New research on the U.S. private sector confirms that the Nation’s journey to an equitable workplace still has a long way to go
I do not typically feature research published by consulting companies because most of it is commercially motivated. However, there is some serious work done at the best firms that can be worth highlighting. One such effort is McKinsey & Co.’s new analysis of the Black working experience in America’s private sector. Working in collaboration with Walmart, the W.K. Kellogg Foundation, PolicyLink, McKinsey’s Institute for Black Economic Mobility have written a sweeping analysis of the experience of Black workers in the U.S. private sector that is well worth a careful read.
As we all know, the issue of diversity has been a part of the corporate lexicon for several decades, with millions spent on consultants, training, and a host of related efforts to make workplaces fairer and more equitable. Unfortunately, we also know that progress has been slow, and most companies are nowhere near where they hoped to be by 2021. Patience in many corners is running low, a phenomenon brought into stark relief by last year’s Black Lives Matter movement. As the McKinsey report notes:
Placing a higher value on diversity and implementing targeted initiatives have not closed the representation gaps for Black workers. At many companies, the existence of DE&I programs has been treated as success, even as better and scaled outcomes have remained elusive. There is a continued sense that Black workers are missing out on opportunities in the private sector that hold the promise of advancement—and the rising economic security that comes with it.
The research team set out to create a foundational analysis of the Black working experience in today’s private sector, and their research was extensive (one of the benefits of having McKinsey’s reach and resources at your disposal). First, they conducted a “comprehensive benchmark analysis of Black Americans in the US private sector, across counties and industries and highlighting key gaps in representation” that drew on publicly available data through 2019 from the “Bureau of Labor Statistics, the US Census Bureau, and the US Equal Employment Opportunity Commission—among other sources—and covers the 125 million-person private-sector labor force.”
Second, they augmented this analysis by inviting companies to participate in their research in order to gain additional insights into employment and representation as well as the experience of their Black employees. The research analyzed overall employment data from 24 companies, including some of the largest private-sector employers in the United States, that collectively represent about 3.7 million US employees. The research also analyzed data on employee experience gathered through a combination of focus groups, interviews, and an inclusion-and-experience survey with nearly 25,000 respondents.
Below are the major highlights from the complete report. They are divided into three dimensions [my segmentations] that I think best capture the report’s key findings: demographic analysis, workplace experience, and perceptions analysis.
Part 1: Demographics
Black workers account for 15 million of the 125 million private-sector workers in the United States, a share that has “grown by two percentage points over the past 25 years to reach 12 percent of the total US private sector.” Overall, as of 2019, the Black labor force has a “94 percent employment rate, and if Black workers were employed at the same rate as the rest of the labor force, an additional 480,000 Black workers would be employed in the private sector.” The report outlines several features that define this segment of the U.S. workforce.
Feature 1: A majority of Black workers are located in the South. Unfortunately, this geographic concentration means that Black workers are “underrepresented in the highest-growth geographies and the highest-paying industries. Meanwhile, they are overrepresented in low-growth geographies and in frontline jobs, which tend to pay less.”
Feature 2: A large portion of Black workers are in jobs with little chance of significant wage growth. Almost half of Black workers are in three industries with a large frontline presence, i.e., they are in service economy jobs and not in high growth/high wage sectors, such as information technology, professional services, and financial services—all sectors that typically have relatively higher wages and job growth.
Image: McKinsey & Co.
Feature 3: Black workers are most at risk from automation. As the report notes, “one-third of Black workers are in occupational groups such as production work, food service, and office support, which are at heightened risk of losing their jobs to automation.”
Feature 4: Job prospects are markedly different for Black and white workers with similar backgrounds. For example, “the employment rates for Black workers with some college or an associate’s degree are similar to the total population of workers who have a high-school diploma.”
Feature 5: The pandemic’s negative impact is likely to be worse on Black workers. As the study notes: “Forty percent of revenues for Black-owned businesses are located in the five most vulnerable industries (compared with 25 percent of revenues for all businesses), and nearly seven million jobs currently held by Black workers are at risk due to the pandemic.” Given the impact of COVID-19 on Black employment and Black-owned businesses, “it is not surprising that 52 percent of Black respondents reported that COVID-19 is a threat to their personal financial situation, compared with 43 percent of white respondents.”
Part 2: In the Workplace
Perhaps the most impressive section of the McKinsey study is the one devoted to the Black workforce experience today. While it does not provide many surprises, it does provide a thorough accounting of some of the major challenges faced by America’s Black managers and workers.
Challenge 1: Frontline jobs largely do not connect Black employees with sufficient opportunities to advance. Their data set of participating companies shows that Black employees are overrepresented in frontline jobs (18 percent) compared with managerial jobs (9 percent).
Image: McKinsey & Co.
Challenge 2: Entry-level jobs are a revolving door, and Black employee attrition is high. Black employees make up 12 percent of entry-level employees (such as account associates, software engineers, and paralegals).
Challenge 3: Black employees encounter a broken rung from entry-level jobs to managerial jobs. Black employees account for just 7 percent of managers.
Challenge 4: A trust deficit exists between Black employees and their companies. A trust deficit reflects Black employee perceptions of their workplace as less fair, accepting, and authentic.
Challenge 5: Black employees lack the sponsorship and allies to support their advancement. Most Black employees are ambitious and want to advance but perceive a lack of support to help them ascend to management jobs.
Part 3: Perceptions
The “trust deficit” noted above is worth expanding, because it gets to the heart of how Black workers see their workplaces, according to the report. Indeed, the authors note three factors that collectively define this shared experience.
Factor 1: Despite the diversity efforts of the past 30 years, Black workers still do not feel fully accepted in the modern American workplace. The authors note that many focus group participants “described relationships between Black employees and others as ‘transactional’ and perceived that sharing their experiences as Black employees could have negative consequences.” Moreover, Black employees believe they are less recognized at work and “have significantly different perceptions from their white counterparts about whether their companies recognize the traditions and habits of diverse employees (21-percentage-point gap compared with white employees), raise awareness of diversity topics (20-percentage-point gap), and allow employees to express themselves personally (12-percentage-point gap).”
Factor 2: Black workers are less likely to believe that they are treated fairly at work and thus have an equal chance to succeed. About one-third of white employees see their companies as unfair, “compared with more than 50 percent of Black employees.” Furthermore, “Black employees are 1.7 times more likely than Hispanic/Latino and Asian employees to believe their race will make it harder for them to achieve their career goals at their companies.” The perception that hiring, performance management, and promotions are not fair “contributes to feelings of ‘working twice as hard’ and promotions being overdue versus well deserved.”
Source: McKinsey & Co.
Factor 3: Black employees still do not feel they can be themselves at work. This factor is one of the more complex issues to unpack. While Black employees are more likely to see their company’s diversity policies as effective (59 percent, compared with 70 percent of all employees), they are not as happy with the actual programs created to advance those policy goals (33 percent of Black employees compared with 54 percent of white employees). One explanation for this result, note the authors, could be that “Black employees believe their companies present and design effective policies (such as those for paid parental leave and remote work), but they see flaws in the execution of programs aimed at improving DE&I (for example, unconscious-bias training and ally initiatives).” The result of these beliefs, the report implies, is that Black workers still feel unable to be fully authentic at work and therefore must still conform to behavioral norms shaped by others.
The Good News
While McKinsey’s report lists many challenges for the Black workforce, there are some positive signs on the horizon. For example, trends for Black promotion are looking up. Black representation in some fast-growing sectors such as transportation may improve this picture in the future. Moreover, “nine in ten Black employees believe they are helping their company succeed and that their work gives them a sense of purpose and accomplishment.”
For Black employees who do reach managerial levels, there are promising signs. Based on data from the first half of 2020, “Black private-sector employees are slightly more likely to be promoted to the next level—a trend that will be critical to eventually close the gap.” Unfortunately, higher up in the corporate ladder, the problems persist. Promotions of Black men to the “VP level (a gain of 1.8 percentage points) and of Black women (an increase of 0.8 percentage points) is nowhere near that of white women (a rise of 5.1 percentage points), who seem to be disproportionately gaining ground (though from a still unequal base).”
Another bright spot in the report is the finding that “more than 80 percent of Black employees say they are interested in advancing in their companies.” To the authors, this finding suggests that “Black workers have both the ambition and desire to contribute to their companies but that the current systems and culture are inadequate.” In other words, despite all the problems and challenges, the Black workforce is still largely engaged in an effort to address issues of diversity and thus companies can still build on this positive sentiment. Indeed, as the authors note: “Even minimal improvements could start to show results.”
Although no company has solved the challenge of increasing Black representation at all job levels, this revealing study notes that “many have made significant inroads at specific points in the pipeline” and that their “successes could hold the key to more favorable outcomes across the private sector.” As one would expect from a consultancy, the report provides a long list of recommendations for companies to consider to advance their diversity efforts.
All in all, the McKinsey report can be read in different ways. On the one hand, the signs of progress are encouraging. The fact that America’s Black workforce, by and large, remains engaged and hopeful is remarkable and inspiring. On the other hand, the lack of progress is — as ever — disappointing and in many ways exasperating. Surely with all of its talent and resources, the American private sector should be much farther ahead than it is in its effort to build a fair workplace for Black executives, managers, and workers. Yet this report clearly shows that companies still have much room for improvement and that, despite their progress in the recent past, Black workers’ journey to an equitable workplace still stretches far into the distance.
Bryan Hancock, Monne Williams, James Manyika, and Lareina Yee. Race in the workplace: The Black experience in the US private sector. McKinsey & Co. February 21, 2021. Access the original report here.