Big Tech Has a Racial Wealth Gap Problem

More than a year after the murder of George Floyd, we have seen plenty of companies jump on board the racial equity, equality and diversity trains. But according to a recent report issued by The Conference Board, much work lies ahead in closing the racial wealth gap. In a nod to the CEOs who publicly said they have seen the problem and want to address it, the report’s authors say, “Acknowledging the problem is an important step in solving it.”

Nevertheless, the data overwhelming shows that companies, notably those in tech, have a long way to go.

The Conference Board cites statistics that aren’t encouraging. For example, in 2010, Black men on average earned 18 percent less than white men. A decade later, that gap had widened to 24 percent, much of which the report’s authors attribute to the decrease of Black workers in higher-paying sectors and jobs.

The racial wealth gap is even more prominent when looking at the wider tech sector. As we’ve seen in many headlines over the past decade, technology companies have generated a huge increase in top earners. But only 4 percent of those highest income earners in tech are Black Americans, compared to 6 percent across other industries.

The numbers aren’t stacked against all Black Americans. In the smaller tech hubs of Atlanta and Washington, D.C., for example, Black employees in tech who are included within the highest income earners are at a respective 12 and 13 percent of those cities’ total tech workforce. But move farther west, and the numbers crater: 2.3 percent in Austin, 2 percent in San Francisco, 1.6 percent in Seattle and an embarrassing 0.8 percent in the capital of Silicon Valley, San Jose. “The tech industry employs relatively few women, Black and Latinx people,” one Bay Area business journal reported this spring. “But Silicon Valley does a worse job than the rest of the country.”

Underrepresentation is in large part what is behind the stubborn racial wealth gap. Tech companies often tend to hire from what they feel are the top U.S. universities, overlooking the potential in hiring from historically black colleges and universities (HBCUs). Apple is one tech giant that says it will tackle this oversight.

The bottom line is that if companies lack the will to hire Black workers, and continue to lose more of them through attrition, the chances are slim that any of them will rise through the ranks and be promoted for jobs with more responsibility and, of course, a more lucrative paycheck.

But as mentioned earlier, geography also plays a part in the racial wealth gap. “The new willingness of firms to hire remote workers could help employers located in areas with small Black populations to recruit and retain Black workers anywhere in the U.S.,” the report’s authors concluded. “As evidence from Washington, D.C. and Atlanta shows, these workers exist. Adjusting the geography of recruitment to target Black workers can make a difference.”

Another way for tech companies to meet their hiring goals is to open offices, or remote hubs, in regions that have a high concentration of Black workers. That could further dismiss the oft-cited myth that “these workers don’t exist.” They do exist and have for a long time. Perhaps it’s a matter of recruiting where they live rather than limiting a search to the metropolitan area surrounding a company’s headquarters.

Finally, this is a time that should be less about setting far-off diversity and inclusion goals and more about tech companies taking a deep look within. If a company is unsure whether pay disparity is a problem, the only way leadership can know for sure is to undertake a pay audit. Completing such an exercise can help locate and correct those salary gaps — tech companies that have already done so include Amazon, Apple, Cisco and Microsoft.

“Without a significant change, racial wage gaps may continue to increase in the coming years,”The Conference Board’s Report concluded. “It will be critical for CEOs to continue to prioritize diversity as a means to close racial wage gaps.”

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