Study Finds Michigan Economy Would Gain $92 Billion With Racial Equity

Study Finds Michigan Economy Would Gain $92 Billion With Racial Equity

The State of Michigan could realize a $92 billion increase in economic output by 2050 if racial disparities in health, education, incarceration, and employment were eliminated, a report from the W.K. Kellogg Foundation and Altarum, a nonprofit organization dedicated to transforming health and health care, finds.

Based on data from public and private sources, including Johns Hopkins, Georgetown, Brandeis, and Harvard universities and the U.S. Census, the report, The Business Case for Racial Equity Michigan: A Strategy for Growth (44 pages, PDF), estimates that ending discriminatory policies and practices in Michigan and closing the wage gap between people of color and their white counterparts would generate $15 billion in additional earnings today as a result of greater worker productivity and eventually produce an additional $36 billion in total economic output. The report further suggests that the increase in earnings would yield an estimated $12 billion in additional purchasing power — including additional annual spending of $4 billion on housing, $2 billion on automobiles and transportation, $1.5 billion on food, $625 million on entertainment, and $423 million on apparel — and would generate an extra $1.5 billion in annual tax revenues, enabling state and local governments to improve education, public safety, and infrastructure. Given the expected growth in the state's populations of color, closing earnings gaps would result in $40 billion in higher earnings and $92 billion in greater economic output by 2050.

An update to an analysis issued in 2015, the report estimates that health disparities in Michigan currently account for $2.2 billion in excess medical care costs and $1.9 billion in untapped productivity. Addressing those disparities could create a potential economic gain of $4.1 billion per year. Noting that 40 percent of Michigan's workers and consumers will be people of color by 2050, the report outlines promising strategies for building equitable communities, including boosting educational attainment levels to narrow the skills gap between employer demand and the available talent pool; strengthening early childhood education; and supporting prenatal care through home visiting programs.

A national report released in April found that the U.S. economy would be $8 trillion larger by 2050 if the country eliminated racial disparities in health, education, incarceration, and employment. In addition to the updated report on Michigan, WKKF and Altarum plan to release new analyses focused on Mississippi, New Mexico, and New Orleans.

"The study details our state's untapped economic potential," said WKKF president and CEO La June Montgomery Tabron. "Advancing racial equity will translate into an economic boom for businesses, the public sector, and communities and catalyze the creativity and productivity of all Michiganders. Inequities hold our communities back and a growing number of public and private sector leaders are recognizing that everyone has a stake in creating opportunities for all people."