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The economic potential of closing gender and racial gaps

Goldman SachsSharon Bell, Gizelle George-Joseph, Alison Nathan
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  • Addressing racial and economic disparities is expected to yield positive economic and business outcomes, with Goldman Sachs planning to integrate diversity research consistently across global regions including Japan, emerging markets, and Europe rather than isolating the topic.
  • HBCU enrollment, particularly among Black students, is projected to have grown since approximately 2014 due to societal unrest, with specific institutions like Morehouse College reporting a 60% year-over-year application increase in 2020, though future growth relies on sustained funding to prevent institutional decline.
  • While HBCUs are expected to offer higher graduation rates than non-HBCUs when controlling for financial status and academic preparedness, schools with large endowments show better success rates, whereas those with high concentrations of Pell Grant recipients (families earning under $60,000) tend to perform less well.
  • HBCUs are anticipated to serve as safe environments countering increased campus hate crimes and providing supportive faculty environments that foster positive academic outcomes for minority students.
  • Global women's workforce participation has risen gradually over the last 15 years driven by education rather than changing work propensity, and narrowing the gender participation gap by half could boost GDP in developed and emerging markets by 5% to 6%.
  • The projected GDP impact in emerging markets is expected to stem primarily from women entering formal employment, while developed markets may see gains from reduced pay gaps and higher labor force participation among educated women.
  • Better-educated women are expected to generate superior health and education outcomes for their families, with the woman's education level cited as more impactful than the man's, making education the critical focus for policymakers in emerging markets to close gender gaps.
  • Policymakers in developed markets are expected to drive female labor force participation through family-friendly policies such as maternity and paternity leave and subsidized child care, while private investors are urged to provide flexible donations and set aspirational hiring goals for HBCU interns.
  • Corporate strategies are expected to prioritize broadening leadership pipelines in lagging technology and financial sectors, with diversity in AI development deemed necessary to address future work patterns affecting both men and women.
  • The gender pay gap is projected to narrow over time, evidenced by Japan's reduction from 50% in the late 1990s to just over 20%, whereas the US gap is expected to remain stagnant at approximately 20% despite the last 15 years.
  • Persistent risks to female economic participation include crime against women in emerging markets which deters mobility and work, and the US is expected to remain one of the developed markets with the highest pay gap.
  • Achieving a fairer society is expected to provide ethical benefits and economic returns in both the shorter and longer term, contingent on sustained governance for lower-income financial support and the creation of career pathways including mentoring for HBCU graduates.