If Massachusetts could close the wealth gap in Black and Latino communities, the state could grow its economy by $25 billion over five years, the equivalent of adding up to 100,000 jobs, according to an analysis by the Massachusetts Taxpayers Foundation.
The 29-page report, to be released on Wednesday, is an unusual one for the fiscal watchdog group, which typically weighs in on topics such as the state budget or MBTA finances. But like many organizations since the racial reckoning that followed George Floyd’s murder last May, the foundation wanted to play a role in eliminating disparities in the Black community.
The group’s focus is research and analysis, and the report attempts to aggregate in one place key data on inequities in education, income, economic opportunity, criminal justice, and health care among Black and Latino people in Massachusetts. Data on the Asian American community were not included, but will be part of a follow-up report.
Foundation president Eileen McAnneny said the goal was to set a “baseline” of racial disparities to measure progress ― or the lack of it ― going forward.
“Often an issue rises to the surface, and people react and move on to the next issue,” McAnneny said. “They don’t always do the necessary follow-up or analysis, or make sure the policies adopted have the intended consequence. As our report demonstrates, good intentions alone are not sufficient to close the racial gap.”
The report lays out in striking fashion how little progress has been made since the 1968 Kerner Commission, established by President Lyndon B. Johnson to examine the roots of nationwide racial unrest during the summer of 1967. The commission’s report warned that “our nation is moving toward two societies, one black, one white — separate and unequal.” Despite numerous policies intended to reverse racism over the past half-century, inequality persists in almost every aspect of society in the United States, including in Massachusetts.
Some of the data are familiar — such as the oft-cited Federal Reserve statistic that the median net worth of a median Black household is $8. Lesser known is that Boston lags far behind the median net worth of Black households in the metro areas of Los Angeles, Miami, and Tulsa, Okla., and Washington, D.C., which averaged $4,800.
To emphasize what’s at stake, the taxpayers foundation analyzed the long-term benefits of eliminating racial inequities in the state’s economy, building off a pair of national studies on the racial wealth gap by Citi Global Perspectives & Solutions and McKinsey & Co.
Among the key findings of the taxpayers foundation:
― The Massachusetts gross state product ― the value of goods and services produced ― could increase by about $25 billion over five years if the Commonwealth can close the racial divide in wages, housing, investments, and wealth, most crucially through getting better-paying jobs.
― If Black and Hispanic students in Massachusetts graduated from college at the same rate as their white peers, the increased economic activity from higher wages, more state and local tax collections, and reduced public assistance could exceed $6 billion over the first five years and grow to more than $20 billion over a decade.
― If Black and Hispanic students in Massachusetts graduated from high school at the same rate as their white peers, and there was a commensurate decline in public assistance and incarceration rates, it could result in nearly $1 billion in increased economic activity over five years.
― The additional 10,965 college degrees awarded annually to Black and Hispanic students would lead to jobs contributing $658 million in state and local taxes over their lifetime, or about $22 million a year.
The health of the Massachusetts economy hinges on the ability of employers to create and fill jobs ― people who work drive spending and pay taxes that feed municipal and state coffers. The report arrives at a time when employers have been worried about the long-term trajectory of the Commonwealth’s workforce, which has been shrinking as more workers retire and fewer immigrants arrive to make up the difference.
In many ways, too, eliminating racial inequities is about shoring up a pipeline of workers.
“You want to make sure every member of society can contribute to the fullest extent possible,” said McAnneny.
While the foundation report focused on disparities among Black and Latino residents, challenges of the Asian American community should not be ignored. Asian Americans are the fastest growing racial group in Greater Boston and account for about 8.9 percent of the population, according to Boston Indicators, the Boston Foundation’s research center. That’s about the same size of the Black population in Greater Boston.
The Asian American poverty rate in Boston is about 29 percent — a few percentage points higher than Black households and nearly three times higher than white households, according to Boston Indicators.
The taxpayers foundation, which is funded by businesses, recognizes its report alone won’t erase racial inequities. It plans to work with other organizations, such as the Boston Foundation, on next steps.
Stephen Mosha, vice chair of the taxpayers foundation executive committee, said the report highlighted for him how Massachusetts should seize the opportunity to be a leader in closing the racial gap in health care, given that the region is home to world class medical institutions. The disparities mean that people of color don’t have the same access to quality care, which leads to poorer health outcomes.
One of the surprising statistics from the report is the high rate of Black and Latino people who still do not have health insurance in Massachusetts, despite the state being the first in the country to mandate coverage. In 2019, 11.4 percent of Black people and 24.4 percent of Latinos reported they were uninsured at some time during the year. Those rates haven’t budged since 2005, the year before Massachusetts passed the health insurance law.
Mosha said increasing access to health care for communities of color would go a long way toward ending disparities. He’d gladly enlist the expertise of care organizations and others to help the taxpayers foundation figure out how to make that happen.
“We would like to be a party to a solution,” said Mosha. “We alone can’t do it.”
Shirley Leung is a Business columnist. She can be reached at email@example.com.