The Potential $43 Billion Widening Racial Wealth Gap And Its Impact On Black Economic Mobility

Implementing artificial intelligence (AI) in the workplace could widen the racial wealth gap between Black and white households in the US by $43 billion, research has suggested.

McKinsey & Co. stated that generative AI (gen AI) has initiated a seismic shift in work and value creation.

When this happens, and a new technology appears, it can create or exacerbate divides, including the racial wealth gap.

They explored how many gen AI may affect Black communities and Black workers.

A Divide In Black And White Households

The research found that new wealth created by digital and AI capabilities flows through an economy where the median Black household has only about 15% of the wealth held by the median white family.

The median Black family has amassed about $44,900 in wealth, and the median white household holds $285,000.

According to a previous study, the US is expected to create around $2 trillion in wealth from generative AI, $500 billion of which will go to households.

This means that each of the projected 143.4 million US households in 2045 will get an average increase of $3,400 in new wealth.

Black Americans currently capture only about 38 cents of every dollar of new household wealth despite representing 13% of the US population.

The research states that if this trend continues and projections of the growth of Black households are accurate, by 2045, the racially disparate distribution of new wealth created by Gen AI could increase the wealth gap by $43 billion annually.

Gen AI’s Impact On Black Workers

Black Americans, with an unemployment rate twice that of white workers, are overrepresented in roles most likely to be taken over by automation, according to the research.

These occupations include office support, production work, food services, and mechanical installation and repair.

Between 2030 and 2060, researchers additionally said generative AI would be able to perform half of the high-mobility jobs, potentially closing the positions as a way of upward mobility for Black workers.

Accelerating Black Economic Mobility

A recent McKinsey Institute for Black Economic Mobility report identified eight pillars representing areas with the highest potential to move the needle on Black economic mobility.

They include financial inclusion, credit and ecosystem development for small businesses, health, workforce and jobs, pre-K-12 education, the digital divide, affordable housing, and public infrastructure.

When gen AI meets these eight pillars, there’s potential for profoundly different levels of impact, depending on how the tools are trained, designed, adopted, and used.

Gen AI poses both opportunities and risks for Black economic mobility, however.

Can Gen AI Increase Or Decrease Inequalities?

With the digital divide, Gen AI can be used positively to develop personalized learning programs for people to improve their computer skills.

However, on the other hand, a new-gen AI-centered digital divide could emerge if marginalized populations are overlooked.

For example, if language models fail to develop an understanding of African American Vernacular English, or if paywalls or desktop-only or mobile-only versions restrict equitable access to gen AI tools.

Regarding credit and ecosystem development for small businesses, the following Black unicorns could emerge through the innovation of gen AI-enabled products and services.

However, Black-owned businesses could have less access to gen AI-driven digital tools that can support small businesses with features such as economic forecasting, content creation, and document generation.

Additionally, regarding financial inclusion, gen AI-powered hyperpersonalization could connect Black consumers with new, tailored financial products.

On the other hand, embedded bias could be incorporated into general AI algorithms and lead to unfair outcomes when financial institutions conduct risk analyses of clients or screen for suspicious activity.

Ultimately, the research found that AI alone will not reduce or increase inequality.

The technology must be applied to increase access for Black patients, customers, and communities in ways that thoughtfully address racial gaps along the eight pillars, with interventions to close those gaps.