It’s obvious that White people are richer than the nation’s Black and Hispanic populations.

What is less understood is the cost of that disparity to everyone, regardless of race, income and wealth.

Mary C. Daly hopes to change that.

As president of the Federal Reserve Bank of San Francisco, one of 12 regional institutions in the nation’s central bank system, this influential voice in economic policymaking co-wrote a recent Brookings Institution report that pegged the cost of racial and economic disparities in the labor market.

The report’s opening line asks the central question: “How much larger would the U.S. economic pie be if opportunities and outcomes were more equally distributed by race and ethnicity?” Buried deep in the 35-page study is the distressing answer: $22.9 trillion over 30 years — that’s trillion with a “T.”

But that’s not the full answer.

When other factors are considered, including the value of capital items like machinery, factories and computers that the labor force needs to do its work, the figure jumps to a staggering $51 trillion, according to Daly and her collaborators, Shelby R. Buckman, a Stanford University graduate student; Laura Y. Choi, a San Francisco Fed senior vice president; and Lily M. Seitelman, a Boston University graduate student.

Looking just at “the economic cost of Black inequality” last year, a report by Citi, a global bank, reached a similar conclusion: “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.”

These trillions represent a huge loss for all Americans, not just Black people, who bear the direct consequences of historic and systemic racism. Daly said the research was needed so people would understand that disparities hurt all our pocketbooks, even if all people don’t care about fairness.

“It’s beyond fairness,” Daly, a high school dropout who is now a PhD economist, said by phone. “It’s really about our economic prosperity as a community and a group in a society … hopefully making a case that will help to move the needle.”

How do we move the needle that’s been stuck amid vast inequities for longer than the nation’s history? What is the government’s role?

“There’s so much we are doing,” Susan Rice, President Biden’s domestic policy adviser, told me during a media briefing last week. She listed a broad range of administration initiatives, citing the just-approved infrastructure legislation and Biden’s Build Back Better proposal, including funding for preschool, health care and housing programs. Biden, more than other presidents, has centered racial justice, placing it at the core of the “ambitious whole-of-government equity agenda” he announced in an executive order on his first day in office.

The Biden administration recognizes “the racial wealth gap has direct roots in discriminatory federal, state and local policies,” Chiraag Bains, Biden’s deputy director for racial justice and equity, added by phone Tuesday. He pointed to the president’s plan to use the administration’s vast purchasing power to increase government contracting with small, disadvantaged companies, including Black-owned firms, to 15 percent, equaling $100 billion over five years.

“It will represent the biggest increase in small, disadvantaged business contracting since we started collecting data,” Bains added.

During a campaign speech last year, Biden promised to “strengthen the Federal Reserve’s focus on racial economic equity,” saying it should “aggressively target persistent racial gaps in jobs, wages and wealth,” in addition to its legislatively mandated focus on maximum employment, stable prices and interest rates.

Similarly, legislation introduced by House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) and Sens. Elizabeth Warren (D-Mass.) and Kirsten Gillibrand (D-N.Y.) would have the Fed support policies aimed at the elimination of racial and ethnic disparities in employment, income, wealth and affordable credit access.

“While the task of closing or eliminating racial gaps in economic outcomes is an all-hands-on-deck task, the Federal Reserve can help in several ways,” Raphael W. Bostic, president of the Federal Reserve Bank of Atlanta, said by email. That includes promoting “sustained maximum employment,” he said, and fostering “solutions to help Black homeowners build equity and wealth more quickly.”

One example, he said, is research by the Atlanta Fed, which found that African Americans do not build home equity as quickly as White homeowners. After accounting for things like credit ratings and income, the research suggests “other social factors are at play,” said a December 2020 Atlanta Fed study.

Overcoming issues that hinder robust, broad-based economic growth, Daly said, requires changing a mind-set that now too often blames disadvantaged individuals instead of society taking ownership for correcting its deficiencies.

“The gaps we tolerate are costing us trillions of dollars …,” she added, “which is the economic pie for everyone.”

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