Black women are experiencing a 90% wealth gap: Goldman Sachs

Gizelle George-Joseph, chief operating officer of global investment research at Goldman Sachs, joins Yahoo Finance to discuss Goldman Sachs’ $10 billion investment in its One Million Black Women initiative.

Video Transcript

- Well, $300 billion. That is the amount that can be added to the US economy per year if the wage gap between Black women and the rest of the workforce is closed. This is coming out of a report from Goldman Sachs released earlier this month. Joining us now to discuss is Gizelle George-Joseph, the Chief Operating Officer of Goldman Sachs Global Investment Research. Gizelle, thanks so much for joining the program this morning.

I want to start with that headline number, that $300 billion number, and maybe help us decompose a little bit how we get there and what the forces are preventing us from seeing this benefit, you know, given the way that Black women are lagging behind in the workforce today.

GIZELLE GEORGE-JOSEPH: Thank you, Myles. And I'm happy to be-- I'm happy to be on the show today. So $300 billion. That is the headline number. And a big part of that is that 90% of-- we discovered that Black women are experiencing a 90% wealth gap.

I think one of the things that we-- that we really brought forward in the research is just confirmation of how foundational Black women are to our households and to the well-being of our economy. Black women are running so many small businesses. They are essential workers. They are breadwinners in their families. They are involved in political advocacy and change. And they are at the forefront of fighting for their own equality.

But I think what we saw in the research is just how disadvantaged they are and they continue to be across a broad range of economic measures. And that is what the $300 billion speaks to.

- And Gizelle, it's Julie here. You all also looked at the reasons behind this, right? And you went back and pretty systemically looked into the causes behind this education, although Black women have made strides in education, as one of the areas. And you still see that persistent earnings gap. So what, to you, are the most important reasons behind this and hopefully those that can be addressed?

GIZELLE GEORGE-JOSEPH: I think what our research showed is that the lower level of earnings accounted for about 2/3 of that. So the remainder, as you said, Julie, is explained by a variety of other factors. And that includes education. That includes access to capital. It includes access to financial information.

But we also saw that Black women tended to lose more jobs during the recession. And unfortunately, the pandemic just sort of confirmed that. We saw in the February jobs report that the economy is getting better for most people. But for Black women, we actually saw an unemployment rate that actually rose.

- And you know, that-- that back sliding in not just the Black female workforce but the female workforce in general, we've seen, as you outlined. Something you also highlighted, which was quite surprising is that Black women made significant strides to close that earnings gap a couple of decades ago, but that it has been widening. What are some of the factors that have driven that recent widening? And why are we seeing this increased inequality once again within the workforce, at least based on the work that you guys have done?

GIZELLE GEORGE-JOSEPH: Actually, that was one of the most concerning part of the whole report. We saw, in the 1980s, an actual reduction in that gap. And we previously had seen quite a wide gap between white women and Black women for instance. And we saw that gap close to about 5% in the 1980s. And today, that gap sits at 15% again.

And I think even more concerning than that is the fact that the factors that contribute to that gap as it currently stands are factors that are a lot harder to measure. So we're talking about discrimination and not just education. Because to the point Julie made earlier, we've closed that gap a bit on education. But then we're seeing inequality in-- in the quality of the schools that Black kids go to, for example. And so I think more than anything else, it's the concern that the reasons for the widening gap are factors we actually can't measure.

- It's mentioned in the report that single Black women are six times less likely to own stocks than single white men and nearly 50% less likely to own a home. Just in terms of the stocks component there, how can investment banks like a Goldman Sachs change that? But also, how can financial media platforms like a Yahoo Finance change it?

GIZELLE GEORGE-JOSEPH: I think a big part of that and what we saw is just access to financial information. If you don't have the financial information to inform your decisions, to actually help you plan budgeting and the kind of decisions you make about what loans you take, that actually is quite an impediment to being able to make smart decisions that actually move-- move the numbers on your ability to-- to get yourself out of debt, for example, right? And so I think to your point, Yahoo Finance, Goldman Sachs, all the banks on Wall Street have a very key role to play in actually just being able to make that information easily accessible in a way that can educate people.

- Gizelle, talk to us also about what Goldman Sachs is doing through its new efforts, right, $10 billion over 10 years, targeting one million Black women. That's the scope of this. How is that money going to be deployed? And what are some of the goals that you have in mind?

GIZELLE GEORGE-JOSEPH: So look, I think before we even get to a conversation on building wealth, let's just talk the basics, right? A third of the homes where Black women live are estimated to be unhealthy. We're talking about rodents and leaks, peeling paint, no working smoke alarm. We talk about health. Black women have 3 times-- 3 times the pregnancy-related mortality rate than white women. In the city, it's actually a lot higher than that in New York City. And that number is astounding.

We talk about education. And six decades after Brown versus Board of Education, we have 70% of Black students still in a school with-- with non majority-- with a majority of nonwhite students. So everything is related. And I think what we're trying to do at Goldman is say, we're not just impacting one part of a Black woman's life, but every single part of her life-- where she lives, where she works, where she learns, and where-- you know, it's funny.

When we started looking at the research, we thought there could be sort of one magic bullet, this one thing that we could say, let's do that, and that will have the impact to be able to move Black women along and to actually decrease the inequity. But what we saw in the research was that we actually need to focus on a lot of different areas. And so 10 billion is a big number. 10 years is a long time, but actually not really in the broad scope of things.

One million Black women. That-- that is the impact we're trying to have, to really be able to-- to use these resources and impact Black women at every stage of their lives.

- And you know, Gizelle, finally, you guys have at the end of this presentation, you know, all the different areas where private sector can get involved, public sector can get involved. And within each of those recommendations, I'm sure there's dozens of-- of nested possibilities. I'm curious what the response from your clients has been and how, maybe alarmed, surprised, motivated, they've been to take actions similar to what Goldman has taken as a firm when this research crossed their desk.

GIZELLE GEORGE-JOSEPH: We have been so pleasantly surprised by just the outpouring of feedback of so many people telling us, hey, we want to be a partner with this. I think one of the-- last summer, after the George Floyd incident, we actually put a research study together on investing in racial economic equality. So it was much broader beyond just Black women and focusing on the Black population at large.

And one of the pieces of research that came from that came from our chief economist and our head of research, Jan Hatzius, which was, if we-- if we actually are able to equalize the Black women's position, we know it's an economy that's working for everybody. One of the things that we saw was that infants of all races show the same cognitive ability-- the same cognitive ability. We all start at the same place, essentially. And Black children in the US start to fall behind around age two. And if we can actually just get to evening out all those opportunities, that gap can decrease over time in a way that will impact not just college graduation rates, not just where people live, not just how people live, but actually their entire life outcomes.

And I think clients see that. And the response we've gotten from so many of them is, we want to be a part of this. We want this to be a model for how we can hopefully help close the gaps around a lot of different issues and inequities. But this is where we're starting. And we're starting with a lot of leadership from Black organizations across the US, Black leaders across the US.

This is not just the Goldman Sachs initiative. This is something that we're doing in partnership with so many other people. And I think a big part of it is-- is listening and learning from the community and from Black women in particular about how we can actually help solve some of these issues.

- All right. Really interesting work, really important topic. Gizelle George-Joseph, Chief Operating Officer of Global Investment Research over at Goldman Sachs. Really appreciate you taking some time to talk with us this morning. And I hope we'll stay in touch.

GIZELLE GEORGE-JOSEPH: Thank you so much. Appreciate it.