How Economic And Racial Inequality Holds Back The Entire Economy

America’s vast economic and racial inequalities are hampering economic growth. As the country’s demographics continue to shift, policymakers will need to address those inequities.

According to a new book from the Center for American Progress’ Progress 2050 project, All-In Nation, these inequalities kept U.S. gross domestic product $1.2 trillion below what it could have been in 2011, and ending them would raise 13 million Americans out of poverty. This inset from the infographic accompanying All-In Nation shows what the U.S. economy would have looked like in 2011 if the book’s ideas on education, health care, infrastructure, housing, immigration, criminal justice, and civic participation had been implemented:

Progress 2050 takes its name from the year by which non-hispanic whites are projected to be a minority of the U.S. population. That shift makes it imperative to address the persistent gaps between non-hispanic whites and other racial and ethnic groups in wealth, educational attainment, and economic opportunity. Here are a few of the book’s key ideas:

Economic, racial, and ethnic inequities are costing Americans of all cultural backgrounds. All-In Nation cites recent economic research from the International Monetary Fund and others that found high inequality undermines economic growth for everyone. As inequality rises, people born at the bottom of the economic spectrum lose access to the economic mobility core to the American dream. And key programs on which everyone relies will be better funded without such severe socioeconomic divisions: for example, Social Security’s long-run deficit would be 10 percent smaller with less inequality.


People of color are the future of America’s workforce, so the country must better prepare them. Whites will be a minority of the workforce by 2045. The educational attainment gap facing African Americans and Hispanics must therefore close to ensure the U.S. workforce remains competitive. From 1973 to 2010, the portion of American jobs requiring postsecondary education more than doubled from 28 to 59 percent. Yet the federal government today spends less of its budget on education and job training than it did in 1970. And an increasingly polarized education system tracks African Americans and Hispanics into overcrowded, underfunded, and less-competitive schools, undermining the strong growth in college enrollment rates for those groups.

It’s time to close the “cradle-to-prison pipeline.” “There are more African American adults under correctional control today…than were enslaved in 1850,” civil rights advocate and author Michelle Alexander writes. Besides the 2 million Americans in prison, another 5.3 million are on probation or parole. Many of that staggeringly large group were caught up in a misguided War on Drugs that “gave birth to this vast, new racial undercaste,” she explains. Another essay by Children’s Defense Fund founder Marian Wright Edelman observes that states spend 2.5 times as much per prisoner as they do per public school student. The reforms All-In Nation proposes to the criminal justice system could save tens of billions of dollars — money which could be spent improving an education system that too often prepares black and Hispanic kids for prison rather than for college.