure 113). More revenue leads to greater job creation, and more
income which facilitates consumption and real GDP growth. A Fed survey found that
60 percent of Black-owned firms declined to apply for financing, even when needed,
due to concern that they would be denied. Increasing applications as well as
improving approval rates would be highly favorable for Black-owned firms.
Closing the share of Black-owned firms-gap Closing the share of Black-owned firms-gap 20 years ago might have generated
20 years ago might have generated $13 $13 trillion of revenues for investment, 6.1 million jobs per year, and a cumulative
trillion of revenues for investment, 6.1 million $182 billion in income for consumption. In 2017, there were more than 114,400
jobs per year, and a cumulative $182 billion small Black-owned firms, employing 1.2 million persons, generating $121 billion in
in income for consumption revenue and $35 billion in annual payroll. However, the number of Black-owned
small businesses represents just 0.6 percent of the Black civilian population age 20
and over (20 million people). This is compared to a 3.6 percent share of white-
owned small firms to the white civilian population (122 million).
© 2020 Citigroup
65
If the share of Black-owned firms was raised to 3.6 percent of the U.S. Black
population, the number of businesses would rise to more than 720,000, or a 6-fold
increase. Per year, revenue might increase to $761 billion, the number of
employees to 7.3 million, and payrolls to $10.8 billion. If this gap were closed two
decades ago, then the additional amount of consumption from workers’ incomes
might have summed to near $182 billion. Some share of the extra $13 trillion in
revenues over the last 20 years might have also contributed to GDP-enhancing
capital expenditure on equipment, intellectual property, and structures (Figure 114).
Figure 113. With the Exception of Manufacturing, White-Owned Firms Generate More Revenues
per Business than Black-Owned Firms
Revenues Per Type of Business ($)
White Black
Wholesale Trade
Utilities
Retail Trade
Real estate &
Rental & Leasing
Professional, Scientific,
& Technical Svcs
Other Services (except Public Admin)
Mining, Quarrying, &
Oil & Gas Extraction
Manufacturing
Mgmt of Companies
& Enterprises
Information
Health care &
Social Assistance
Finance & Insurance
Educational Services
Construction
Figure 114. Small Firms, Revenues, Employment and Payrolls: 2017 Actual and Gap Closure Estimates
Per Year 20 Years
Black Small Businesses 2017 Share of Black 3.6 Percent Share of Black 2017 Share of Black 3.6 Percent Share of Black
population (0.6 percent) Population population (0.6 percent) Population
Firms (Number) 114,400 720,069 2,288,000 14,401,386
Revenues (Billions of US$) $121 $761 $2,417 $15,212
Employees (Number) 1,155,344 7,272,095
Payrolls/Year (Billions of US$) $1.7 $10.8 $34.4 $216.7
Source: Citi Research
© 2020 Citigroup
66
Source: Shutterstock
Significant and permanent behavioral and To emerge from a history of entrenched segregation and active discriminatory policy
attitudinal changes are required to mitigate into an era of genuine equity will require conscientious reform at individualistic,
the number of gaps faced by Black corporate, and governmental levels. Although there is much to celebrate regarding
Americans renewed interest in closing gaps, there is still considerable work that must be done.
Moreover, given the exacerbation of inequality amid the COVID-19 pandemic, now
is an important time to focus on eliminating racial gaps. In the U.S., the sum total of
wealth held by U.S. billionaires is equal to three-quarters of all Black wealth ($3.5
trillion vs $4.6 trillion). Hence, it is crucial to address severe income inequality as
part of the overall economic resolution and to avoid the perpetuation of disparity as
seen after the Global Financial Crisis (GFC) of 2008. As of 2016, only 20 percent of
Americans are said to have recovered to pre-GFC wealth levels, with Black
Americans having suffered a 33 percent decline in wealth between 2007 and 2010.
The GFC wealth loss further compounded how the median Black family witnessed
their wealth almost halve, once adjusted for inflation, from 1983 to 2016; in
comparison to an increase of almost one-third for white households.33
33Dettling, L.J., Hsu, J.W. and Elizabeth Llanes. 2018. "A Wealthless Recovery? Asset
Ownership and the Uneven Recovery from the Great Recession," FEDS Notes.
Washington: Board of Governors of the Federal Reserve System; Wolff, E. 2017.
"Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth
Recovered?", NBER Working Paper No. 24085.
© 2020 Citigroup
67
Source: Shutterstock
Governments can help reduce racial gaps Governments can help reduce racial gaps by eliminating discriminatory barriers and
by eliminating discriminatory barriers and implementing policies that support work, homeownership, entrepreneurship, and
implementing policies that support work, well-being. Basic actions, borrowed in part from the literature on gender equity,
homeownership, entrepreneurship, and well- include (1) adequate race-specific data collection, necessary for identifying,
being tracking, and ameliorating race-based gaps; (2) prohibiting discrimination in wages,
housing, labor, financial services, lending etc. based upon race; (3) facilitating work,
including affordable childcare options, quality K-12 education, access to higher
education, and paid family leave; and (4) supporting innovation, including enabling
access to financing for Black-owned firms and start-ups. Additionally, governments
can act to promote access to affordable healthcare and housing, which are
paramount for supporting work and innovation. In this paper, we also highlight more
unconventional ideas for how governments can contribute to closing racial gaps,
from the Fed and Congress, to the state and local level.
34Long, H., “Democrats introduce bill to give the Federal Reserve a new mission: Ending
racial inequality,” Washington Post, August 5, 2020.
© 2020 Citigroup
68
Amid the pandemic, jobless rates across every racial group swelled to nearly four
times their pre-COVID levels, but the racial gaps persisted.35
The Fed will now focus on broad-based and Even in the absence of new legislation, the Fed has signaled a willingness to
inclusive job gains and will allow inflation to enhance its focus upon inequality. At the 2020 Jackson Hole Economic Summit, the
exceed their 2 percent target for a period Fed indicated its policies will focus on “broad-based and inclusive” job gains,
language suggesting the central bank’s policies may help disadvantaged Americans
in particular, rather than as a consequence of focusing upon maximum employment
in general. Practically, the Fed will now allow inflation to exceed the 2-percent target
for a period of time before raising interest rates, allowing unemployment rates to fall
further. Still Chairman Powell stated that ending racial inequality “is more of an all-
government, society project that we need to take on forcefully…It can’t just be the
way the Fed manages interest rates.”36 In other words, there is a role for fiscal
policies at every level of government. Moreover, a counter argument to the Fed
allowing rates to remain lower for longer, is that low rates inflate the prices of asset
that do not benefit low income persons on the upswing, but do negatively affect
them on the downswing when the owners of capital (employers) respond to financial
market crises by cutting labor.
Figure 117. Black Unemployment Rate is Consistently Higher than Other Races
U.S. Unemployment Rate: 16 Years+
25 (Statistical Average, %)
20
15
10
0
Sep-1973
Sep-1978
Sep-1983
Sep-1988
Sep-1993
Sep-1998
Sep-2003
Sep-2008
Sep-2013
Sep-2018
May-1975
May-1980
May-1985
May-1990
May-1995
May-2000
May-2005
May-2010
May-2015
May-2020
Jan-1972
Jan-1977
Jan-1982
Jan-1987
Jan-1992
Jan-1997
Jan-2002
Jan-2007
Jan-2012
Jan-2017
White Black Asian Hispanic
Source: Bureau of Labor Statistics. Citi Research
35 Zeitli, M., “Federal Reserve policy has failed Black Americans for decades. Now is the
time to fix that,” Business Insider, July 18, 2020.
36 Guida, V., “An activist central bank? Dems push the Fed to fight racial inequality,”
© 2020 Citigroup
69
Encourage Work
Tax policy, such as EITC and CTC, have Reforming tax benefits and the application of specialized tax reforms can encourage
proven to reduce poverty as workers keep work among lower income families and help reduce racial gaps. One recent study
more of their earnings highlighted that of the nearly $275 billion within the 2018 Tax Cuts and Jobs Act, 80
percent benefited white households; receiving $2,020 on average in cuts, versus
$970 received by Latino household and just $840 by Black Households.37 Moreover,
households in the highest 1 percentile received 23.7 percent of the law’s total tax
cuts, in comparison to just 13.8 percent received by the bottom 60 percent. Given
that white households are three times as likely as Black or Latino households to be
in the top 1%, these racial gaps are further exacerbated.38 Some effective and
racially-inclusive tax provisions linked to work such as the Earned Income Tax
Credit (EITC), and Child Tax Credit (CTC), have proven to reduce poverty while
serving a larger proportion of minority groups, especially Black and Latina Women.
Some policymakers would make CTC fully refundable so the benefits reach the
poorest children. Indeed, an estimated 17 million Black households would benefit
from a fully-refundable CTC.39 Under current law, the Congressional Budget Office
(CBO) estimates the share of Federal government spending on these credits is set
to tumble over the next decade without Congressional intervention (Figure 118).
How do the EITC and the Child Tax Credit Encourage Work?
EITC: The Earned Income Tax Credit, EITC or EIC, is a benefit for working people with low to moderate income. To
qualify for EITC, tax filers must have earned income from either working for someone or from running or owning a
business or farm, in addition to meeting some basic rules. Filers must also either meet additional rules for workers
without a qualifying child or have a child that meets all the qualifying child rules. (Source: IRS.gov).
CTC: The Child Tax Credit (CTC) is designed to give an income boost to the parents or guardians of children and
other dependents. It only applies to dependents who are younger than 17 as of the last day of the tax year. The
credit is worth up to $2,000 per dependent, but income level determines the exactly amount of the credit. Tax filers
need to have earned at least $2,500 to qualify for the CTC. Then it phases out for income above $200,000 for
single filers and $400,000 for joint filers. If earned income is above the applicable threshold, filers will receive a
partial credit. (Source: Smartasset)
37 Institute on Taxation and Economic Policy and Prosperity Now “Race, Wealth and
Taxes: How the Tax Cuts and Jobs Act Supercharges the Racial Wealth Divide,”
October 11, 2018.
38 Ibid.; Huang, Chye-Ching and Roderick Taylor. “Advancing Racial Equity Through the
Households, Reduce Child Poverty,” Center on Budget and Policy Priorities, April 16,
2019.
40 Walker, D., “If Corporations Really Want to Address Racial Inequality, Here are 9
© 2020 Citigroup
70
Figure 118. EITC and Child Tax Credit Spending Share Set to Tumble Figure 119. Black People More Likely to Make Minimum Wage or Less
CBO: Federal Government Spending on Percent of Workers Paid Hourly Rates At or Below Federal
Earned Income and Child Tax Credits Minimum Wage
(Share of GDP) 3.0%
2.0%
1.8% 2.5%
Forecast
1.6%
2.0%
1.4%
1.2% 1.5%
1.0%
1.0%
0.8%
0.6% 0.5%
0.4%
0.0%
White White Black Black Asian Asian Hispanic Hispanic
0.2%
Men Women Men Women Men Women Men Women
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Source: Congressional Budget Office, Citi Research Source: Bureau of Labor Statistics, Citi Research
41 Berman, Matthew and Random Reamey. “Permanent Fund Dividends and Poverty in
Alaska.” Institute of Social and Economic Research: University of Alaska Anchorage.
42 Paddison, Laura. “What is a federal jobs guarantee?” The Huffington Post; Paul, Mark,
William Darity, Jr. and Darrick Hamilton. “The Federal Job Guarantee – A Policy to
Achieve Permanent Full Employment.” Center on Budget and Policy Priorities.
43 Huang, Chye-Ching and Roderick Taylor “How the Federal Tax Code Can Better
Advance Racial Equity,” Center on Budget and Policy Priorities, 25 July 2019
© 2020 Citigroup
71
tax rate for all individual tax payers, making them the least progressive (Figure 121).
A clear approach the U.S. could take in order to reduce racial inequality would be to
raise more revenue overall in a progressive manner, with the revenues then
directed to investments which advance racial equity. Indeed, the U.S. system of
taxes currently underperforms 27 other high-income countries in regards to
reducing post-tax inequality.44
Figure 120. 25 States have Combined State and Local Tax Rates Figure 121. Progressiveness of State Taxes-
Exceeding the National Median of 6.98%
Combined State & Local Sales Tax Rate State Income Tax Rates: Difference
12.30%
Between Top & Bottom Rate (%, 2020)
9.55%
9.53%
9.52%
14%
9.23%
9.22%
8.95%
States
9.60%
12%
7.83%
7.65%
7.46%
7.46%
7.31%
7.18%
7.17%
7.07%
7.05%
7.00%
7.00%
6.98%
8.20%
10%
7.57%
10%
7.00%
5.90%
5.80%
8% 8%
5.40%
4.95%
4.95%
4.90%
4.82%
4.75%
4.60%
4.50%
4.50%
4.40%
4.38%
4.00%
3.99%
3.90%
3.75%
3.75%
3.65%
3.50%
6%
3.20%
3.00%
6%
2.60%
2.24%
2.00%
1.95%
1.91%
1.80%
4%
1.35%
4% 2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2% 0%
Pennsylvania
Michigan
Alabama
North Carolina
Maine
New Mexico
Nebraska
Delaware
New York
New Hampshire
North Dakota
Ohio
Mississippi
Minnesota
Georgia
Indiana
Kentucky
Massachusetts
Tennessee
Utah
Arizona
Rhode Island
Kansas
Wisconsin
Connecticut
West Virginia
Maryland
Virginia
Oklahoma
Arkansas
Oregon
Wyoming
Missouri
Louisiana
Idaho
Montana
Iowa
California
Illinois
Washington
Vermont
South Carolina
New Jersey
Hawaii
0%
Kansas
Arkansas
New York
Tennessee
Louisiana
Texas
South Carolina
Utah
Ohio
Alabama
Oklahoma
Indiana
Illinois
Arizona
Nevada
Missouri
Colorado
Minnesota
California
New Mexico
Georgia
North Carolina
Mississippi
Florida
Rhode Island
Washington
44Based on reductions in the Gini measure of inequality among 33 countries for which
OECD data for 2016 or the latest available year are available (see OECD Income
Distribution Database, 2019). The United States ranks above only New Zealand, Israel,
Switzerland, Korea, and Chile on this measure. (Data for Mexico, Hungary, and Turkey
are unavailable.)
© 2020 Citigroup
72
Fintech can also play a critical role in reducing the number of unbanked persons.
Ex-JP Morgan Managing Director and founder of Mobility Capital Finance, Wole
Coaxum, estimates that “Black and Hispanic people spend 50 to 100 percent more
per month for basic banking services, which, over a lifetime, can cost $40,000 in
fees.”4546 His company, along with a number of others, seeks to tackle this in
providing financial services to those on low to moderate incomes. Similarly FS Card
provides credit cards with $500 spending limits as an alternative to payday loan
services. In providing these alternative services without the high fees, these fintech
firms have the ability to drastically improve access to basic financial services.
Moreover, in August 2020, leaders of the fintech industry, including Credit Karma,
Monzo, and Stash, announced the creation of the Fintech Equality Coalition. The
Coalition will focus on enhancing access to financial services and committing to
providing opportunities in recruitment outreach within the Black community.47
45 Rosen, E., “Trying to Correct Banking’s Racial Imbalance”, The New York Times, June
30, 2020.
46 FDIC National Survey of Unbanked and Underbanked Households, 2017.
47 “Fintech Equality Coalition Created to Help Fight Racial Inequality in the Industry,” PR
Uninsured Population,” Kaiser Family Foundation, December 13, 2019; Kaiser Family
Foundation, “State Data and Policy Actions to Address Coronavirus,” Kaiser Family
Foundation, May 13, 2020.
© 2020 Citigroup
73
Figure 122. The Majority of U.S. Persons Are Covered by Private-Employed Based Insurance;
The Number of Persons in the Private-Direct Purchase Option Has Declined in Recent Years
Number of People With and Without Health Insurance
70,000 185,000
60,000
175,000
50,000
40,000
165,000
30,000
20,000
155,000
10,000
0 145,000
94 96 98 00 02 04 06 08 10 12 14 16 18
Private: Direct Purchase Public: Medicaid
Public: Medicare Public: Military
Not Covered Private: Employment Based (RHS)
Note: Some persons may have more than one type of insurance.
Source: Census Bureau, Citi Research
Encouraging homeownership is a potential Policy reform of established programs to benefit minority groups, might be
path to intergenerational wealth instrumental in closing equity gaps. One candidate for reform is the Mortgage
Interest Deduction program which currently only benefits 6% of Black families.
Enhancing the benefit to Black households requires increased homeownership, but
the gap in homeownership rates between white and Black families is significant: the
Black homeownership rate is at 44 percent vs. white at 70 percent. Affordable also
housing remains a challenge in many local regions with large Black populations
(Figure 123). Increasing incentives and access to affordable housing is an avenue
towards greater homeownership. With a stark deficiency in affordable housing — in
no state can a full time employee on $7.25 afford a two bedroom apartment —
progress in this area is of desperate necessity.51 The American Housing and
Economic Mobility Act provides an initial framework with provisions for down
payment assistance for first time buyers living in formerly redlined or officially
segregated areas.52
50 Fulwok III, S., “The United States’ History of Segregated Housing Continues to Limit
Affordable Housing,” Center for American Progress, December 15, 2016.
51 National Low-Income Housing Coalition. “Out of Reach 2018: The High Cost of
Housing.” 2018.
52 “Warren Unveils Historic Legislation to Confront America's Housing Crisis.” Press
© 2020 Citigroup
74
Figure 123. Many Highly Populated Regions of the U.S. Are Unaffordable Even For Median-
Income Households
Notes: Median incomes are estimated at the core-based statistical area (CBSA) level. Recently sold homes are
defined as homes with owners that moved within the 12 months prior to the survey date. Monthly payments
assume a 3.5% down payment and property taxes of 1.15%, property insurance of 0.35%, and mortgage insurance
of 0.85%. Affordable payments are defined as requiring less than 31% of monthly household income. Only CBSAs
with at least 30 home sales in the past year are shown.
Source: JCHS tabulations of US Census Bureau, 2017 American Community Survey 1-Year Estimates, and
Freddie Mac, PMMS
17 percent of the gap between Black and The Urban Institute found intangible factors are contributing to the widening racial
white homeownership is unexplained housing gap, highlighting the need for targeted policy solutions. According to the
Urban Institute, even after accounting for individual factors including marital status,
income distribution, FICO scores, age, median household income, and city
segregation, approximately 17 percent of the Black-white family home ownership
gap remains unexplained (Figure 100). These intangible factors suggest a
combination of policies are necessary to narrow the gap, built on a foundation of fair
housing and lending, plus new technologies.
© 2020 Citigroup
75
Invest in Training
Government investment in training programs Government focus on specific skills training with respect to identified occupational
can help narrow income and wealth gaps availability through either community college courses or named industry training has
proven instrumental in combating economic inequality. With over 12 million students
enrolling in community colleges each year, and a majority of those enrolled as
undergraduates in 2-year public colleges identifying as non-white, funding for these
programs is vital in delivering a more equitable workforce. However, without a
permanent funding stream, sustainability can be a challenge.5354 Though community
colleges have been the benefactors of a number of grants, including the Community
Based Job Training Grant (CBJTG), which provided $600 million in three years from
2005-2010, and two Federal grant programs under President Obama — Health
Profession Opportunity Grant and Trade Adjustment Assistance Community College
and Career Training (TAACCT) — there have been calls to reform the workforce
system to move away from presumptions based upon skills narratives.5556 Skills
narratives place an emphasis on skills, which for many workers “fail[s] to recognize
the historical and inter-generational way in which multiple systems, including not
only workforce, but also education, housing, criminal justice and others, have
created an inherent set of disadvantages for people of color.”57 Without proper
recognition of individual circumstance, and an understanding that a
multidimensional, rather than a ‘one-size-fits-all’ approach is far more likely to
deliver meaningful results, there is a natural restriction to equity progress.
Public-private partnerships can help narrow Public-private partnerships can help narrow training gaps. Notably, white high
training gaps school dropouts have the same chance of obtaining a job as Black workers who
have completed some college or earned an associate degree. In order to address
such discrepancies, The Center for American Progress has highlighted four policy
features that are essential for developing an equitable design and process for
training and job access: (1) expand the share of economic risk by requiring
employers of a certain size to pay into the WETF (Workforce Equity Trust Fund); (2)
make a suite of wrap-around services (e.g., childcare) and employment benefits
standard; (3) improve workforce analytics by creating an accountability dashboard
for multiple measures of job quality; and (4) govern the WETF by a multi-
stakeholder partnership comprising of business, labor and the public.5859 There are
a number of programs along such guidelines emerging with community-based
organizations designing programs to directly train and connect workers to local
opportunities.
53 Eyster, L., Durham, C., and Theresa Anderson. “Federal Investments in Job Training
at Community Colleges,” Urban Institute, December 2016
54 Kilpatrick, S., “A Quick Rundown of Community College Diversity Statistics,”, EVERFI
55 Anderson, T., Loprest, P., Derrick-Mills, T. Eyster, L., Morley, E., and Alan Werner.
2014. Health Profession Opportunity Grants: Year Two Annual Report 2011–2012.
Report 2014-03. Washington, DC: Office of Planning, Research, and Evaluation,
Administration for Children and Families, US Department of Health and Human Services.
56 Lam, L. “A Design for Workforce Equity,” Center for American Progress, October 16,
2019.
57 Race Forward, “Race-Explicit Strategies for Workforce Equity in Healthcare and IT”
2019.
© 2020 Citigroup
76
For example, in Detroit, HOPE has incorporated robotics training into its technical
training; and in San Diego, the International Rescue Committee has included solar
panel installation into training options; connecting a high-growth local industry
currently facing a skilled labor shortage with job-seekers.60
Invest in Protections
Funding and broadening the scope of anti- Established in 1965, the U.S. Equal Employment Opportunity Commission (EEOC)
discrimination agencies can help lessen is tasked with enforcing Federal laws preventing discrimination against job
inequality in the United States applicants and employees based upon race, color, religion, sex, national origin, age,
disability, or genetic information. However, as the U.S. population has grown by 44
percent in 40 years to roughly 330 million persons, and become even more diverse,
Federal funding for the EEOC has not kept pace. Indeed, funding for the EEOC has
shrunk by 8 percent over the same period, and the number of employees at the
EEOC fielding discrimination complaints has decreased by 42 percent since 1980.
Meanwhile, at the state level, funds for employment anti-discrimination programs
are modest and in some cases non-existent. A 2015 census of ten states with the
largest Black populations revealed that none of them spent more than 70 cents per
resident on employment anti-discrimination programs. Indeed, three states —
Mississippi, Alabama, and North Carolina — spent zero dollars on such programs.
60 Jones, M., and Ed Skyler. “Here's a solution to economic inequity: Invest more in job
training,” USA Today, March 10, 2020.
61 Zwede, N., “Universal Baby Bonds Reduce Black-White Wealth Inequality,
© 2020 Citigroup
77
Figure 124. Congress Has Decreased Resources for the Equal Employment Opportunity Commission (EEOC) Over the Last 40 Years
U.S. Population EEOC Budget (Millions of US$) Number of EEOC Employees
450 (Millions of People) ('000s of People)
$450 4,500
$412
400
$400 $380 4,000
350 325 3,390
$350 3,500
300
$300 3,000
250 225 $250 2,500
1,968
200 $200 2,000
150 $150 1,500
1980 2018 1980 2018 1980 2018
Source: Census Bureau, EEOC, Citi Research
66 Gould, E., “State of Working America Wages 2019,” Economic Policy Institute,
February 20, 2020.
67 Bessen, J. E., Meng, C., and Erich Denk. “Perpetuating Inequality: What Salary
69 Ziv, S., “Salary History Bans Reduce Racial and Gender Wage Gaps; Every CEO
© 2020 Citigroup
78
Figure 125. Anti-Discrimination Agency Spending at the State Level is Figure 126. Only 19 of 50 States Plus Washington, DC, and 20 of
Significantly Underfunded in States with Large Black Populations Thousands of Municipalities, Have Salary History Bans
EEOC $1.19
Maryland $0.55
Tennessee $0.39
Delaware $0.38
Georgia $0.06
Louisiana $0.02
Alabama $0.00
Mississippi $0.00
Source: EEOC, Henry J. Kaiser Family Foundation, Citi Research Source: AccuSource, HRDrive, Citi Research
© 2020 Citigroup
79
Source: Shutterstock
70“The Business Case for D&I: Ask Catalyst Express,” Catalyst, October 4, 2019.
71Colby, S.L., and Jennifer M. Ortman. “Projections of the Size and Composition of the
U.S. Population: 2014 to 2060,” US Census Bureau, March 2015.
© 2020 Citigroup
80
Figure 128. The Share of Non-White Hispanic Persons Is Poised to Shrink to 44% by 2060
Population Projections
(Shares of Total Population,%)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2016 2020 2030 2035 2040 2045 2050 2055 2060
Hispanic or Latino Two or More Races
Native Hawaiian & Other Pacific Islander Asian
American Indian & Alaska Native Black or African American
Non-Hispanic White
Source: Census Bureau, Citi Research
Diversity of Perspectives: Persons from diverse backgrounds and experiences
will have a multiplicity of ideas and perspectives. Diversity of perspectives may
produce better outcomes as diversity can help avoid “group-think.”72 A diversity of
opinions can create friction. However, if diverse employees are made to feel
included, then outcomes can potentially be positive.73 A Boston Consulting Group
(BCG) international survey, including the U.S., revealed a strong and statistically
significant correlation between the diversity of management teams and overall
innovation. “Firms reporting above-average diversity on their management teams
also reported innovation revenue that was 19 percentage points higher than that
of companies with below-average leadership diversity — 45% of total revenue
versus just 26%.”7475
Bolstering the Bottom Line: Studies suggest that diverse firms may have
stronger financial results more generally. A separate McKinsey & Company
international survey found that “companies in the top quartile for racial and ethnic
diversity were 35 percent more likely to have financial returns above their
respective national industry medians.” In the United States, McKinsey found
“there is a linear relationship between racial and ethnic diversity and better
financial performance: for every 10 percent increase in racial and ethnic diversity
on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8
percent.”
72 Sidorenko, V., “The Business Case For Diversity and Inclusion,” TLNT, April 24, 2019.
73 Kaplan, S., “Why the ‘business case’ for diversity isn’t working,” Fast Company,
February 12, 2020.
74 Lorenzo, R., Voigt, N., Tsusaka, M., Krentz, K., and Katie Abouzahr. “How Diverse
Leadership Teams Boost Innovation,” Boston Consulting Group, January 23, 2018.
75 Esweraj, V., “The business case for diversity in the workplace is now overwhelming,”
© 2020 Citigroup
81
Moreover, that “racial and ethnic diversity has a stronger impact on financial
performance in the United States than gender diversity, perhaps because earlier
efforts to increase women’s representation in the top levels of business have
already yielded positive results.”76
Figure 129. Businesses with Diverse Leadership Teams May Generate More Revenue Figure 130. Diverse Firms May Perform Better
Likelihood of Financial Performance
Above National Industry Median
26% 45% Gender & Ethnic
Diversity Combined: 40%
All Other Quartiles
Gender & Ethnic
Diversity Combined: 53%
Innovation Revenue - Innovation Revenue - Top Quartile
Companies with Companies with
Below-Average Above-Average
Gender Diversity:
47%
Diversity Scores Bottom Quartile
Diversity Scores
Gender Diversity:
54%
Top Quartile
Ethnic Diversity:
58%
Top Quartile
Source: The Boston Consulting Group, Citi Research Source: McKinsey & Co, Citi Research
Moral Imperative - It’s the Right Thing to Do: The Society for Human
Resource Management defines inclusion as, “the achievement of a work
environment in which all individuals are treated fairly and respectfully, have equal
access to opportunities and resources, and can contribute fully to the
organization’s success.” Employees who are made to feel like they belong are
potentially better performers and happier people.79
76 Hunt, V., Layton, D., and Sara Prince. “Why diversity matters,” McKinsey & Company,
January 1, 2015.
77 “The Business Case for D&I: Ask Catalyst Express,” Catalyst, October 4, 2019.
78 Hunt, V., Layton, D., and Sara Prince. “Why diversity matters,” McKinsey & Company,
January 1, 2015.
79 Sidorenko, V., “The Business Case For Diversity and Inclusion,” TLNT, April 24, 2019.
© 2020 Citigroup
82
A number of high profile CEOs support D&I initiatives, including former Xerox CEO
Ursula Burns (the first Black female CEO of a Fortune 500 company) who stated
that “Business leaders have to start to lead, what has happened in the past, they’ve
trailed.” Similarly a number of CEOs have pledged hard dollars to address racial
gaps. For example, Comcast pledged $100 million over three years to accelerate
efforts on diversity and inclusion, and Walmart also pledged $100 million over five
years to create a new center on racial equity that would concentrate in four areas:
financial, health care, criminal justice and education.81
Citi’s Response
In direct response to the messages from the #BLM Protests, Citi itself has committed to $10.7 million in donations:
$1 million each to two organizations working to close the Black achievement gap in education in the United States:
UNCF and Management Leadership of Tomorrow (MLT). This is in addition to the $8 million Citi committed to four
leading Black-led organizations addressing voting rights, income and wealth gaps, and housing discrimination (the
NAACP Legal Defense Fund, the Lawyers’ Committee for Civil Rights, the National Urban League and the National
Fair Housing Alliance), for a total of $10,684,000 in charitable contributions, inclusive of employee contributions.
40%
30%
20%
10%
0%
South Africa Canada U.S. U.K. France Germany
Source: Edelman Brand Trust Barometer 2020, Citi Research
80 Siripurapu, A., “The US Inequality Debate”. Council on Foreign Relations. July 15,
2020.
81 Stankiewicz, K., “CEOs are offering plans and investments to address racial inequality
© 2020 Citigroup
83
Recruitment and Hiring: Establishing diverse slates and limiting selection bias
is paramount at the recruitment and hiring stage. Analysis by NatCen suggests
that there is discrimination and ‘ethnic filtering’ in the recruitment process.
Indeed, National Academy of Sciences data reveal the rate of callbacks for Black
candidates is generally lower than that of white candidates, and this rate has
been little changed over since the 1970s.82 Moreover, businesses may be
inadvertently perpetuating wage inequality by asking for salary histories. To
enhance motivation for greater minority employment, companies could be subject
to mandatory, randomized public diversity monitoring with the intention that in
facing potential obligation to publish minority employment statistics this would
translate into material change and diversification of the recruitment process.
Additionally, a government supported and fiscally incentivized enhancement of
online recruitment as a method to further anonymize the hiring process likely
would prove instrumental in improving racial equality in hiring practices.83
82 Quillian, L., Pager, D., Midtbøen, A., and Ole Hexel. Hiring Discrimination Against
Black Americans Hasn’t Declined in 25 Years,” Harvard Business Review, October 11,
2017.
83 Lloyd, J., “Ending Ethnic Discrimination in Recruitment”. The Strategic Society Centre.
November, 2010.
84 Kapor Center. 2017 Tech Leavers Study.
https://www.diversitybestpractices.com/sites/diversitybestpractices.com/files/import/emb
edded/anchors/files/diversity_primer_chapter_08.pdf.
86 Vieux, S., “What Companies Can Do to Combat Systemic Racism Against Black
© 2020 Citigroup
84
Source: Meta-analysis of field experiments shows no change in racial discrimination in hiring over time. Lincoln
Quilliana, Devah Pager, Ole Hexela, and Arnfinn H. Midtbøen,Proceedings of the National Academy of Sciences
(PNAS), 2017
Layoffs: Black and Hispanic workers are more likely to be subject to reductions
in force (RIF) actions amid economic downturns due to higher labor market
segmentation in lower-level or more discretionary jobs. The Harvard Business
Review (HBR) suggests employers can consider performance more than
position, and cross-training and upskilling workers to help narrow the numbers of
minorities reduced. Companies factoring performance into their decision-making,
often are able to retain their best performers, regardless of gender and race.
Businesses can redeploy workers with transferable skills to other parts of the
firm, and/or cross-train employees for other tasks to avoid major labor cuts.
Employers can also cut pay and hours, but continue to retain workers.87
Lists: HBR recommends that firms, when releasing employees, maintain lists of
persons being let go to note major disparities and to share those lists with other
firms that may have job openings. Businesses can draw from these lists of
recently unemployed persons to find a diverse set of talent.88
87 Kalev, A., “Research: U.S. Unemployment Rising Faster for Women and People of
Color,” Harvard Business Review, April 20, 2020.
88 Morgan Roberts, L., McCluney, C.L., Thomas, E.L., and Michelle Kim. “How U.S.
Companies Can Support Employees of Color Through the Pandemic,” Harvard Business
Review, May 22, 2020.
© 2020 Citigroup
85
Firms can also consider public actions to accelerate policies and legal measures to
protect and support vulnerable populations. This can include public condemnation
of events or legislation that target groups of people based upon race.89
Studies have shown CSR is not only for attracting and retaining customers, but also
for retaining talent. For example, Millennials are willing to forego an average of 14.4
percent of their expected compensation to work at socially responsible companies.
Also 88 percent of Millennials believe a business should be proactivity participating
in the community. A reported 92 percent of employees involved in CSR programs
cite higher rates of emotional and physical health. Moreover, 66 percent of
employees report a greater sense of loyalty to their employers as a consequence of
participating in CSR programs.90
89 IBID.
90 Civic, B., “CSR – IS IT GOOD FOR BUSINESS?,” February 28, 2018.
91 Walker, D., “If Corporations Really Want to Address Racial Inequality, Here are 9
© 2020 Citigroup
86
Targets are useful for opening up opportunity for highly qualified underrepresented
persons while potentially limiting space for less qualified persons among
overrepresented groups.94 Third, investigate whether Black employees are
compensated for equal work and promoted as regularly as other employees.
Following the pay equity study (analyze), firms should be transparent about the
results (report), and then create a plan to rectify discrepancies (react).95 Business
can also hire specialized recruitment and employment firms (e.g., Jopwell) to assist
with diversification initiatives.
94 Kaplan, S., “Why the ‘business case’ for diversity isn’t working,” Fast Company,
February 12, 2020.
95 Vieux, S., “What Companies Can Do to Combat Systemic Racism Against Black
Board Diversity Census of Women and Minorities on Fortune 500 Boards, Deloitte LLP,
February 5, 2019.
97 Ibid.
© 2020 Citigroup
87
Figure 133. Black People Still Underrepresented on Boards (9%) Relative to Population (13%)
Fortune 500 Board Seats (2018)
332 154 ,
6% 3% 148 61
2% 1%
168
45
1,017 3%
1%
18% 3
1 0%
0%
3,741
66%
98Cheng, J.Y-J., Groysberg, B., and Paul M. Healy. “Why Do Boards Have So Few
Black Directors?,” Harvard Business Review, August 13, 2020.
© 2020 Citigroup
88
Figure 134. Social Networking is a Major Factor In Selecting Black Figure 135. Racially Diverse Boards Tend to Prioritize Racial Diversity
Board Members Within the Company
How Black Directors Were Initially Introduced to Percent of Directors Who Agree or Strongly
the Board Agree
(% of Black or White Directors)
© 2020 Citigroup
89
Source: Shutterstock
While we argue that structural factors have and continue to play significant roles in
perpetuating racial gaps, individuals are far from powerless. Black persons in the
U.S. can continue to advocate for themselves in the realms of finances, education,
business, and politics. Meanwhile, persons of other races can continue to educate
themselves about historical disparities and work towards fixing them.
99 Morris, M.W., Black Stats: African Americans by the Numbers in the 21st Century,
2014.
100 Ibid.
101 Pirtle, W., “The Other Segregation,” The Atlantic, April 23, 2019.
© 2020 Citigroup
90
Figure 137. Minority Students Are More Likely to Attend Charter Schools than Traditional Ones
60
14.5
25.8
40
48.7
20
32.1
0
Traditional (Non-Charter) Schools Charter Schools
White Black
Hispanic Asian
Pacific Islander American Indian/ Alaska Native
Two or More Races
Source: U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), Citi
Research
Students can aim high and utilize resources As mentioned above, students can take more courses relevant to STEM fields, and
that promote success take Advanced Placement courses in high school. Students should seek education
beyond a high school degree: college, trade school. Students should also consider
advanced and professional degrees even after earning a college degree.
Throughout the school career, students can take advantage of organizations that
promote academic achievement and stepping stones into business. Notable
organization include Girls Who Code, My Brother’s Keeper Alliance, Jack and Jill of
America Incorporated, United Negro College Fund (UNCF), Management
Leadership for Tomorrow (MLT), INROADS, Toigo, Sponsors for Educational
Opportunity (SEO), A Better Chance, the Jackie Robinson Foundation, and the
Urban League. Funding for education can be tackled in part via familial investments
in college savings plans and student applications to scholarships. As discussed
above, training and higher education are highly correlated with higher incomes over
a lifetime.
© 2020 Citigroup
91
Have Non-Profit Organizations Built the Middle Class? Spotlight on MLT and INROADS
Non-profit organizations have existed for more 100 years to help advance the financial and social wellbeing of Black Americans.
Two organizations have quantified how their efforts have bolstered the expansion of the Black middle-class.
MLT – Statistics from the MLT website indicate the average starting salary for their Career Prep Fellows is $75,000, with half
of these students coming from homes with annual household incomes of less than $50,000. Moreover, of their 1,600 scholars
per year, 90 percent of their undergraduates receive an offer for a high trajectory job, 90 percent of its MBA Prep students
matriculate at top10 business schools, and 90 percent of its first-generation college students are on track to graduate within 4-
6 years, compared to the national average of 11 percent.
INROADS –INROADS in partnership with Australian-based non-profit Career Trackers surveyed 1000 INROADS alumni to
determine how the organization has helped to narrow racial gaps. Among respondents, 57 percent have incomes in the range
of $50,000 to $100,000 and 34 percent with incomes exceeding $100,000. Forty seven percent have net worth in the range of
$100,000 to $500,000, and 40 percent in the $500,000 to $5 million range. Plus, 76 percent own a home. Regarding real
estate 49 percent own at least one property and 56 percent own more than one property (Figure 138).
Figure 138. INROADS Scholar Alumni Have Helped to Expand the Black and Minority US Middle-Class
60% 57%
50% 47%
50%
40%
40%
29% 30%
30%
20% 20%
20% 20%
9%
10% 5% 10% 6% 4% 2% 1% 0% 0%
0%
0% 0%
$5-$10mn
<$25K
$1-$5mn
$50-$100mn
$500K-$1mn
$10-$25mn
$25-$20mn
$1-$50K
$100K-$250K
$250K-$500K
$100K-$500K
$50K-$100K
$50K-$100K
$25K - $50K
60% 40%
35%
50%
30%
40% 24%
25%
30% 24% 20% 17% 16%
15%
20% 10%
10%
10% 4% 3% 3%
5%
0% 0% 0% 0% 1%
0% 0%
Owner Non-Owner 0 1 2 3 4 5 6 7 8 9 10 11 12
Source: Adam Davids, Fulbright Scholar hosted by INROADS and Director of Learning and Innovation CareerTrackers Australia, Citi Research
© 2020 Citigroup
92
Citi Foundation Supports NPower and their report Breaking Through, Rising Up; Strategies for Propelling
Women of Color in Technology
In May 2018, the Citi Foundation awarded a $1.64 million grant to NPower to increase the enrollment of young women
in its program from 25% to 40% by 2022 — now two years into this mission, enrollment rates are at 31%. In
September 2020, Citi Foundation announced it was expanding its partnership with NPower, including an additional $4
million investment, to help advance the careers of young Black and Latinx women in the technology field across six
U.S. cities.
To date, the intersection of gender, race, and class in technology has received little attention. NPower seeks to
address this discrepancy and highlight the core elements crucial to establishing a more equitable industry; with a
particular focus on women of color. Undeniably, achieving this goal will require intention, investment and innovation as
well as cross-sector awareness and action by practitioners and executives. With women making up just 26% of the
technology workforce and with Black and Latinx women making up just 3% and 1% of the computing workforce,
respectively, there is significant progress to be made.
NPower seeks to address inequality in providing free training in technology. Its aim is to correct diminished
access to early computing as a result of inequitable funding streams in high-poverty areas disproportionally affecting
minority groups. There are four key aspects to the program: (1) focusing on recruitment; (2) support services; (3)
instruction; and (4) job placement services. In combining the practical with the personable, the program is able to best
approach training for women of color. In using community-based organizations to expand applicant pools whilst
providing wraparound support services, the impact of the training and economic mobility provided to alumni can be
material. Moreover, in endeavoring to target classroom bias by providing female instructors, the program is also able
to provide applicable role models; challenging what is often seen as a barrier to motivation to join an industry. With
Citi’s support, the instructional staff at NPower has gone from one female instructor in 2018 to recruiting and
onboarding six additional female instructors two years later. This trend of inclusion is further emphasized within the job
placement aspect of the program, primarily in their drive to create strong partnerships with employers that
demonstrate successful and integrated diversity practices.
NPower supports utilization of a number of strategies that practitioners, employers, and funders can apply in
order to deliver a successful and minority favorable outcome. Particularly impactful is the suggestion for the
provision of flexible training provisions, such as online or at the weekend, whilst considering skill based hiring and
embracing non-traditional educational backgrounds. Moreover from a funding prospective, investing in wraparound
services such as childcare — with 19% of female and 10% of male students citing managing childcare responsibilities
as a significant challenge during the program — and transportation, deliver meaningful differences for participants.
NPower believes a number of policy levers for increasing opportunities for Women of Color in Technology
can also be widely applied to the minority population as a whole. Fundamentally, an expansion of funding for
apprenticeship programs as well as the expansion of Pell Grants to shorter term training programs would have a
positive impact, alongside the increased funding for childcare subsides, especially during non-traditional hours. To
provide sustainability, expanding family leave laws and strengthening pay parity laws would prove instrumental in
progressing towards a more equitable workplace, not just in technology, but in every industry.
© 2020 Citigroup
93
Women of color were 19 percent less likely to have received a raise than a white
man and men of color were 25 percent less likely.”102 Nonetheless, if workers do not
ask for a raise, then they lower the likelihood of receiving one. Network and remain
visible, highlighting your successes with key stakeholders. Workers should seek
mentors, advocates, and sponsors to help navigate their careers within a corporate
setting. Join trade unions or professional clubs within your industry. Join or create
support groups with colleagues outside of your business to glean knowledge and to
build morale. Remain curious and retool one’s skillset in order to be prepared for
larger roles, greater responsibilities, and new opportunities.
Consider starting a business: The U.S. Chamber of Congress and the SBA are
resources for Black-owned businesses to find sources for grants, financing, and
advice on how to run effective firms.
Move: While a difficult decision, relocation may be the answer to improved jobs
prospects. Sixty five percent of the Black population resides in 16 states in the
U.S. However, according to a survey by McKinsey and Company, on average
these states rank below national averages in metrics that can lead to an
improved quality of life and wealth generation. Black workers, especially younger
workers can opt to move to states that are generating the most jobs in high
paying industries.
Figure 139. Black Workers Are Concentrated in States with Poor Economic Prospects Relative to National Average
20
10
0
Economy
Healthcare
Infrastructure
Quailty of
Healthcare
Healthcare
Stability
Opportunity
Broadband
Corrections
Opportunity
Employment
Education
Health
Public
Economic
Fiscal
Crime &
Access
Access
Quality
Life
Requested Pay Raise than White Men,” PayScale Inc., May 28, 2018.
© 2020 Citigroup
94
Figure 140. Black Workers Are Less Likely to Be Located In States With Rapid Growth in High Wage Sectors
Healthcare and Social Assistance Professional and Technical
5.0% 6.0%
Nevada Utah
Percent Job Growth (5-Yr Annualized Rate: 2013-2018)
-1.0%
0.0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
-0.5% -2.0%
Black Persons as Share of Population: 2020 Black Persons as Share of Population: 2020
Washington
3.0%
Florida
4.0%
Wyoming Utah California Nevada North Carolina
2.5% North Carolina Arizona
Georgia DC
Colorado South Carolina
Texas Delaware 2.0% New York
IdahoUtah Tennessee
2.0%
Tennessee Georgia
Florida
Virginia Michigan
Ohio Virginia Alabama
1.5% 0.0% Illinois
South Carolina DC 0% 10% 20% 30% 40% 50%
Arkansas New Jersey Maryland Mississippi
Michigan
New York
1.0% Alabama
-2.0% Delaware Louisiana
0.5% New Jersey
Illinois
Mississippi
-4.0% Arkansas
Maryland Louisiana
0.0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
-6.0%
-0.5%
-1.0% -8.0%
Black Persons as Share of Population: 2020 Black Persons as Share of Population: 2020
103 Jones, J.M., “U.S. Stock Ownership Down Among All but Older, Higher-Income,”
Gallup, May 24, 2017.
104 McCarthy, J., “Stock Investments Lose Some Luster After COVID-19 Sell-Off,”
© 2020 Citigroup
95
Operation Hope and Dfree are notable organizations that advocate financial literacy
as an avenue for achieving financial independence, often known as “silver rights.”
Online brokerage firms that require smaller initial investments and reduced fees, as
well as investment clubs are ways that families with modest incomes can begin to
invest in their futures. Families with greater means can seek professional advice
from brokers and financial advisors. All persons working at jobs with pension funds
and/or retirement savings vehicles (IRAs, 401Ks) should take advantage of them,
especially early in one’s career.
Figure 141. Black People Less Likely to Own Stocks than White People Figure 142. A Significant Share of Americans Favor Stock Holdings
U.S. Stock Ownership Which Do You Think is the Best Long-Term
70% (Percent of Respondants, 2017) Investment?
60% 40%
60%
35% 34% 34% 35% 35%
35%
34% 31%
50% 30%
30% 28%
40% 36% 37%
25% 25% 25%24% 25% 27%
26% 26%
30% 24% 22%
19% 20% 22% 21%
20% 20% 19%
17% 18% 17% 17%
20%
15% 17% 19%
16% 16%
14%
10% 14% 14% 15% 15% 13% 15% 15%
10%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0% Real Estate Stocks/Mutual Funds
White Black Hispanic Savings Accounts/CDs Gold
Source: Gallup, Citi Research Source: Gallup, Citi Research
© 2020 Citigroup
96
Figure 143. Number of Blacks in Congress is Small but Steadily Climbing Figure 144. Blacks in Federal Positions Have Increased
Number of Black U.S. Representatives 30%
60
25%
50 20%
15%
40
10%
30 5%
0%
Carter
Johnson
Ford
Reagan, term 1
Reagan, term 2
G.H.W. Bush
Clinton, term 1
Clinton, term 2
Trump, to date
Nixon, term 1
Nixon, term 2
Obama, term 1
Obama, term 2
20
10
0
1965 1975 1985 1995 2005 2015
Source: Pew Research Center, Citi Research Source: Pew Research Center, Citi Research
© 2020 Citigroup
Citi Global Perspectives & Solutions (Citi GPS) is designed to help our clients
navigate the global economy’s most demanding challenges, identify future themes and
trends, and help our clients profit in a fast-changing and interconnected world. Citi GPS
accesses the best elements of our global conversation and harvests the thought
leadership of a wide range of senior professionals across the firm.
Notes:
© 2020 Citigroup
100
Notes:
© 2020 Citigroup
101
IMPORTANT DISCLOSURES
This communication has been prepared by Citigroup Global Markets Inc. and is distributed by or through its locally authorised affiliates (collectively, the "Firm")
[E6GYB6412478]. This communication is not intended to constitute "research" as that term is defined by applicable regulations. Unless otherwise indicated, any reference to a
research report or research recommendation is not intended to represent the whole report and is not in itself considered a recommendation or research report. The views
expressed by each author herein are his/ her personal views and do not necessarily reflect the views of his/ her employer or any affiliated entity or the other authors, may differ
from the views of other personnel at such entities, and may change without notice.
You should assume the following: The Firm may be the issuer of, or may trade as principal in, the financial instruments referred to in this communication or other related
financial instruments. The author of this communication may have discussed the information contained herein with others within the Firm and the author and such other Firm
personnel may have already acted on the basis of this information (including by trading for the Firm's proprietary accounts or communicating the information contained herein to
other customers of the Firm). The Firm performs or seeks to perform investment banking and other services for the issuer of any such financial instruments. The Firm, the Firm's
personnel (including those with whom the author may have consulted in the preparation of this communication), and other customers of the Firm may be long or short the
financial instruments referred to herein, may have acquired such positions at prices and market conditions that are no longer available, and may have interests different or
adverse to your interests.
This communication is provided for information and discussion purposes only. It does not constitute an offer or solicitation to purchase or sell any financial instruments. The
information contained in this communication is based on generally available information and, although obtained from sources believed by the Firm to be reliable, its accuracy
and completeness is not guaranteed. Certain personnel or business areas of the Firm may have access to or have acquired material non-public information that may have an
impact (positive or negative) on the information contained herein, but that is not available to or known by the author of this communication.
The Firm shall have no liability to the user or to third parties, for the quality, accuracy, timeliness, continued availability or completeness of the data nor for any special, direct,
indirect, incidental or consequential loss or damage which may be sustained because of the use of the information in this communication or otherwise arising in connection with
this communication, provided that this exclusion of liability shall not exclude or limit any liability under any law or regulation applicable to the Firm that may not be excluded or
restricted.
The provision of information is not based on your individual circumstances and should not be relied upon as an assessment of suitability for you of a particular product or
transaction. Even if we possess information as to your objectives in relation to any transaction, series of transactions or trading strategy, this will not be deemed sufficient for
any assessment of suitability for you of any transaction, series of transactions or trading strategy.
The Firm is not acting as your advisor, fiduciary or agent and is not managing your account. The information herein does not constitute investment advice and the Firm makes
no recommendation as to the suitability of any of the products or transactions mentioned. Any trading or investment decisions you take are in reliance on your own analysis and
judgment and/or that of your advisors and not in reliance on us. Therefore, prior to entering into any transaction, you should determine, without reliance on the Firm, the
economic risks or merits, as well as the legal, tax and accounting characteristics and consequences of the transaction and that you are able to assume these risks.
Financial instruments denominated in a foreign currency are subject to exchange rate fluctuations, which may have an adverse effect on the price or value of an investment in
such products. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Investors should obtain advice from their
own tax, financial, legal and other advisors, and only make investment decisions on the basis of the investor's own objectives, experience and resources.
This communication is not intended to forecast or predict future events. Past performance is not a guarantee or indication of future results. Any prices provided herein (other
than those that are identified as being historical) are indicative only and do not represent firm quotes as to either price or size. You should contact your local representative
directly if you are interested in buying or selling any financial instrument, or pursuing any trading strategy, mentioned herein. No liability is accepted by the Firm for any loss
(whether direct, indirect or consequential) that may arise from any use of the information contained herein or derived herefrom.
Although the Firm is affiliated with Citibank, N.A. (together with its subsidiaries and branches worldwide, "Citibank"), you should be aware that none of the other financial
instruments mentioned in this communication (unless expressly stated otherwise) are (i) insured by the Federal Deposit Insurance Corporation or any other governmental
authority, or (ii) deposits or other obligations of, or guaranteed by, Citibank or any other insured depository institution. This communication contains data compilations, writings
and information that are proprietary to the Firm and protected under copyright and other intellectual property laws, and may not be redistributed or otherwise transmitted by you
to any other person for any purpose.
IRS Circular 230 Disclosure: Citi and its employees are not in the business of providing, and do not provide, tax or legal advice to any taxpayer outside of Citi. Any statements
in this Communication to tax matters were not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any
such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
© 2020 Citigroup Global Markets Inc. Member SIPC. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are
used and registered throughout the world.
© 2020 Citigroup
103
© 2020 Citigroup
© 2020 Citigroup
www.citi.com/citigps