Race, gender, age, nationality, religion, or sexual orientation are just several elements constituting each unique human being. Accumulation of these individual features creates an abundant mixture - our society.
Unfortunately, despite enriching human experience, these elements often become a set of lenses through which people try to make unjustified distinctions between each other that frequently result in unequal treatment.
Microaggressions, spiteful comments, substantial pay gaps, or unfair promotion rules all seem like abstract concepts, far from core values of all self-respecting companies. Nonetheless, these behaviors actually tend to comprise a distressing reality to a substantial part of humanity.
The 2019 Glassdoor survey has revealed that approximately three in five American employees have either witnessed or experienced discrimination based on age, race, gender, or sexual orientation in their workplace. Obviously, other countries struggle with creating an equal and inclusive environment as well. Half of the employed adults across the US, UK, France, and Germany believe that their employers need to do much more to increase diversity and inclusion.
In the era of plunging into the ocean of CSR endeavors, companies tend to intensify their focus on socially responsible initiatives, including combatting prejudice. Therefore, it is crucial to understand why discrimination is so detrimental, even from an economic point of view.
Cost of discrimination
According to the analysis performed by the International Institute and Department of Social Policy at the London School of Economics, women and men from ethnic minority groups would have had extra incomes of £127 billion a year if their salaries matched those of white British men. It is also essential to mention that one of the principal reasons for income gaps in the past were differences in qualifications. These days, however, researches have shown that white British men do not present higher qualifications than the representatives of other groups.
Moreover, World Bank Group’s 2018 report has estimated that: “globally, countries lose $160 trillion in wealth due to earning gaps between women and men.” Meanwhile, a study led by Citigroup has revealed a significant price tag on racism in the United States – according to the estimates, the US economy has lost $16 trillion due to racial discrimination over the past 20 years. This cost results from discriminatory practices in numerous fields, including education and access to business loans and individual credits.
You might wonder how these sums are measured...
And that was the same query that emerged in my mind after I gazed at these tremendous numbers. Citigroup has explained that to arrive at the complete sum, they have taken into consideration several factors: the value of the estimated number of jobs that weren’t created due to discriminatory lending to African American entrepreneurs, disparities in wages, sums of not-provided housing credit, and predicted income lost due to biased practices obstructing the access to higher education.
As another example, let’s investigate the research titled ‘The Costly Business of Discrimination’ led by the Center for American Progress in 2012. Its main aim was to measure the economic costs of discrimination against gay and transgender people in the workplace. The estimated amount - $64 billion a year – represented the “annual estimated cost of losing and replacing more than 2 million American workers who leave their jobs each year due to unfairness and discrimination.”
As it is quite clear to see, all of these indications have a strong confirmation in objective statistic data estimated over the years. Moreover, median judgment in discrimination lawsuits equals approximately $200,000, and 25% of sentences rise above $500,000, according to data analyzed by Hiscox company.
If discrimination is not profitable, why does it persist?
You probably expect a meticulous analysis scrutinizing many factors that fuel discrimination, right? Well, it might disappoint you, but the answer to this question is surprisingly simple: discrimination remains in the market solely because of social prejudice. I think we should try to deeply and consciously understand what the previous sentence means.
Market forces, like the renowned invisible hand described by Adam Smith in his work “The Theory of Moral Sentiments,” are not sufficient enough to overwhelm strenuous social attitudes based on ingrown prejudice.
If market forces were solely responsible for deciding about discrimination, it would not last for too long. As the famous economist and Nobel Prize winner Gary Becker argued, in a competitive labor and product market, profit incentives work against the excluding practices. Why? If a company wanted to employ only workers from one particular social group, it would increase their wages, which would lead to higher production costs. That would automatically push the average salary of the discriminated group down and… make the company vulnerable to a firm not led by prejudice! The non-biased enterprise would be able to access the labor force more efficiently and outstrip its rival.
Unluckily, due to attitudes represented by larger groups of customers, many businesses are tempted to act according to their expectations to earn a higher profit and avoid the loss of potential buyers.
What can we do to help the fight against discrimination?
If you read my posts regularly, you are probably getting used to that section of my texts – “so, what can we do…?” I find it particularly important that analyses of any socio-economic problems are accompanied by a consideration of potential solutions. It is the only way to provide change rather than just a constant repetition of an issue until people become bored with it.
The main aim of the fight against costly discrimination is to be pro-active. Having meaningful conversations with people about harmful excluding practices, familiarizing oneself with interhuman differences, and understanding them, or avoiding culturally offensive humor, are a perfect place to start. The key is to fully understand that treating others who differ from us with due respect is not even close to a complex process that can be summed up in numerous bullet points. It is a fundamental duty of every human being. Poof! That’s all that magic.
Why is it so important right now?
Because these days, we are experiencing the overlap of two mutually fueling pandemics, of which one is relatively new, and the other haunts humanity for ages: coronavirus and discrimination. According to numerous studies, like the renowned McKinsey ‘Women in the Workplace 2020”, people belonging to less privileged groups are much more likely to have been laid off or furloughed throughout the COVID-19 crisis. Additionally, decisions imposed by many governments have put many immigrants in devastating conditions with the lack of support and the advice to go back to their countries in the middle of coronavirus turmoil.
The pandemic has the terrifying power to set efforts to create a more inclusive society back by decades. As Phumzile Mlambo-Ngcuka, the Executive Director at UN Women, has stated in the interview with SABC News, “we need to fast track the journey (to equality), we need to scale up the change, because every time we slow, we then reel back. Pace and scale are critical for this change to be meaningful.”
Only conscious and mobilized efforts can help us defeat the pandemic of discrimination and arrive at a better stage of our reality.
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