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mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-8 mdc-u-ts-10"></div></section><section class="mdc-u-grid mdc-u-grid-col-md-12 mck-u-animation-blur-in-400"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><div data-component="mdc-c-description" class="mdc-c-description___SrnQP_2734c4f mdc-u-ts-5"><div class="mck-u-links-inline">US leaders across sectors have an opportunity to improve economic performance—and bolster individual and community well-being—through investments that embed equity into the development process.</div></div></div></section><main data-layer-region="article-body" class="mdc-u-grid mdc-u-grid-gutter-xxl"><div class="mdc-u-grid mdc-u-grid-col-1 mdc-u-grid-col-md-12"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><div class="mdc-o-content-body mck-u-dropcap"><div data-component="mdc-c-module-wrapper" data-module-theme="default" 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data-layer-report-name="inclusive-growth-executive-summary-final>"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--size-md___yi5fA_2734c4f mck-download-icon"></span><span class="mdc-c-link__label___Pfqtd_2734c4f"> (14 pages)</span></a><a data-component="mdc-c-link" href="#/download/%2F~%2Fmedia%2Fmckinsey%2Findustries%2Fpublic%20and%20social%20sector%2Four%20insights%2Fthe%20case%20for%20inclusive%20growth%2Fthe-case-for-inclusive-growth-web-final.pdf%3FshouldIndex%3Dfalse" class="DownloadsSidebar_mck-c-downloads-sidebar__download-link__fPqFQ mdc-c-link___lBbY1_2734c4f" target="_self" data-layer-event-prefix="Download Link" data-layer-action="click" data-layer-report-type="" data-layer-file-name="the-case-for-inclusive-growth-web-final" data-layer-report-name="the-case-for-inclusive-growth-web-final>"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--size-md___yi5fA_2734c4f mck-download-icon"></span><span class="mdc-c-link__label___Pfqtd_2734c4f"> (40 pages)</span></a></div></div></div></div> <p><strong>The concept of inclusive growth</strong> has become central to economic development due to rising economic inequality and its effects on human well-being and prosperity (see sidebar, “What is inclusive growth?”).<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="dafe592d-7a16-4a36-be77-7ae0e293d893"><sup class="FootNote_footnotesup__e73z_">1</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="dafe592d-7a16-4a36-be77-7ae0e293d893" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Neil Lee, “Inclusive growth in cities: A sympathetic critique,” <em>Regional Studies</em>, June 2018, Volume 53, Number 3, pp. 424–34, tandfonline.com. </span></span></span></a></span> Indeed, despite the longest economic expansion in US history through much of the 2010s,<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="31d4b8df-195e-495a-98bb-86845c6710ed"><sup class="FootNote_footnotesup__e73z_">2</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="31d4b8df-195e-495a-98bb-86845c6710ed" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Yun Li, “This is now the longest US economic expansion in history,” CNBC, July 2, 2019, cnbc.com.</span></span></span></a></span> the Gini<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="d9136017-997c-4620-ad30-302e5bd87d48"><sup class="FootNote_footnotesup__e73z_">3</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="d9136017-997c-4620-ad30-302e5bd87d48" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">The Gini index is a measure of the distribution of income across a population. A higher Gini index indicates greater inequality, with high-income individuals receiving much larger percentages of the total income of the population.</span></span></span></a></span> index reached 0.485 in 2018—the most inequitable level of income distribution recorded in the United States since the Census Bureau began tracking the metric, and the highest level of income inequality among Group of Seven countries.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="cbbf4587-ef7b-4ee2-98db-22e333865b46"><sup class="FootNote_footnotesup__e73z_">4</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="cbbf4587-ef7b-4ee2-98db-22e333865b46" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Taylor Telford, “Income inequality in America is the highest it’s been since Census Bureau started tracking it, data shows,” <em>Washington Post</em>, September 26, 2019, washingtonpost.com.</span></span></span></a></span> In terms of wealth inequality, the top 1 percent hold nearly 40 percent of the nation’s net worth as of 2019, the highest on record since the Federal Reserve began collecting survey data in 1989.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="e6e53e2f-12f3-47a8-9411-2c72206f9264"><sup class="FootNote_footnotesup__e73z_">5</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="e6e53e2f-12f3-47a8-9411-2c72206f9264" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Jeanna Smialek, “Even as Americans grew richer, inequality persisted,” <em>New York Times</em>, September 28, 2020, nytimes.com.</span></span></span></a></span></p> <div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="lightest-grey" data-module-category="" data-module-gradient-position="bottom-right" class="mck-c-inline-module-container SideBar_mck-c-sidebar__bgimg-wrapper__Qj4Dt mck-o-sm-left-span SideBar_mck-c-sidebar__sidebar-wrapper__Dpjw2 SideBar_mck-c-sidebar__sidebar-wrapper--istablet__IQ6ii mck-u-screen-only mck-c-module-wrapper" data-layer-region="sidebar"><div class="SideBar_mck-c-sidebar__epoAm mck-o-md-center"><div class="SideBar_mck-c-sidebar__share-icons-wrapper__9gB_c"><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--display-column___X0HDD_2734c4f SideBar_mck-c-sidebar__share-icons___eQy6"><div data-component="mdc-c-dropdown-menu" class="mdc-c-drop-down"><button data-component="mdc-c-button" aria-label="" type="button" id="button_id" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--ghost mdc-c-button--size-medium mdc-c-drop-down__rootmenu___yJzvz_2734c4f" aria-expanded="false" aria-haspopup="menu"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--default___f-hQM_2734c4f mdc-c-icon--size-md___yi5fA_2734c4f mck-share2-icon"></span></button><div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="white" data-module-category="" class=""></div></div><button data-component="mdc-c-button" aria-label="Expandable Sidebar" type="button" id="button_id" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--ghost mdc-c-button--size-medium SideBar_mck-c-sidebar__toggle-btn__EL8iE" aria-expanded="false" data-layer-event-prefix="UI Item" data-layer-action="click" data-layer-category="sidebar" data-layer-subcategory="open" data-layer-text="open sidebar"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--radial___y3csX_2734c4f mdc-c-icon--size-xxl___cL3ZT_2734c4f mck-plus-no-circle-icon"></span></button></div></div><div class="SideBar_mck-c-sidebar__content-outer__UdWCq"><div class="SideBar_mck-c-sidebar__eyebrow__5GSEq"></div><div class="SideBar_mck-c-sidebar__content__raEwe"><h2 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-u-ts-3 SideBar_mck-c-sidebar__content-heading__NJekY"><div>About the authors</div></h2><div class="SideBar_mck-c-sidebar__content-description__4p9iI mdc-u-ts-7"><div class="mdc-o-content-body">This article was a collaborative effort by <a href="/our-people/andre-dua">André Dua</a>, JP Julien, <a href="/our-people/mike-kerlin">Mike Kerlin</a>, <a href="/our-people/jonathan-k-law">Jonathan Law</a>, Nick Noel and <a href="/our-people/shelley-stewart">Shelley Stewart III</a>.</div></div></div></div></div></div> <p>This inequality has disproportionately affected communities of color, women, those less physically abled, and certain geographies. For example, between January 1972 and December 2019, other than during the aftermath of recessions, the unemployment rate for Black workers has stayed at or above twice the rate for white workers.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="d90b80a2-72d9-464b-b645-2ffb2831bf57"><sup class="FootNote_footnotesup__e73z_">6</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="d90b80a2-72d9-464b-b645-2ffb2831bf57" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Olugbenga Ajilore, “On the persistence of the Black-white unemployment gap,” Center for American Progress, February 24, 2020, americanprogress.org.</span></span></span></a></span> On the wealth front, the racial wealth gap between Black and white households grew from $100,000 in 1992 to $164,100 in 2019.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="fc3a5acd-3610-4d34-92ee-d973b09954a8"><sup class="FootNote_footnotesup__e73z_">7</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="fc3a5acd-3610-4d34-92ee-d973b09954a8" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">“2019 survey of consumer finances,” Federal Reserve Board, September 2020, federalreserve.gov.</span></span></span></a></span> The impact of shrinking such inequities would be huge: eliminating disparities in wealth between Black and white households and Hispanic and white households could result in the addition of $2 trillion to $3 trillion of incremental annual GDP to the US economy.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="3a97d26a-603d-4302-806b-1c8b6f9455c3"><sup class="FootNote_footnotesup__e73z_">8</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="3a97d26a-603d-4302-806b-1c8b6f9455c3" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Nick Noel, Duwain Pinder, Shelley Stewart, and Jason Wright, “<a href="/industries/public-sector/our-insights/the-economic-impact-of-closing-the-racial-wealth-gap">The economic impact of closing the racial wealth gap</a>,” August 2019; Ingrid Millán, Nick Noel, Lucy Pérez, and Alfonso Pulido, “<a href="/industries/social-sector/our-insights/us-hispanic-and-latino-lives-and-livelihoods-in-the-recovery-from-covid-19">US Hispanic and Latino lives and livelihoods in the recovery from COVID-19</a>,” September 2020.</span></span></span></a></span> Furthermore, unlocking women’s economic potential in the workforce over the coming years could add $2.1 trillion in GDP by 2025.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="deff8ae9-cb32-4e75-ad19-a24f82554b0f"><sup class="FootNote_footnotesup__e73z_">9</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="deff8ae9-cb32-4e75-ad19-a24f82554b0f" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">For more information, see “<a href="/featured-insights/employment-and-growth/the-power-of-parity-advancing-womens-equality-in-the-united-states">The power of parity: Advancing women’s equality in the United States</a>,” McKinsey Global Institute, April 2016.</span></span></span></a></span></p> <div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="lightest-grey" data-module-category="" data-module-gradient-position="bottom-right" class="mck-c-inline-module-container SideBar_mck-c-sidebar__bgimg-wrapper__Qj4Dt mck-o-sm-left-span SideBar_mck-c-sidebar__sidebar-wrapper__Dpjw2 SideBar_mck-c-sidebar__sidebar-wrapper--istablet__IQ6ii mck-u-screen-only mck-c-module-wrapper" data-layer-region="sidebar"><div class="SideBar_mck-c-sidebar__epoAm mck-o-md-center"><div class="SideBar_mck-c-sidebar__share-icons-wrapper__9gB_c"><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--display-column___X0HDD_2734c4f SideBar_mck-c-sidebar__share-icons___eQy6"><div data-component="mdc-c-dropdown-menu" class="mdc-c-drop-down"><button data-component="mdc-c-button" aria-label="" type="button" id="button_id" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--ghost mdc-c-button--size-medium mdc-c-drop-down__rootmenu___yJzvz_2734c4f" aria-expanded="false" aria-haspopup="menu"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--default___f-hQM_2734c4f mdc-c-icon--size-md___yi5fA_2734c4f mck-share2-icon"></span></button><div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="white" data-module-category="" class=""></div></div><button data-component="mdc-c-button" aria-label="Expandable Sidebar" type="button" id="button_id" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--ghost mdc-c-button--size-medium SideBar_mck-c-sidebar__toggle-btn__EL8iE" aria-expanded="false" data-layer-event-prefix="UI Item" data-layer-action="click" data-layer-category="sidebar" data-layer-subcategory="open" data-layer-text="open sidebar"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--radial___y3csX_2734c4f mdc-c-icon--size-xxl___cL3ZT_2734c4f mck-plus-no-circle-icon"></span></button></div></div><div class="SideBar_mck-c-sidebar__content-outer__UdWCq"><div class="SideBar_mck-c-sidebar__eyebrow__5GSEq"></div><div class="SideBar_mck-c-sidebar__content__raEwe"><h2 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-u-ts-3 SideBar_mck-c-sidebar__content-heading__NJekY"><div>Foreword from Bob Sternfels</div></h2><div class="SideBar_mck-c-sidebar__content-description__4p9iI mdc-u-ts-7"><div class="mdc-o-content-body"><p><strong>Achieving a more equitable and inclusive economy</strong> is one of the most important priorities of our time. Before the COVID-19 pandemic, and despite the longest economic expansion in US history through much of the 2010s, the United States has been experiencing record levels of economic inequality. As our country continues to deal with a pandemic that has disproportionately affected the lives and livelihoods of women, people of color, low-income workers, and other vulnerable groups, the need for a more inclusive growing economy could not be more pressing. Contrary to fears that economic inclusion must come at the expense of economic growth, our research supports the idea that economic growth is at its best when it is most inclusive. Conversely, left unaddressed, inequality and economic exclusion threaten economic growth. By embedding equity into the development process and improving opportunities for those on the margins to meaningfully participate in the mainstream economy, we can push forward a more sustainable and equitable economy. Together, public-, private-, and social-sector leaders can work with communities to bring about the transformative change that creates an economy that works better and benefits everyone.</p> <p>—Bob Sternfels, Senior Partner, McKinsey & Company</p></div></div></div></div></div></div> <p>At the same time, as of the end of 2020, more than 70 million Americans—approximately 40 percent of US workers—had applied for unemployment benefits since the start of the COVID-19 pandemic.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="b21150bc-847a-4ff8-aeb4-2dde549c7270"><sup class="FootNote_footnotesup__e73z_">10</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="b21150bc-847a-4ff8-aeb4-2dde549c7270" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Jack Kelly, “803,000 Americans filed for unemployment last week: 70 million sought unemployment benefits since the pandemic,”<em> Forbes</em>, December 23, 2020, forbes.com. </span></span></span></a></span> And the US economy contracted by 3.5 percent on an annual basis in 2020 alone and may take several years to recover.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="99e662c3-7540-4a03-9169-2b3c5a95df70"><sup class="FootNote_footnotesup__e73z_">11</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="99e662c3-7540-4a03-9169-2b3c5a95df70" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Jason Furman and Wilson Powell III, “What the US GDP data tell us about 2020,” Peterson Institute for International Economics, January 28, 2021, piie.com.</span></span></span></a></span> Indeed, COVID-19 is accelerating trends that existed before the pandemic, and without a more inclusive recovery, existing disparities may further calcify.</p> <p>These realities demand that leaders work to both stimulate the US economy and make it more inclusive, ensuring that the COVID-19 pandemic does not considerably increase material deprivation, lead to financial ruin or downward mobility, or result in permanent, detrimental changes to our economic structure. We believe that to achieve long-term, sustainable, and inclusive growth, public-, private-, and social-sector leaders must work together to embed equity in the development process.</p> <h2>Why growth and inclusion reinforce each other</h2> <p>The perceived tension between inclusion and growth—and the false belief that they should be addressed separately—has hampered efforts to pursue and achieve inclusive growth. But in fact, insufficient economic inclusion is a threat to prosperity, and it is difficult to improve economic mobility and resource distribution without increasing the overall size of the economy (Exhibit 1).</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mdc-u-grid mdc-u-grid-gutter-lg mdc-u-grid-col-sm-1 mdc-u-grid--align-start mdc-u-mb-3 GenericItem_mck-c-generic-item__sGwKL"><div data-component="mdc-c-content-block" class="mdc-c-content-block___7p6Lu_2734c4f mdc-u-grid-gutter-xs GenericItem_mck-c-generic-item__content__gq1m0"><div class="mck-c-eyebrow mdc-u-ts-10"><span> 1</span></div></div></div><div class="mck-u-inline-module-border-top mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/industries/public%20and%20social%20sector/our%20insights/the%20case%20for%20inclusive%20growth/svg-inclusivegrowth-pssp-ex3-jr.svgz?cq=50&cpy=Center"/><img alt="Increases in both prosperity and resource distribution are required for inclusive growth." src="/~/media/mckinsey/industries/public%20and%20social%20sector/our%20insights/the%20case%20for%20inclusive%20growth/svg-inclusivegrowth-pssp-ex3-jr.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <p>Research suggests that up to 40 percent of GDP growth in the US economy between 1960 and 2010 can be attributed to greater participation of women and people of color in the labor force through improved talent allocation.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="babbbb01-f6dd-4bfd-a3f0-3f68a8b74f9e"><sup class="FootNote_footnotesup__e73z_">12</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="babbbb01-f6dd-4bfd-a3f0-3f68a8b74f9e" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Chang-Tai Hsieh et al., “The allocation of talent and U.S. economic growth,” <em>Econometrica</em>, September 2019, Volume 87, Number 5, pp. 1439–74, econometricsociety.org.</span></span></span></a></span> Furthermore, economies grow faster and more vigorously—not to mention for longer periods—when prosperity is more equally distributed across segments of the population.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="5ef92329-a0c2-4bde-b1b3-c12d062cb1e3"><sup class="FootNote_footnotesup__e73z_">13</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="5ef92329-a0c2-4bde-b1b3-c12d062cb1e3" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Richard Florida, “For a strong economy, focus on inclusive growth,”<em> Bloomberg CityLab</em>, September 28, 2017, bloomberg.com.</span></span></span></a></span></p> <div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="lightest-grey" data-module-category="" data-module-gradient-position="bottom-right" class="mck-c-inline-module-container SideBar_mck-c-sidebar__bgimg-wrapper__Qj4Dt mck-o-sm-left-span SideBar_mck-c-sidebar__sidebar-wrapper__Dpjw2 SideBar_mck-c-sidebar__sidebar-wrapper--istablet__IQ6ii mck-u-screen-only mck-c-module-wrapper" data-layer-region="sidebar"><div class="SideBar_mck-c-sidebar__epoAm mck-o-md-center"><div class="SideBar_mck-c-sidebar__share-icons-wrapper__9gB_c"><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--display-column___X0HDD_2734c4f SideBar_mck-c-sidebar__share-icons___eQy6"><div data-component="mdc-c-dropdown-menu" class="mdc-c-drop-down"><button data-component="mdc-c-button" aria-label="" type="button" id="button_id" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--ghost mdc-c-button--size-medium mdc-c-drop-down__rootmenu___yJzvz_2734c4f" aria-expanded="false" aria-haspopup="menu"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--default___f-hQM_2734c4f mdc-c-icon--size-md___yi5fA_2734c4f mck-share2-icon"></span></button><div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="white" data-module-category="" class=""></div></div><button data-component="mdc-c-button" aria-label="Expandable Sidebar" type="button" id="button_id" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--ghost mdc-c-button--size-medium SideBar_mck-c-sidebar__toggle-btn__EL8iE" aria-expanded="false" data-layer-event-prefix="UI Item" data-layer-action="click" data-layer-category="sidebar" data-layer-subcategory="open" data-layer-text="open sidebar"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--radial___y3csX_2734c4f mdc-c-icon--size-xxl___cL3ZT_2734c4f mck-plus-no-circle-icon"></span></button></div></div><div class="SideBar_mck-c-sidebar__content-outer__UdWCq"><div class="SideBar_mck-c-sidebar__eyebrow__5GSEq"></div><div class="SideBar_mck-c-sidebar__content__raEwe"><h2 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-u-ts-3 SideBar_mck-c-sidebar__content-heading__NJekY"><div>What is inclusive growth?</div></h2><div class="SideBar_mck-c-sidebar__content-description__4p9iI mdc-u-ts-7"><div class="mdc-o-content-body"><p><strong>Inclusive growth</strong> is both process and outcome: it is about aligning how growth is achieved (or how people are provided access to opportunities) with the ultimate outcome of broad, shared prosperity—that is, decent living standards that increase with economic growth. Practitioners engaged in this work say they seek to achieve outcomes that benefit all segments of society while also supporting those on the margins and reducing relative inequality.</p></div></div></div></div></div></div> <p>Additionally, research shows that today’s inequalities may be self-perpetuating: as living standards and social mobility stagnate, many populations fall into a vicious cycle of underdevelopment that threatens long-term growth for everyone. Families and communities aren’t able to make investments in their children and their physical and social environments, creating barriers to human and place-based development that thwart access to opportunities. In turn, this limits the ability of these groups to participate in growth processes, and, worse, their environments are left without the ingredients to build momentum and reverse these dynamics.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_inactive__VZfCp" aria-describedby="009369d0-3196-493e-89e6-b7b8ebfa8b0f"><sup class="FootNote_footnotesup__e73z_">14</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="009369d0-3196-493e-89e6-b7b8ebfa8b0f" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Raj Chetty et al., “Race and economic opportunity in the United States: An intergenerational perspective,” <em>Quarterly Journal of Economic</em>s, May 2020, Volume 135, Number 2, pp. 711–83; Raj Chetty et al., “Where is the land of opportunity? The geography of intergenerational mobility in the United States,” <em>Quarterly Journal of Economics</em>, November 2014, Volume 129, Number 4, pp. 1553–623. </span></span></span></a></span></p> <h2>How leaders can work together to achieve inclusive growth</h2> <p>In working closely with state and local governments, private-sector and civic leaders, and communities across the country, we’ve developed a three-phased approach practitioners can take to realize a more inclusive economy (Exhibit 2). This approach is informed by an understanding that any successful effort will need to bring together technical expertise, adaptive approaches and mindsets, and community engagement to alter adverse dynamics in complex environments. </p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mdc-u-grid mdc-u-grid-gutter-lg mdc-u-grid-col-sm-1 mdc-u-grid--align-start mdc-u-mb-3 GenericItem_mck-c-generic-item__sGwKL"><div data-component="mdc-c-content-block" class="mdc-c-content-block___7p6Lu_2734c4f mdc-u-grid-gutter-xs GenericItem_mck-c-generic-item__content__gq1m0"><div class="mck-c-eyebrow mdc-u-ts-10"><span> 2</span></div></div></div><div class="mck-u-inline-module-border-top mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/industries/public%20and%20social%20sector/our%20insights/the%20case%20for%20inclusive%20growth/svg-inclusivegrowth-pssp-ex5-jr.svgz?cq=50&cpy=Center"/><img alt="Three actions, informed by three underlying principles, can help leaders successfully pursue inclusive growth." src="/~/media/mckinsey/industries/public%20and%20social%20sector/our%20insights/the%20case%20for%20inclusive%20growth/svg-inclusivegrowth-pssp-ex5-jr.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div>  <h3>1. Diagnose the current state and develop a bold vision for change</h3> <p>Too often, economic-development planning happens <em>to</em> communities rather than <em>with</em> them. To achieve an economy in which the benefits are shared across, for example, race, class, gender, and geography, leaders must take an approach that is fully rooted in the human perspective, directly engaging diverse voices and giving decision-making authority to the communities they seek to empower.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="lightest-grey" data-module-category="" data-module-gradient-position="bottom-right" class="mck-c-inline-module-container SideBar_mck-c-sidebar__bgimg-wrapper__Qj4Dt mck-o-sm-left-span SideBar_mck-c-sidebar__sidebar-wrapper__Dpjw2 SideBar_mck-c-sidebar__sidebar-wrapper--istablet__IQ6ii mck-u-screen-only mck-c-module-wrapper" data-layer-region="sidebar"><div class="SideBar_mck-c-sidebar__epoAm mck-o-md-center"><div class="SideBar_mck-c-sidebar__share-icons-wrapper__9gB_c"><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--display-column___X0HDD_2734c4f SideBar_mck-c-sidebar__share-icons___eQy6"><div data-component="mdc-c-dropdown-menu" class="mdc-c-drop-down"><button data-component="mdc-c-button" aria-label="" type="button" id="button_id" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--ghost mdc-c-button--size-medium mdc-c-drop-down__rootmenu___yJzvz_2734c4f" aria-expanded="false" aria-haspopup="menu"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--default___f-hQM_2734c4f mdc-c-icon--size-md___yi5fA_2734c4f mck-share2-icon"></span></button><div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="white" data-module-category="" class=""></div></div><button data-component="mdc-c-button" aria-label="Expandable Sidebar" type="button" id="button_id" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--ghost mdc-c-button--size-medium SideBar_mck-c-sidebar__toggle-btn__EL8iE" aria-expanded="false" data-layer-event-prefix="UI Item" data-layer-action="click" data-layer-category="sidebar" data-layer-subcategory="open" data-layer-text="open sidebar"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mdc-c-icon--radial___y3csX_2734c4f mdc-c-icon--size-xxl___cL3ZT_2734c4f mck-plus-no-circle-icon"></span></button></div></div><div class="SideBar_mck-c-sidebar__content-outer__UdWCq"><div class="SideBar_mck-c-sidebar__eyebrow__5GSEq"></div><div class="SideBar_mck-c-sidebar__content__raEwe"><h2 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-u-ts-3 SideBar_mck-c-sidebar__content-heading__NJekY"><div>In their words: What should inclusive growth seek to achieve?</div></h2><div class="SideBar_mck-c-sidebar__content-description__4p9iI mdc-u-ts-7"><div class="mdc-o-content-body"><p>The practitioners, leaders, and experts in our study had varying—but related—views on what inclusive growth should aim to achieve:</p> <ul> <li>“Economic growth should be distributed fairly across society and [so] should opportunities for all.”</li> <li>“Growth across different segments of the population that doesn’t leave behind vulnerable groups [such as] women, Indigenous peoples, communities of color, etc.”</li> <li>“Providing the opportunity for all sections of society to participate in economic growth.”</li> <li>“As our city saw exponential growth over the years, it became clear that many populations were left out and suffered as a result of the economic growth the region experienced—many weren’t able to compete, participate, or share in the success.... Inclusive growth is not only including everyone but providing equity and ownership to share in the success of the region.”</li> <li>“Economic growth that benefits everyone and, particularly, provides bigger benefits for those near the bottom of the economic ladder.”</li> </ul></div></div></div></div></div></div> <p>It is equally important for leaders to understand the starting point and measure the potential opportunity of addressing key outcomes. Robust fact gathering that highlights not just current-day realities but also the rich historical context of communities can help stakeholders fully appreciate the depth and complexities of the challenges they face.</p> <p>Finally, aligning public-, private-, and social-sector leaders on a bold, measurable aspiration that is anchored in facts and the assets of the community provides a North Star by which to navigate measurable goals, interventions, and investments.</p> <h3>2. Design comprehensive community- and human-centered interventions</h3> <p>The first step in designing comprehensive interventions is to identify barriers to and opportunities for impact. Practitioners should consider conducting assessments to identify the root causes impeding key journeys and forces leading to inequality. Understanding these forces will allow practitioners to assess the trade-offs of different interventions and also design targeted interventions that will generate more equitable outcomes.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-disruptor1up mck-o-md-center mck-u-inline-module-border-top mck-u-inline-module-border-bottom mck-u-screen-only" data-layer-region="disruptor-1up"><div class="mdc-u-grid mdc-u-grid-gutter-md mdc-u-grid-col-lg-12 mdc-u-grid-col-md-12 "><div class="mdc-u-grid-col-md-span-12"><header data-component="mdc-c-header" class="mdc-c-header"><div class="mdc-c-header__block___i1Lg-_2734c4f"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f"><div>Learn more about the <a href="/bem/overview">McKinsey Institute for Black Economic Mobility</a></div></h3></div></header><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--display-column___X0HDD_2734c4f mck-c-disruptor1up__content Disruptor1Up_mck-c-disruptor1up__content--links__VV4lE mdc-u-grid-gutter-md"><a data-component="mdc-c-link" href="/bem/overview" class="mdc-c-link-cta___NBQVi_2734c4f"><span class="mdc-c-link__label___Pfqtd_2734c4f">Visit the page</span><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_2734c4f mck-link-arrow-right-icon"></span></a></div></div></div></div> <p>For example, there is a clear homeownership gap in the United States across demographic groups. Compared with white Americans, Black Americans have 30 percent lower homeownership rates, Hispanic Americans have 26 percent lower rates, and Asian Americans have 16 percent lower rates. Numerous barriers contribute to these discrepancies, including economic, market, sociocultural, and institutional factors. Whereas traditional interventions address a single barrier at a time, true change will require coordinated action from public-, private-, and social-sector stakeholders to comprehensively address bottlenecks across all barriers.</p> <h3>3. Take coordinated action to ensure long-term accountability and momentum</h3> <p>Public-, private-, and social-sector leaders should consider implementing critical infrastructure to help sustain progress and achieve inclusive economic outcomes over time. For example, they can invest in monitoring and evaluation systems that collect feedback, launch pilot initiatives to help establish proofs of concept, and establish ways of meaningfully engaging internal and external stakeholders to inform actions and refinements. Also, it is important for leaders to continually and transparently communicate progress with communities and change course as needed.</p> <hr/> <p>It will take strong shifts in resources and capabilities, stakeholder interests and organizational incentives, and trust across social networks to sustain execution that ensures inclusion occurs alongside growth in the development process. By working together, public-, private-, and social-sector leaders can achieve this to help various demographic groups overcome the barriers that have kept them from fully participating in and contributing to an economy that benefits everyone.</p></div><div class="container-placeholder"></div></div></div><div class="mdc-u-grid mdc-u-grid-gutter-xl"><section role="contentinfo" data-layer-region="article-about-authors" class="mdc-u-grid mdc-u-grid-col-md-12 AboutAuthor_mck-c-about-author__nRJzu"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><h5 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-c-heading--title___5qyOB_2734c4f mdc-c-heading--border___K8dj3_2734c4f mdc-u-align-center"></h5><div data-component="mdc-c-description" class="mdc-c-description___SrnQP_2734c4f mdc-u-ts-8 mck-u-links-inline mck-u-links-inline--secondary mdc-u-mt-5"><div><p><strong><a href="/our-people/andre-dua"><strong>André Dua</strong></a></strong>is a senior partner in McKinsey’s Miami office; <strong>JP Julien</strong> is an associate partner in the Philadelphia office, where<strong> <a href="/our-people/mike-kerlin">Mike Kerlin</a></strong> is a partner; <strong><a href="/our-people/jonathan-k-law">Jonathan Law</a></strong> is a senior partner in the New York office; <strong>Nick Noel </strong>is a consultant in the Washington, DC, office; and <strong><a href="/our-people/shelley-stewart">Shelley Stewart III</a></strong> is a partner in the New Jersey office.</p> <p>The authors wish to thank Darius Bates, Tati Brezina, Avery Cambridge, Michael Chui, Christopher Copeland, Aria Florant, Pablo Illanes, Michael Lazar, Sebastian Leape, Brenden McKinney, Matthew Petric, Duwain Pinder, Ben Safran, Rachel Schaff, Shane Skov, Sanjay Srinivasan, Ben Thomas, Sarah Tucker-Ray, Zooey Wilkinson, Abigail Wozniak, Qi Xu, Nina Yancy, Ammanuel Zegeye, and Haiyang Zhang for their contributions to this report. </p></div></div></div></section><section class="mdc-u-grid mdc-u-grid-col-md-12 mck-u-screen-only"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-5 mdc-u-grid-col-lg-end-9"><h5 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-c-heading--title___5qyOB_2734c4f mdc-c-heading--border___K8dj3_2734c4f mdc-u-align-center">Explore a career with us</h5><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_2734c4f mdc-c-link-container--align-center___ar3mu_2734c4f"><a data-component="mdc-c-link" href="/careers/search-jobs" class="mdc-c-button___U4iY2_2734c4f mdc-c-button--secondary___Boipq_2734c4f mdc-c-button--size-large___jwpUy_2734c4f" aria-label="Search Openings" data-layer-event-prefix="CTA Link" data-layer-action="click" data-layer-category="careers" data-layer-subcategory="search" data-layer-text="Search Openings"><span class="mdc-c-link__label___Pfqtd_2734c4f">Search Openings</span></a></div></div></section></div></main></div><div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="lightest-grey" data-module-category="StandalonePromo" class="RelatedArticle_mck-c-article-related__GGA76 mck-u-screen-only" data-layer-region="related-articles"><div class="mdc-o-container__wrapper is-wrapped mdc-u-spaced-mobile"><h5 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-c-heading--title___5qyOB_2734c4f mdc-u-align-center">Related Articles</h5><div class="mdc-u-grid mdc-u-grid-col-md-3 RelatedArticle_items-container__s2uD0"><div class="mdc-u-grid mdc-u-grid-gutter-lg Card_card__diA2r Card_hover-effect__RGb9b"><div class="Card_wrapper-image__8b4P6"><a data-component="mdc-c-link" href="/industries/public-sector/our-insights/building-supportive-ecosystems-for-black-owned-us-businesses" class="mdc-c-link___lBbY1_2734c4f"><picture data-component="mdc-c-picture" class="Card_wrapper-image__8b4P6"><style>.picture-uniqueKey-build-0 { aspect-ratio: 16/9 }</style><img alt="Building supportive ecosystems for Black-owned US businesses" class="picture-uniqueKey-build-0" src="/~/media/mckinsey/industries/public%20and%20social%20sector/our%20insights/building%20supportive%20ecosystems%20for%20black%20owned%20us%20businesses/black-owned-us-businesses-1536x1536.jpg?cq=50&mw=767&car=16:9&cpy=Center" loading="lazy"/></picture></a></div><div class="Card_wrapper-text__U6Y3k"><div data-component="mdc-c-content-block" class="mdc-c-content-block___7p6Lu_2734c4f Card_content-block__pF6Z1"><span>Article - 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<i>McKinsey Institute for Black Economic Mobility</i></span><h6 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_2734c4f mdc-u-ts-6"><a data-component="mdc-c-link" href="/bem/our-insights/its-time-for-a-new-approach-to-racial-equity" class="mdc-c-link-heading___Zggl8_2734c4f mdc-c-link___lBbY1_2734c4f"><div>It’s time for a new approach to racial equity</div></a></h6></div></div></div></div></div></div></div></main></div><script id="__NEXT_DATA__" type="application/json">{"props":{"pageProps":{"locale":"en","dictionary":{},"sitecoreContext":{"route":{"name":"The case for inclusive growth","displayName":"The case for inclusive growth","fields":null,"databaseName":"web","deviceId":"fe5d7fdf-89c0-4d99-9aa3-b5fbd009c9f3","itemId":"7d709415-1ff5-45b4-a4b8-a3ec27dbce07","itemLanguage":"en","itemVersion":8,"layoutId":"ae753eb4-a035-40b4-83bf-4b4438df6742","templateId":"683910db-02ba-40ba-92e7-726c880160a9","templateName":"ArticleJSS","placeholders":{"jss-main":[{"uid":"232bb7e9-289f-492d-a916-2b6185e44a84","componentName":"ArticleTemplate","dataSource":"","fields":{"data":{"articleTemplate":{"title":{"jsonValue":{"value":"The case for inclusive growth"}},"sEOTitle":{"value":""},"description":{"jsonValue":{"value":"US leaders across sectors have an opportunity to improve economic performance\u0026mdash;and bolster individual and community well-being\u0026mdash;through investments that embed equity into the development process."}},"sEODescription":{"value":"Leaders have an opportunity to improve economic performance—and bolster well-being—through investments in inclusive growth during the development process."},"displayDate":{"jsonValue":{"value":"2021-04-28T00:00:00Z"}},"body":{"value":"[[DownloadsSidebar]]\n\u003cp\u003e\u003cstrong\u003eThe concept of inclusive growth\u003c/strong\u003e has become central to economic development due to rising economic inequality and its effects on human well-being and prosperity (see sidebar, \u0026ldquo;What is inclusive growth?\u0026rdquo;).[[Footnote 1]] Indeed, despite the longest economic expansion in US history through much of the 2010s,[[Footnote 2]] the Gini[[Footnote 3]] index reached 0.485 in 2018\u0026mdash;the most inequitable level of income distribution recorded in the United States since the Census Bureau began tracking the metric, and the highest level of income inequality among Group of Seven countries.[[Footnote 4]] In terms of wealth inequality, the top 1 percent hold nearly 40 percent of the nation\u0026rsquo;s net worth as of 2019, the highest on record since the Federal Reserve began collecting survey data in 1989.[[Footnote 5]]\u003c/p\u003e\n[[Sidebar 3]]\n\u003cp\u003eThis inequality has disproportionately affected communities of color, women, those less physically abled, and certain geographies. For example, between January 1972 and December 2019, other than during the aftermath of recessions, the unemployment rate for Black workers has stayed at or above twice the rate for white workers.[[Footnote 6]] On the wealth front, the racial wealth gap between Black and white households grew from $100,000 in 1992 to $164,100 in 2019.[[Footnote 7]] The impact of shrinking such inequities would be huge: eliminating disparities in wealth between Black and white households and Hispanic and white households could result in the addition of $2 trillion to $3 trillion of incremental annual GDP to the US economy.[[Footnote 8]] Furthermore, unlocking women\u0026rsquo;s economic potential in the workforce over the coming years could add $2.1 trillion in GDP by 2025.[[Footnote 9]]\u003c/p\u003e\n[[Sidebar 1]]\n\u003cp\u003eAt the same time, as of the end of 2020, more than 70 million Americans\u0026mdash;approximately 40 percent of US workers\u0026mdash;had applied for unemployment benefits since the start of the COVID-19 pandemic.[[Footnote 10]] And the US economy contracted by 3.5 percent on an annual basis in 2020 alone and may take several years to recover.[[Footnote 11]] Indeed, COVID-19 is accelerating trends that existed before the pandemic, and without a more inclusive recovery, existing disparities may further calcify.\u003c/p\u003e\n\u003cp\u003eThese realities demand that leaders work to both stimulate the US economy and make it more inclusive, ensuring that the COVID-19 pandemic does not considerably increase material deprivation, lead to financial ruin or downward mobility, or result in permanent, detrimental changes to our economic structure. We believe that to achieve long-term, sustainable, and inclusive growth, public-, private-, and social-sector leaders must work together to embed equity in the development process.\u003c/p\u003e\n\u003ch2\u003eWhy growth and inclusion reinforce each other\u003c/h2\u003e\n\u003cp\u003eThe perceived tension between inclusion and growth\u0026mdash;and the false belief that they should be addressed separately\u0026mdash;has hampered efforts to pursue and achieve inclusive growth. But in fact, insufficient economic inclusion is a threat to prosperity, and it is difficult to improve economic mobility and resource distribution without increasing the overall size of the economy (Exhibit 1).\u003c/p\u003e\n[[Exhibit 1]]\n\u003cp\u003eResearch suggests that up to 40 percent of GDP growth in the US economy between 1960 and 2010 can be attributed to greater participation of women and people of color in the labor force through improved\ntalent allocation.[[Footnote 12]] Furthermore, economies grow faster and more vigorously\u0026mdash;not to mention for longer periods\u0026mdash;when prosperity is more equally distributed across segments of the population.[[Footnote 13]]\u003c/p\u003e\n[[Sidebar 2]]\n\u003cp\u003eAdditionally, research shows that today\u0026rsquo;s inequalities may be self-perpetuating: as living standards and social mobility stagnate, many populations fall into a vicious cycle of underdevelopment that threatens long-term growth for everyone. Families and communities aren\u0026rsquo;t able to make investments in their children and their physical and social environments, creating barriers to human and place-based development that thwart access to opportunities. In turn, this limits the ability of these groups to participate in growth processes, and, worse, their environments are left without the ingredients to build momentum and reverse these dynamics.[[Footnote 14]]\u003c/p\u003e\n\u003ch2\u003eHow leaders can work together to achieve inclusive growth\u003c/h2\u003e\n\u003cp\u003eIn working closely with state and local governments, private-sector and civic leaders, and communities across the country, we\u0026rsquo;ve developed a three-phased approach practitioners can take to realize a more inclusive economy (Exhibit 2). This approach is informed by an understanding that any successful effort will need to bring together technical expertise, adaptive approaches and mindsets, and community engagement to alter adverse dynamics in complex environments. \u003c/p\u003e\n[[Exhibit 2]]\n[[MostPopularArticles 5]]\n\u003ch3\u003e1. Diagnose the current state and develop a bold vision for change\u003c/h3\u003e\n\u003cp\u003eToo often, economic-development planning happens \u003cem\u003eto\u003c/em\u003e communities rather than \u003cem\u003ewith\u003c/em\u003e them. To achieve an economy in which the benefits are shared across, for example, race, class, gender, and geography, leaders must take an approach that is fully rooted in the human perspective, directly engaging diverse voices and giving decision-making authority to the communities they seek to empower.\u003c/p\u003e\n[[Sidebar 4]]\n\u003cp\u003eIt is equally important for leaders to understand the starting point and measure the potential opportunity of addressing key outcomes. Robust fact gathering that highlights not just current-day realities but also\nthe rich historical context of communities can help stakeholders fully appreciate the depth and complexities of the challenges they face.\u003c/p\u003e\n\u003cp\u003eFinally, aligning public-, private-, and social-sector leaders on a bold, measurable aspiration that is anchored in facts and the assets of the community provides a North Star by which to navigate measurable goals, interventions, and investments.\u003c/p\u003e\n\u003ch3\u003e2. Design comprehensive community- and human-centered interventions\u003c/h3\u003e\n\u003cp\u003eThe first step in designing comprehensive interventions is to identify barriers to and opportunities for impact. Practitioners should consider conducting assessments to identify the root causes impeding\nkey journeys and forces leading to inequality. Understanding these forces will allow practitioners to assess the trade-offs of different interventions and also design targeted interventions that will generate more equitable outcomes.\u003c/p\u003e\n[[Disruptor1UP dis1]]\n\u003cp\u003eFor example, there is a clear homeownership gap in the United States across demographic groups. Compared with white Americans, Black Americans have 30 percent lower homeownership rates, Hispanic Americans have 26 percent lower rates, and Asian Americans have 16 percent lower rates. Numerous barriers contribute to these discrepancies, including economic, market, sociocultural, and institutional factors. Whereas traditional interventions address a single barrier at a time, true change will require coordinated action from public-, private-, and social-sector stakeholders to comprehensively address bottlenecks across all barriers.\u003c/p\u003e\n\u003ch3\u003e3. Take coordinated action to ensure long-term accountability and momentum\u003c/h3\u003e\n\u003cp\u003ePublic-, private-, and social-sector leaders should consider implementing critical infrastructure to help sustain progress and achieve inclusive economic outcomes over time. For example, they can invest in monitoring and evaluation systems that collect feedback, launch pilot initiatives to help establish proofs of concept, and establish ways of meaningfully engaging internal and external stakeholders\nto inform actions and refinements. Also, it is important for leaders to continually and transparently communicate progress with communities and change course as needed.\u003c/p\u003e\n\u003chr /\u003e\n\u003cp\u003eIt will take strong shifts in resources and capabilities, stakeholder interests and organizational incentives, and trust across social networks to sustain execution that ensures inclusion occurs alongside growth in the development process. By working together, public-, private-, and social-sector leaders can achieve this to help various demographic groups overcome the barriers that have kept them from fully participating in and contributing to an economy that benefits everyone.\u003c/p\u003e"},"isFullScreenInteractive":{"boolValue":false},"hideStickySocialShareBar":{"boolValue":false},"desktopID":{"value":""},"mobileID":{"value":""},"desktopURL":{"value":""},"mobileURL":{"value":""},"desktopPaddingPercentage":{"value":""},"mobilePaddingPercentage":{"value":""},"desktopOverrideHeight":{"value":""},"mobileOverrideHeight":{"value":""},"cerosOembedURL":{"value":""},"cerosRenderMode":{"targetItem":null},"cerosBackgroundColor":{"targetItem":null},"hideByLine":{"boolValue":false},"tableOfContentsTitle":{"value":"TABLE OF CONTENTS"},"accessStatus":{"targetItem":{"key":{"value":"RegisteredUsers"},"value":{"value":"Registered Users"}}},"articleType":{"targetItem":{"displayName":"Report"}},"hasSpecialReport":{"boolValue":false},"contentType":{"targetItem":{"displayName":"Article"}},"sourcePublication":{"targetItem":null},"externalPublication":{"value":""},"mobileReady":{"boolValue":true},"forClientsOnly":{"boolValue":false},"excludeFromClientLink":{"boolValue":false},"originalPublishDate":{"jsonValue":{"value":"2021-04-28T00:00:00Z"}},"footnotes":{"value":"\u003col\u003e\n \u003cli\u003eNeil Lee, \u0026ldquo;Inclusive growth in cities: A sympathetic critique,\u0026rdquo; \u003cem\u003eRegional Studies\u003c/em\u003e, June 2018, Volume 53, Number 3, pp. 424\u0026ndash;34, tandfonline.com. \u003c/li\u003e\n \u003cli\u003eYun Li, \u0026ldquo;This is now the longest US economic expansion in history,\u0026rdquo; CNBC, July 2, 2019, cnbc.com.\u003c/li\u003e\n \u003cli\u003eThe Gini index is a measure of the distribution of income across a population. A higher Gini index indicates greater inequality, with high-income individuals receiving much larger percentages of the total income of the population.\u003c/li\u003e\n \u003cli\u003eTaylor Telford, \u0026ldquo;Income inequality in America is the highest it\u0026rsquo;s been since Census Bureau started tracking it, data shows,\u0026rdquo; \u003cem\u003eWashington Post\u003c/em\u003e, September 26, 2019, washingtonpost.com.\u003c/li\u003e\n \u003cli\u003eJeanna Smialek, \u0026ldquo;Even as Americans grew richer, inequality persisted,\u0026rdquo; \u003cem\u003eNew York Times\u003c/em\u003e, September 28, 2020, nytimes.com.\u003c/li\u003e\n \u003cli\u003eOlugbenga Ajilore, \u0026ldquo;On the persistence of the Black-white unemployment gap,\u0026rdquo; Center for American Progress, February 24, 2020, americanprogress.org.\u003c/li\u003e\n \u003cli\u003e\u0026ldquo;2019 survey of consumer finances,\u0026rdquo; Federal Reserve Board, September 2020, federalreserve.gov.\u003c/li\u003e\n \u003cli\u003eNick Noel, Duwain Pinder, Shelley Stewart, and Jason Wright, \u0026ldquo;\u003ca href=\"/industries/public-sector/our-insights/the-economic-impact-of-closing-the-racial-wealth-gap\"\u003eThe economic impact of closing the racial wealth gap\u003c/a\u003e,\u0026rdquo; August 2019; Ingrid Mill\u0026aacute;n, Nick Noel, Lucy P\u0026eacute;rez, and Alfonso Pulido, \u0026ldquo;\u003ca href=\"/industries/social-sector/our-insights/us-hispanic-and-latino-lives-and-livelihoods-in-the-recovery-from-covid-19\"\u003eUS Hispanic and Latino lives and livelihoods in the recovery from COVID-19\u003c/a\u003e,\u0026rdquo; September 2020.\u003c/li\u003e\n \u003cli\u003eFor more information, see \u0026ldquo;\u003ca href=\"/featured-insights/employment-and-growth/the-power-of-parity-advancing-womens-equality-in-the-united-states\"\u003eThe power of parity: Advancing women\u0026rsquo;s equality in the United States\u003c/a\u003e,\u0026rdquo; McKinsey Global Institute, April 2016.\u003c/li\u003e\n \u003cli\u003eJack Kelly, \u0026ldquo;803,000 Americans filed for unemployment last week: 70 million sought unemployment benefits since the pandemic,\u0026rdquo;\u003cem\u003e Forbes\u003c/em\u003e, December 23, 2020, forbes.com. \u003c/li\u003e\n \u003cli\u003eJason Furman and Wilson Powell III, \u0026ldquo;What the US GDP data tell us about 2020,\u0026rdquo; Peterson Institute for International Economics, January 28, 2021, piie.com.\u003c/li\u003e\n \u003cli\u003eChang-Tai Hsieh et al., \u0026ldquo;The allocation of talent and U.S. economic growth,\u0026rdquo; \u003cem\u003eEconometrica\u003c/em\u003e, September 2019, Volume 87, Number 5, pp. 1439\u0026ndash;74, econometricsociety.org.\u003c/li\u003e\n \u003cli\u003eRichard Florida, \u0026ldquo;For a strong economy, focus on inclusive growth,\u0026rdquo;\u003cem\u003e Bloomberg CityLab\u003c/em\u003e, September 28, 2017, bloomberg.com.\u003c/li\u003e\n \u003cli\u003eRaj Chetty et al., \u0026ldquo;Race and economic opportunity in the United States: An intergenerational perspective,\u0026rdquo; \u003cem\u003eQuarterly Journal of Economic\u003c/em\u003es, May 2020, Volume 135, Number 2, pp. 711\u0026ndash;83; Raj Chetty et al., \u0026ldquo;Where is the land of opportunity? The geography of intergenerational mobility in the United States,\u0026rdquo; \u003cem\u003eQuarterly Journal of Economics\u003c/em\u003e, November 2014, Volume 129, Number 4, pp. 1553\u0026ndash;623. \u003c/li\u003e\n\u003c/ol\u003e"},"contributoryPractice":{"targetItems":[{"displayName":"Public Sector"},{"displayName":"McKinsey Institute for Black Economic Mobility"},{"displayName":"SHaPE"}]},"aboutTheAuthors":{"value":"\u003cp\u003e\u003cstrong\u003e\u003ca href=\"/our-people/andre-dua\"\u003e\u003cstrong\u003eAndr\u0026eacute; Dua\u003c/strong\u003e\u003c/a\u003e\u003c/strong\u003eis a senior partner in McKinsey\u0026rsquo;s Miami office; \u003cstrong\u003eJP Julien\u003c/strong\u003e is an associate partner in the Philadelphia office, where\u003cstrong\u003e \u003ca href=\"/our-people/mike-kerlin\"\u003eMike Kerlin\u003c/a\u003e\u003c/strong\u003e is a partner; \u003cstrong\u003e\u003ca href=\"/our-people/jonathan-k-law\"\u003eJonathan Law\u003c/a\u003e\u003c/strong\u003e is a senior partner in the New York office; \u003cstrong\u003eNick Noel \u003c/strong\u003eis a consultant in the Washington, DC, office; and \u003cstrong\u003e\u003ca href=\"/our-people/shelley-stewart\"\u003eShelley Stewart III\u003c/a\u003e\u003c/strong\u003e is a partner in the New Jersey office.\u003c/p\u003e\n\u003cp\u003eThe authors wish to thank Darius Bates, Tati Brezina, Avery Cambridge, Michael Chui, Christopher Copeland, Aria Florant, Pablo Illanes, Michael Lazar, Sebastian Leape, Brenden McKinney, Matthew Petric, Duwain Pinder, Ben Safran, Rachel Schaff, Shane Skov, Sanjay Srinivasan, Ben Thomas, Sarah Tucker-Ray, Zooey Wilkinson, Abigail Wozniak, Qi Xu, Nina Yancy, Ammanuel Zegeye, and Haiyang Zhang for their contributions to this report. \u003c/p\u003e"},"authors":{"targetItems":[]},"nonPartnerAuthors":{"targetItems":[]},"interactiveToUse":{"targetItem":null},"enableArticleComponents":{"boolValue":false},"relatedArticles":{"targetItems":[{"sourcePublication":{"targetItem":{"name":"McKinsey Institute for Black Economic Mobility"}},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"Building supportive ecosystems for Black-owned US businesses"},"url":{"path":"/industries/public-sector/our-insights/building-supportive-ecosystems-for-black-owned-us-businesses"},"eyebrow":{"targetItem":{"name":"Article"}},"articleType":{"targetItem":{"name":"Article"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"The right business ecosystems can mitigate or negate the effects of structural obstacles to business building for Black business owners\u0026mdash;and add $290 billion in business equity."},"standardImage":{"src":"/~/media/mckinsey/industries/public and social sector/our insights/building supportive ecosystems for black owned us businesses/black-owned-us-businesses-1536x1536.jpg","alt":"Building supportive ecosystems for Black-owned US businesses"},"heroImage":null,"thumbnailImage":null},{"sourcePublication":{"targetItem":{"name":"McKinsey Institute for Black Economic Mobility"}},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"COVID-19: Investing in Black lives and livelihoods"},"url":{"path":"/industries/social-sector/our-insights/covid-19-investing-in-black-lives-and-livelihoods"},"eyebrow":{"targetItem":{"name":"Article"}},"articleType":{"targetItem":{"name":"Article"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"The unfolding public-health and possible economic disaster of the pandemic will disproportionately affect Black Americans\u0026mdash;unless stakeholders respond immediately."},"standardImage":{"src":"/~/media/mckinsey/industries/public and social sector/our insights/covid 19 investing in black lives and livelihoods/blacklives-1190822834-standard-1536x1536.jpg","alt":"COVID-19: Investing in black lives and livelihoods"},"heroImage":null,"thumbnailImage":null},{"sourcePublication":{"targetItem":{"name":"McKinsey Institute for Black Economic Mobility"}},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"It’s time for a new approach to racial equity"},"url":{"path":"/bem/our-insights/its-time-for-a-new-approach-to-racial-equity"},"eyebrow":{"targetItem":{"name":"Article"}},"articleType":{"targetItem":{"name":"Article"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"Despite decades of efforts by public-, private-, and social-sector organizations, racial inequity has only increased. 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Before the COVID-19 pandemic, and despite the longest economic expansion in US history through much of the 2010s, the United States has been experiencing record levels of economic inequality. As our country continues to deal with a pandemic that has disproportionately affected the lives and livelihoods of women, people of color, low-income workers, and other vulnerable groups, the need for a more inclusive growing economy could not be more pressing. Contrary to fears that economic inclusion must come at the expense of economic growth, our research supports the idea that economic growth is at its best when it is most inclusive. Conversely, left unaddressed, inequality and economic exclusion threaten economic growth. By embedding equity into the development process and improving opportunities for those on the margins to meaningfully participate in the mainstream economy, we can push forward a more sustainable and equitable economy. Together, public-, private-, and social-sector leaders can work with communities to bring about the transformative change that creates an economy that works better and benefits everyone.\u003c/p\u003e\n\u003cp\u003e\u0026mdash;Bob Sternfels, Senior Partner, McKinsey \u0026amp; Company\u003c/p\u003e"}},"aboutTheAuthors":{"jsonValue":{"value":""}},"headline":{"jsonValue":{"value":"Foreword from Bob Sternfels"}},"footnotes":{"value":""},"showShareTools":{"boolValue":true},"backgroundColor":{"targetItem":{"key":{"value":"Lightest Grey"},"value":{"value":"lightest-grey"}}},"gradientDirection":{"targetItem":{"key":{"value":"Bottom Right"},"value":{"value":"bottom-right"}}},"renderMode":{"targetItem":{"key":{"value":"Collapsible"},"value":{"value":"default"}}},"isAboutAuthor":{"boolValue":false},"background":{"targetItem":null},"image":{"src":null,"alt":""}},{"mediaID":{"value":"2"},"description":{"jsonValue":{"value":"\u003cp\u003e\u003cstrong\u003eInclusive growth\u003c/strong\u003e is both process and outcome: it is about aligning how growth is achieved (or how people are provided access to opportunities) with the ultimate outcome of broad, shared prosperity\u0026mdash;that is, decent living standards that increase with economic growth. Practitioners engaged in this work say they seek to achieve outcomes that benefit all segments of society while also supporting those on the margins and reducing relative inequality.\u003c/p\u003e"}},"aboutTheAuthors":{"jsonValue":{"value":""}},"headline":{"jsonValue":{"value":"What is inclusive growth?"}},"footnotes":{"value":""},"showShareTools":{"boolValue":true},"backgroundColor":{"targetItem":{"key":{"value":"Lightest Grey"},"value":{"value":"lightest-grey"}}},"gradientDirection":{"targetItem":{"key":{"value":"Bottom Right"},"value":{"value":"bottom-right"}}},"renderMode":{"targetItem":{"key":{"value":"Collapsible"},"value":{"value":"default"}}},"isAboutAuthor":{"boolValue":false},"background":{"targetItem":null},"image":{"src":null,"alt":""}},{"mediaID":{"value":"4"},"description":{"jsonValue":{"value":"\u003cp\u003eThe practitioners, leaders, and experts in our study had varying\u0026mdash;but related\u0026mdash;views on what inclusive growth should aim to achieve:\u003c/p\u003e\n\u003cul\u003e\n \u003cli\u003e\u0026ldquo;Economic growth should be distributed fairly across society and [so] should opportunities for all.\u0026rdquo;\u003c/li\u003e\n \u003cli\u003e\u0026ldquo;Growth across different segments of the population that doesn\u0026rsquo;t leave behind vulnerable groups [such as] women, Indigenous peoples, communities of color, etc.\u0026rdquo;\u003c/li\u003e\n \u003cli\u003e\u0026ldquo;Providing the opportunity for all sections of society to participate in economic growth.\u0026rdquo;\u003c/li\u003e\n \u003cli\u003e\u0026ldquo;As our city saw exponential growth over the years, it became clear that many populations were left out and suffered as a result of the economic growth the region experienced\u0026mdash;many weren\u0026rsquo;t able to compete, participate, or share in the success.... Inclusive growth is not only including everyone but providing equity and ownership to share in the success of the region.\u0026rdquo;\u003c/li\u003e\n \u003cli\u003e\u0026ldquo;Economic growth that benefits everyone and, particularly, provides bigger benefits for those near the bottom of the economic ladder.\u0026rdquo;\u003c/li\u003e\n\u003c/ul\u003e"}},"aboutTheAuthors":{"jsonValue":{"value":""}},"headline":{"jsonValue":{"value":"In their words: What should inclusive growth seek to achieve?"}},"footnotes":{"value":""},"showShareTools":{"boolValue":true},"backgroundColor":{"targetItem":{"key":{"value":"Lightest Grey"},"value":{"value":"lightest-grey"}}},"gradientDirection":{"targetItem":{"key":{"value":"Bottom 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