Digital racial gap could ‘render the country’s minorities into an unemployment abyss,’ says Deutsche Bank
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Tech is playing an ever-greater role in work and the economy more broadly, meaning those who don’t have access and lack training will be under-prepared for jobs of the future. According to a new study from Deutsche Bank, minorities are disproportionately impacted and “large chunks” of Black and Hispanic people could get shut out of the job market.
“If this digital racial gap is not addressed, in one generation alone, digitization could render the country’s minorities into an unemployment abyss,” Deutsche Bank said Wednesday in a note to clients.
Following a bottom-up societal study, the firm found that 76% of Blacks and 62% of Hispanics could be under-prepared for 86% of jobs by 2045.
“Due to the structural and infrastructural inequities, Blacks and Hispanics are 10 years behind Whites in levels of broadband access and almost 4 times more Blacks have poor Tech connectivity than Whites,” the firm said. “In the era of Tech innovation, a year can be a lifetime. The impact of being 10 years behind is a staggering manifestation of multiple aspects of economic and societal development.”
Tech inequality often starts during childhood, and can be broadly defined by three categories: access, training and hardware. Deutsche Bank found, for example, that 83% of White people in the U.S. have a personal computer, compared with 51% and 60% of Hispanic and Black people, respectively.
Covid-19 has not only hit minority communities the hardest, but it’s also illustrated the digital racial gap. Deutsche Bank looked at mobility data for majority Black and White neighborhoods across New York, Los Angeles and Chicago, and found that Black people left their homes 135% more than White people during the lockdown peak in April.
“Clearly, poor access to Tech connectivity and work-from-home jobs rendered minorities with few choices but to venture out of home to make a living, even with peril to their lives,” the firm’s strategists led by Apjit Walia said.
Big Tech can help
The growing digital racial divide is playing out as Big Tech comes under increased scrutiny, but primarily for privacy concerns. Deutsche Bank noted that worrying about privacy is a luxury for those who don’t have more immediate concerns, such as where to go for internet access.
While looking for a solution that could begin to bridge the divide, Deutsche Bank said that Big Tech could play a pivotal role. The firm argues that if these large companies were to commit $15 billion over the next five years — less than 1% of the market cap gains for the five largest tech companies since the start of the pandemic — meaningful initiatives could be put in place.
The program, which would target the roughly 10 million Black and Hispanic households with annual incomes of less than $30,000 per year, would be broken into three parts: $5 billion for broadband connections, $1 billion for computers and $9 billion for training programs. The latter would be the “most consequential,” as it would provide foundation skills required for the digital age.
Such an initiative could also provide positive spin around the largest tech companies, which consumers are growing more weary of. According to a survey from Deutsche Bank, just one in three Americans holds a positive view of Big Tech.
“For Big Tech to come together and find a solution or a small step in the direction of the solution to one of the most egregious divides in our society could change the national discourse on these companies,” the firm said. This, in turn, could boost tech companies’ long-term prospects as stakeholder capitalism becomes more and more important.
Such an initiative would not, of course, solve the numerous structural issues hindering social equality. But it could be a start.
“There are many programs that currently exist in principle which aim to address the digital racial divide, but one that is sustained, committed and backed by cash rich companies is still conspicuous by its absence,” Walia said.
– CNBC’s Michael Bloom contributed reporting.
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