Artificial Intelligence Could Widen Racial Wealth Gap In U.S. By $43 Billion
he implementation of generative artificial intelligence in the workplace, such as automated customer and employee support roles and AI-generated coding programs, could widen the racial wealth gap between Black households and white households in the U.S. some $43 billion by 2045, research suggested, due to an already existing wealth gap and Black workers being employed in occupations most at risk of automation—worsening the racial wealth gap and hampering Black economic mobility.
Key facts
- Researchers from McKinsey’s Digital Practice and the McKinsey Institute for Black Economic Mobility cited a June study that said the U.S is expected to create around $2 trillion in wealth from generative AI, $500 billion of which will go to households, meaning each of the projected 143.4 million U.S. households in 2045 will get an average increase of $3,400 in new wealth.
- The researchers said Black households only make 38 cents of every dollar of new household wealth, so if projections are accurate, the new wealth created by generative AI would increase the wealth gap by $43 billion.
- In October, the Federal Reserve found the median Black household has about $44,900 of wealth, just 15% of the $285,000 median for white households—a continuation of the widening gap between Black and white wealth which has grown in the last four decades.
- Black workers are also mostly employed in four of the top five “high-mobility” occupations—or jobs that provide a livable wage and opportunities for development without requiring a degree—most likely to be taken over by automation: office support, production work, food services and mechanical installation and repair, McKinsey said.
- Between 2030 and 2060, researchers said generative AI will be able to perform half of high-mobility jobs, potentially closing the jobs as a way of upward mobility for Black workers.
Contra
The researchers said generative AI could also provide opportunities of upward mobility for Black workers by better tailoring financial products for Black workers to improve financial inclusion, using AI-powered programs to improve digital skills and making homeownership more accessible through generative AI tools that improve the process of checking credit scores.
Key background
In 1870, shortly after the emancipation of slaves in the U.S., white wealth in the U.S. was 23 times that of Black wealth, according to the Federal Reserve Bank of Minneapolis. The ratio had tightened to eight-to-one by 1960, and reached five-to-one in 1980 due to the passage of civil rights legislation in the 1960s, including the Civil Rights Act of 1964, the Voting Rights Act of 1965, the Fair Housing Act of 1968 and changes to the federal minimum wage set under the Fair Labor Standards Act. However, since 1980, the racial wealth gap has increased by about 0.1% a year due to a difference in capital gains—or previously owned wealth and the interest earned on that wealth—the Federal Reserve found. The unemployment rate for Black Americans is also twice as high as it is for white workers, according to a 2017 study from the Center for Economic and Policy Research.
