Disparities exist in every dimension of Black economic life in the United States according to a new report from McKinsey consulting firm. While Black people have known for a long time we’re catching hell it’s interesting when the research documents the daily reality.
There is both opportunity and more disaster available for the consumers and business. Consider retail. The report estimates, Black shoppers are willing to spend 20% more for a product that actually caters to them. Think personalization and service.
McKinsey reports $700 billion value can be created by companies that cater to Black customers. That wealth could also help solve the racial income and wealth gaps that exist in the US economy.
For companies that proclaim support for Black Lives Matter, Juneteenth, The Tulsa Race Massacre and other systemic inequities there are real opportunities to step up.
Amazon is launching its own initiative called the Black Business Accelerator, pledging $150 million over the next four years to give Black businesses access to education and mentorship.
“Black consumers are often willing to switch what they buy and even pay more for offerings that truly resonate.
When combined with the effects of income parity and expanded access to goods and services in Black communities, there is an opportunity to unlock some $700 billion in value that would be shared by companies and Black households,” the authors write.
According to McKinsey, Black households spent approximately $835 billion in 2019 — making up only 10% of the nation’s total — largely due to lower income and wealth. However, years of “underinvestment by the private sector have left some majority-Black communities with a dearth of retail options and key services.” If you live in major metros like Philadelphia, Detroit, Chicago, Los Angeles then you know first hand the differences between the inner-city and suburban shopping options.
Even for Black entrepreneurs hoping to address the inequalities, there are unique hurdles.
McKinsey says white entrepreneurs start their businesses with $107,000 of capital on average, while that number for Black founders is just $35,000, making it extremely hard for Black businesses to “survive” the startup stage.
“Hundreds of years of structural exclusion will not be simply erased, particularly when complex dynamics are at work,” McKinsey says. “However, the status quo is not tenable for Black Americans or for the US economy as a whole. Some progress can be achieved quickly. In other cases, changes to entrenched systems and dynamics will take years to produce results.”
What do you think?