Workplace Discrimination: $64 Billion in Lost Revenue

With recent headlines, there is an awareness now for the immense amount of work that must be done to eradicate bias and discrimination in America. Since this country starts and stops on economics, change in the workplace is fundamental if a national paradigm shift is to be achieved.

One report cites the fiscal damage of workplace discrimination at $64 billion annually. But, as it turns out, that number could be considerably higher—perhaps in the trillions of dollars.

Bill Proudman and Michael Welp founded White Men As Full Diversity Partners 20 years ago to answer a question most people never thought of asking: Why is the white male, who holds most CEO and C-level positions, left out of the diversity and inclusion discussion? From there, Proudman and Welp developed a rather unorthodox approach to diversity by engaging white male leadership directly, while including everyone in the discussion.

While Corporate America may seem like an immense faceless and emotionless entity, it responds to the bottom line, which can be broken down like this:

Recruitment: Systemic bias—often unconscious—is a costly stumbling block. Ninety-six percent of all Fortune 50 companies have sexual orientation nondiscrimination policies in place, but getting them understood and instinctively followed is imperative for these policies to work.

Retention: Two million workers leave their jobs each year because of unfair treatment due to race, gender, religion or sexual orientation. Replacing them costs corporations about $5,000 to $10,000 per worker and $75,000 to $200,000 per executive. These individuals must seek new jobs or face going on unemployment in order to provide for their families, which then costs the government and, in turn, the taxpayers.

Job Performance: Nothing demotivates a worker like unfairness and injustice, which can play out as lowered productivity, damaged morale, absenteeism, illness and depression. The cost of workforce absenteeism is in the billions. One report cites the annual cost of workforce illness alone—from sick days to workers’ compensation—at $576 billion.

Litigation: Workplace discrimination exposes businesses to potentially costly lawsuits. In 2010, the top 10 private plaintiff employment discrimination lawsuits cost firms over $346 million.

At the federal fiscal level, the economics of discrimination—in all its forms—expands exponentially.

A study, released by the W.K. Kellogg Foundation in October 2013, took a comprehensive look at racial inequality in America and how it affects our economy. The study addressed health care inequities, unjustified incarceration disparities, lesser employment and education opportunities, the income tax gap and other facets of the economy. It found that earnings gains would translate into $180 million in additional corporate profits, $290 billion in additional federal tax revenues, and a potential reduction in the federal deficit of $350 billion—or 2.3 percent of the GDP—adding up to $1.9 trillion each year.