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Ask the White Guy: Why Are Disparities in Income Distribution Increasing?

Luke Visconti’s Ask the White Guy column is a top draw on DiversityInc.com. Visconti, the founder and CEO of DiversityInc, is a nationally recognized leader in diversity management. In his popular column, readers who ask Visconti tough questions about race/culture, religion, gender, sexual orientation, disability and age can expect smart, direct and disarmingly frank answers.

Ask the White Guy Income DistributionQuestion:
What do diversity and inclusion have to do with income distribution, such as in “The United States of Inequality”
from Slate? 

Answer:
The broad subject of wealth disparities is a source of constant discussion in our office. What “diversity” in a business context means for most companies is maximizing the efficiency and effectiveness of talent development; you want the best and brightest of ALL groups and want them to equitably be developed—and it is of immense advantage to companies that do it well, especially if their competitors don’t.

However, where I think the subject truly makes money for companies (and societies) is that when you harness equitable talent development to the purposeful development of innovative and nimble corporate (and societal) cultures, you have a force multiplier that dramatically outpaces competition. That means taking diversity training beyond compliance and making a real business case for the four stages of diversity management.

In a country-size economy, it will maintain economic superiority, but the nature of economics is that when one group wins, all win because they have to produce the goods and services demanded by increased wealth. Winning in this context isn’t bad; it’s highly desirable.

A Distribution of Wealth

I’m not sure that we’re seeing anything more than a return to traditional distribution of wealth because very few people as a percentage are truly talented, and this has been consistent. What hasn’t been consistent is access for talent to express itself, and from time to time, markets expand to include more people than typical. For example, I think the post-war “middle class” was an artificial artifact of our not having to suffer massive strategic bombing and TWO generations of dead young men (our casualties in World War I were nothing compared to those of France, Germany and England).

The last 100 years have been a process of expanding workforce needs forcing expanding participation of workers; women haven’t had the vote for 100 years yet, and Jim Crow ended less than 50 years ago. When we needed more workers, the workforce market had to expand past Christian Anglo men. When the new groups to the table gained a modicum of power, they demanded their rights. Those rights increased wealth, and that wealth consumed more services and products—a virtuous circle. Good for America. Good for the world. [Click on the images below to view and enlarge the timelines.]

But I’d argue that economic growth didn’t come from labor, the labor came from innovation—and innovation created the economic growth that drove the demand for labor. Innovation is facilitated by a free society, and our society is more “free” than anywhere else (acknowledging our faults, but giving us our just credit). In other words, despite our faults, America gives access for talent to find means of success better than anywhere on Earth.

Recovery Through Education

So if we are returning to a traditional distribution of wealth (more wealth concentrated in the hands of fewer people), what is the answer to the discordant societal damage from inequitable distribution of wealth?

The article on slate.com touches on the one thing I think will save America’s pre-eminence: education.

In my opinion, only a certain percentage (a small percentage) of people have what it takes to be in the top 5 percent—or the top 1 percent. We need to maximize the ability for people to reach that level because they create the things that the rest of the people live on; their innovation creates wealth, which in turn creates economic (and labor) demand. We destroy our potential by limiting good education to a precious few. I believe that we do this because people intuitively feel that if “they” win, “I” lose.

There is also a cynical group of very wealthy people who will prey on the common human emotion of xenophobia to aggregate and restrict access. So we end up with crappy schools for Black and brown people, the prison-industrial complex and healthcare disparities. We kill off that small percentage of truly talented people out of the bigotry that, generally speaking, we mistakenly believe that “keeping ours” is dependent on “keeping them” in their place. Foolishness—and that’s being proven in today’s economy.

Read Ask the White Guy on Racism, Bigotry & White Privilege.

How to Bridge Gaps With Community Outreach

The question for America is: Can we keep the destructive forces lagging behind the constructive forces? I sure hope so, and that’s why all my philanthropy is dedicated to educational disparities, such as the DiversityInc Foundation and Rutgers Future Scholars.

For corporate America, the decision on managing this overtly must be made from the top. I’d say that most companies on a sustainable path are actively involved with managing diversity because the face of educated talent has become much more diverse, and that trend is increasing. Watch the video clip below to hear KPMG CEO John Veihmeyer discuss his best practices for communicating diversity goals throughout the organization.

Companies that are dragging their feet on this one aren’t on the right side of the demographic shift, and if you can say that for your place of employment, it’s a flashing red light that your future is not secure; get out if you can.

I think the larger and far more economically powerful discussion should be taking place around how diversity can build innovation—how the very culture that develops talent equitably has far more potential to have dramatically better innovation and nimbleness than competitors that do not. For cutting-edge best practices, watch our recent innovation web seminar from Capital One and McGraw-Hill, and read Our First Innovation Fest! 10 Companies Use Diversity to Drive Change.

Think about it this way: If “diversity and inclusion” programs can help you achieve a 5 percent improvement in productivity from better human-capital performance (higher engagement, lower turnover/regrettable loss, etc.), that’s wonderful. If “diversity and inclusion” programs can help you build the innovation that facilitates the next generation of pharmaceutical advances or transportation improvement or first-mover advantage in your marketplace, well, you’d be a fool not to pick a workplace that has a demonstrable advantage over one that does not—even if you’re a white, Christian, heterosexual man with no disabilities. Anyone with an evolved sense of survival knows that your chances of success are far better at the successful company. Especially if you’re talented.

Before you jump to sending me an email that I’m beating up on one side or another, please think about this: I am taking a side. I am an optimist and I believe that all people are created equally. If you aren’t or don’t, that’s fine, but there’s no parsing this basic truth: People are created equally; therefore, talent is distributed equitably. Anything less than equitable cultivation of talent is subtractive from optimum performance.

If you are an executive, you have a fiduciary responsibility to your investors. If you’re a worker at a company that operates with this ethos (and it is a matter of ethics and values), then you do NOT have the right to work contrary to your company’s stated interests. It’s that simple.

For more on corporate values, read Ask the White Guy: Decision Making, Clarity of Values & What to Do When It Goes Horribly Wrong

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9 Comments

  • James Coles III

    I agree with you that the fundamental problem is education of the children, where influential people can send there kids to better schools. So, how do we make the schools better or allow disadvantaged children to get to a better school? I think that system is broken. There are many ideas that could help: business involvemnt in the local schools, school choice for families, school competition between schools, holding teachers accoutable.

    • Luke Visconti

      The answer is clear: If people are created equally, then anything less than equity in outcome defines a less than optimum outcome for the common good. Therefore, there must be equity in educational OUTCOME regardless of any other factors. In other words, the percentages of graduation and higher-education attendance should be statistically the same across geography and income across our nation. But because poverty and race are connected in the United States, this is not palatable to a definable group of people who are working against our common good (do a web search on the people working against reforming Stand Your Ground laws, go to the SPLC website and check the growth of hate groups, etc.). Equitable outcome may mean building dormitory high schools in poor neighborhoods and keeping schools open 365 days a year – and serving three meals a day. It is poverty that destroys potential as poverty introduces chaos into lives and forces people down Maslow’s Hierarchy. You cannot focus on studying if you are hungry and have unstable/insufficient shelter. Will this be expensive? Sure. But probably not as expensive as maintaining a military/intelligence complex that is larger than the next 17 militaries added together. But I don’t think we have to trade one thing for another – education is an amazingly good investment. Each class of 200 Rutgers Future Scholars is estimated to save the state of New Jersey $40,000,000 in their lifetime. Further, what’s more important to our “security” than a viable world-class innovative workforce? Luke Visconti, CEO of DiversityInc

      • What a ludicrous statement. Everyone is created equal in the eyes of the law, but to say they are created equally in terms of talents, etc. is insane. I want to be in the NFL, but I don’t run a 4.4 forty and am only 5’6″. The NBA is for tall people. I have no musical ability. I can’t get into Harvard or Yale; my grades and scores are not high enough. There is equality before the law, but equality of outcomes is an impossibility because not everyone is motivated the same or born with the same abilities. Utter nonsense is what you espouse.

        • Luke Visconti

          Everyone individually is not equal, but overall, we all fall in a pattern of natural abilities, including intelligence, that is statistically the same for all people – women, men, Black, Latino, Asian, etc., because there is no biological basis for race – we are all one race. There will be people with more and less ability in every group. You are entitled to your own opinion, you are not entitled to your own facts. Nor are you entitled to an opinion that runs contrary to the stated values of your employer.
          You are entitled to those opinions from the comfort of your couch, as you sit with the remote in your hand, watching FOX.
          Luke Visconti, CEO of DiversityInc

  • The sheer amount of data and information provided in this article, its opinion, and the links, is vast. Much appreciated.

    One of the challenges to education as a solution is that supply and demand continues to erode the value of education. There was a time when graduating high school set one apart. Then everyone did it, and getting an undergrad degree made the difference. Then everyone did it, and a post-graduate degree became the thing…the cycle continues, the floor raises.

    I like the framework and conclusion you’ve drawn – we’re better with diversity, so it should be recognized as a profitable enterprise to be more diverse and improve access for the best and brightest (and make room for all people at their various levels of contribution to society).

    • Luke Visconti

      You have a point – however, the requirements for the workforce demand more education as the sophistication of the work demanded by the American economy has increased. This makes inclusion more important than ever as I would think it’s logical that as the sophistication of work has increased, the percentage of who is capably talented for the work at hand has narrowed. Luke Visconti, CEO of DiversityInc

      • I appreciate this conversation with you.

        Yes, it’s agreed we can’t go backwards and seek less education.

        Your article does point to a real issue, and speaks to the burgeoning absurdity of arguing that, as visible minorities tip the 50% portion of general society, we should drop the “minority/majority” labels. Yet, penetration at the highest levels of power, decision-making and access remains below the national average for diversity penetration at other levels.

        It’s still an “old boys’ club” at the higher levels. And the growing disparity we recognize is indeed a reflection of a combination of factors including the lack of diversity of hands divvying up the pie.

  • I urge you and your staff to think a little more about how we are going to even out the disparities in income. I think your assertion about limited talent in fact supports the argument that income should be concentrated in the top 1 % to supply the innovative energy that you claim our economy relies on. In my opinion 99% of the population has the ability to innovate. I think your argument about talent is pandering to the more widely held beliefs of capitalism and contradicts and undermines your other assertion that people are created equally and deserve equitable treatment. As long as we continue to believe that talent is rare we will have a system to perpetuate some kind of discrimination for the purpose of concentrating wealth. See part of your opinion piece below.

    ” In my opinion, only a certain percentage (a small percentage) of people have what it takes to be in the top 5 percent—or the top 1 percent. We need to maximize the ability for people to reach that level because they create the things that the rest of the people live on; their innovation creates wealth, which in turn creates economic (and labor) demand. We destroy our potential by limiting good education to a precious few. I believe that we do this because people intuitively feel that if “they” win, “I” lose.

    • Luke Visconti

      You miss my point – whatever the percentage is – 1%, 5%, 30% – if we exclude broad swaths of our population from having the preparation necessary to contribute, we sharply limit our potential. That said, I stand by my estimation. In my experience of being on three boards of higher-education institutions, the Chief of Naval Operations Executive Panel and having an extremely high degree of interaction with CEOs, senior executives, flag-rank officers and people who have Ph.D’s, I can tell you from observation that I’d estimate that a “precious few,” maybe 5%, of the most highly educated people in this country are truly innovative and are given the sharp delineation of opportunity (that excludes people from being in those groups that I interact with). I think the excluded population can be expected to be no better or worse than the group that is currently INCLUDED. Therefore, if we INCLUDED the groups we currently exclude (which I’d estimate to be 40% of our population), then we’d increase our available pool of truly innovative and contributing citizens by 40%. Our GDP would likely go up by a greater percentage as innovations usually leverage and spawn other innovations. No more deficit. Lower taxes. Problems solved. Luke Visconti, CEO of DiversityInc

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