Accessible articles from McKinsey fill the research gap
There is a lack of well-written, research-based articles accessible to the general public on Black Economics. Many people want to know where to get started when learning about Black Economics.
There are four top resources in Black Economics: Ta-Nehisi Coates’s reparations article in The Atlantic, the Advanced Placement Black Studies Course(The Collage Board), the California reparations report and the McKinsey articles on African American wealth, income, and employment. Coates and McKinsey cover the current situation and the AP and California report cover how we got here.
McKinsey’s suite of articles on Black workers fills the gap between pure academic research and social media content. McKinsey’s reports feature lots of easy-to-understand content, discussion, data, and graphics. All the articles are plain, clear, and direct.
McKinsey & Company is a consulting firm that provides strategic, operational and organizational advice to large multinational corporations and governments. McKinsey has about 38,000 to 45,000 employees, depending on who you count. They are known for their data-driven and exhaustive approach to business problems.
The group of articles is produced by the McKinsey Institute for Economic Mobility
Before COVID and the murder of George Floyd, McKinsey had started looking at the Black wealth gap and Black life in corporate America. After the Floyd killing, they accelerated their research into Black economics. The result is a substantial body of research on African American workers. The articles provide a clear, short and understandable collection of reports on the Black labor market and how to improve Black incomes.
And, believe it or not, they even made a movie. “Wait Until Tomorrow” discusses African Americans’ economic struggles.
However, McKinsey’s research comes with some drawbacks. They work for large corporations, which creates a corporate solution bias (capitalist bias). Second, they give little coverage to political and government solutions (private sector bias). Third, their long-term commitment to Black economic solutions is always in question (political and institutional bias). With all that being known, their past research has been great.
Finally, we want to point out that no other consulting company has devoted any similar amount of resources, like McKinsey has, to Black workers and their economic challenges in the United States. At Blackeconomics.com, we support McKinsey’s continuing effort to uplift Black Americans through high-quality research.
Before you begin reading the research reports, it is important to remember two events that impacted the research: The murder of George Floyd in May 2020 and Covid-19, which lasted from March 2020 to March 2023.
If we had to pick one story from McKinsey to read, it would be “The Economic State of Black America: What is and What could be?”
Let’s look at some of the McKinsey reports and studies in detail
McKinsey offers studies of Black employment, Black income and wealth, Black work-life and Black careers. If we were to summarize the research, we believe it analyzes the labor, income, geographic, residential, and business factors that contribute to low Black incomes and wealth.
• The Economic State of Black America: What is and What could be (McKinsey), June 17th 2021
This is one of the best road maps toward improving Black economic conditions in the US. It shows the current struggles of African Americans and then offers pathways for improvement. It develops Black career progressions. The central idea is that investments in education, either individually or by companies, lead to improved career outcomes and incomes. And higher incomes lead to wealth and power.
The most powerful example is upgrading skills in healthcare. McKinsey has long championed careers, workforce development and individual skills building.
• The economic impact of closing the racial wealth gap (McKinsey), August 13th 2019- This was the original study that started McKinsey down the Black economics path. The study projected that GDP could increase by 4-6% and increase Black per capita income by $2,900 to $4,300 by 2028.
• Race in the workplace: The Black experience in the US private sector (McKinsey), February 21st, 2021
• Closing the job mobility gap between black and white Americans (HBR) and (McKinsey), July 2021
• Black consumers: Where to invest for equity (a preview) (McKinsey), December 2021. Black consumers spent $910 billion in 2019. The report breaks down Black consumer spending into four categories: necessities, essentials, finance and lifestyle.
• The case for accelerating financial inclusion in Black Communities(McKinsey), February, 2020. Financial inclusion would increase Black wealth.
• How to advance equity in Black communities (McKinsey), February 2023
• A guide to impact investing in Black economic mobility (McKinsey) February, 2023
• Building supportive ecosystems for Black-owned US businesses (McKinsey), October 2020. Supporting Black businesses could add $290 billion in equity. Black businesses are concentrated in low-performing sectors.
• The state of Black residents: The relevance of place to racial equity and outcomes (McKinsey), February 2024. African Americans are located in slow-growth, lower opportunity areas.
They also have general research on jobs and labor
• The future of work in America: People and places, today and tomorrow (McKinsey). July 11th, 2019
• The Great Ownership Transfer: A new era of business stewardship (McKinsey), Feb. 25st, 2026
• Understanding how American workers progress to higher-wage jobs (McKinsey), August 12, 2020.
• Bridging the advancement gap: What frontline employees want—and what employers think they want (McKinsey), July 2022
• The case for inclusive growth (McKinsey), April, 2021
That is where McKinsey’s series of reports on Black income and wealth comes in. They are clear, concise and readable. They use statistics to make a point, but never to tell the whole story. Instead, they explain the larger, big-picture drivers of the outcomes.
The research is great, and the charts and graphic explanations are top-notch. You can see they deal with a lot of executive egos and big-shot that cannot read more than three sentences, let alone a PowerPoint. But I digress.
McKinsey’s known Biases in Detail
First, McKinsey’s biases and shortcomings are known and out in the open. Transparency is important. You won’t be surprised when you know where they are coming from. But they also have good intentions that can benefit society.
Let’s summarize McKinsey’s biases. McKinsey works for large corporations and CEOs, which leads to a private-sector solution bias. Second, they give short shrift to public sector solutions. Third, the long-term commitment to Black economic solutions is unclear. Let’s look at these topics one by one.
McKinsey is naturally biased toward corporate CEOs who write the big checks. Duh. So the research and outcomes are focused on what a CEO wants to know. McKinsey answers the strategic questions the CEO or board of directors might have asked, but do not have the skills or time to answer.
For example, what business am I really in, and what should I be in the future? How should I organize my business? What are my competitive threats? How can I run my business better?
After the killing of George Floyd, every CEO wanted to know what they were doing for African Americans. And McKinsey answered the question.
Second, McKinsey has an inherent bias toward private-sector and corporate-based solutions. They can only support answers that fit their business model. They rarely mention political solutions such as regulation, affirmative action, DEI or enhanced government services.
Third, McKinsey’s commitment is great but unclear over the long term. Like any consulting firm, they face political pressure. The effort to research Black wealth started with McKinsey’s public sector practice, then after the George Floyd killing, they got more funding. However, lately they have shifted to the general term “inequity research”. We did notice that any reference to “Black History Month” has been scrubbed from their website.
The reports are part of community outreach, social responsibility, reputation enhancement, talent acquisition, and ultimately marketing. There is also an ethical component.
However, given all these issues, McKinsey & Company are the only top consulting firm to tackle Black employment and income issues. A quick scan of their competitors shows little interest in Black worker issues. So, it’s hats off to McKinsey for sticking this through. We at BlackEconomic.com support McKinsey’s report efforts.
Why can’t McKinsey offer political solutions?
One question that frequently comes up is: “Why can’t McKinsey offer political solutions?”
McKinsey is limited because it is a business. It’s brand and reputation are at the core of how they generate value and create profits. They cannot offend past, current or future clients. Even researching Black economics is controversial, so they are limited to offering market-based solutions.
In fact, you have to ask why McKinsey has allowed the research to continue for so long given the current DEI backlash. I think we have to credit Shelly Stewart for continuing to push this important research work. He is credited on almost every paper in this area and developed a movie about the impact
But the reports are so good that we can fill in the blanks and correct for the bias. Actually, it is a little refreshing to see only conservative market solutions to Black economic issues because there is a lot to explore.
In the World of Black Economic research, where does McKinsey come in?
There is a huge gap in basic Black Economic knowledge. There are plenty of websites on personal finance, starting a business and investing, but nothing about basic economics and business. Earn Your Leisure, Budgetnista, and Boyce Watkins all cover motivation, investing and personal finance.
On the other side, think tanks cover the academic side of Black economics. There are lots of academic sites covering specific issues in Black economics. We recommend the AEA, Review of Black Political Economy, Brookings, and EPI. They all cover Black economic issues. The academic side has great Black economists like Valerie Wilson, Darrick Hamilton and William Darity who you should follow, but some of the work is heavy.
However, McKinsey nails the solid middle ground between academic articles and books, social media, and our headline-chasing “news” outlets. So, why are McKinsey’s Black economic studies so good?
First, McKinsey has resources. Period. They have the money and the talent.
Second, so far, they have been in the Black Economics research game for the long haul, starting in 2019. They have a social mission and a desire to apply their skills and knowledge to a difficult topic. They have prioritized this issue
Third, they have the brand. Everything produced is top-quality, in line with the company’s reputation. Part of that brand is social responsibility. The research can help when bidding on government contacts.
We also admire McKinsey for putting its brand stamp of approval on all research. The research comes from the parent corporation, not a funded charity, not a related corporate entity or some charity or foundation. McKinsey has the balls to own it. Cheers.
Let’s look at the history of McKinsey, its research methods, the people involved, and some general news.
McKinsey started as a partnership and later changed ownership structure to a corporation.
McKinsey’s research process is so famous that they wrote a book about their methods called the McKinsey Way.
McKinsey has a long history of ethically dubious client relationships. Reputation is everything.
Summary
McKinsey has produced a large body of research that is fundamental to Black economics. The papers are readable and easy to understand. The studies cover jobs, careers, wealth and income, financial exclusion and Black businesses. We are adding McKinsey’s research to our list of top readings in Black economics.
Research Spotlight
We also want to highlight some other research from McKinsey that makes for great reading if you have the time and interest.
• The future of work in America: People and places, today and tomorrow (McKinsey)
Notes:
Separately, there is some good news. McKinsey writes for CEOs, so there are lots of graphics, short declarative sentences, and bullet points. Everything is at about a 12th-grade level. Think about most CEOs. They are the equivalent of intelligent 12th graders but with less time on their hands for thinking and analysis. So they pay McKinsey to develop easy-to-understand pictures.
In the Black consumer spending report, black consumer spending in 2021 is calculated at $906 billion.
This number, rounded up from $906 billion, is a departure from the $835 billion calculated in Michael Chui, Brian Gregg, Sajal Kohli, and Shelley Stewart III, “A $300 billion opportunity: Serving the emerging Black American consumer,” McKinsey Quarterly, August 6, 2021, McKinsey.com. This latest calculation uses data from the 2019 US Census and 2019 Consumer Expenditure Surveys (US Bureau of Labor Statistics, bls.gov) and includes the full population of Black Americans, which the $835 billion figure does not. We also use households as the unit of analysis for the purposes of this report.
Shelley Stewart: A team of five McKinsey colleagues worked full time over several months analyzing publicly available data from think tanks, the census, and the Bureau of Labor plus McKinsey Global Institute data about the future of work and automation.
Shelley Stewart: A few things. It starts with geography: the fact that 60 percent of black families are concentrated in metropolitan regions that we define as “declining”—a combination of low growth and low wages. So location immediately limits opportunities.
Jason Wright: I would like to see the creation of a capability-building organization for black executives and entrepreneurs. It could focus on both hard skills, such as analytics and automation, and soft skills, such as how to secure funding, develop institutional support for initiatives, grow talent.