Black women in the United States are paid 35% less than white men and 15% less than white women, says research from Goldman Sachs. Black women are also 10 percentage points less likely to be employed than white men.

The bank says closing that earnings gap would add 1.2 million jobs to the economy and add an estimated $300 billion to U.S. GDP per year. Extending the same improvements to Black men would add 1.7 million jobs and boost the U.S. GDP by $450 billion per year.

“One of the key takeaways of our analysis is that overcoming these inequities would make for not only a fairer, but also a richer society,” Goldman’s research team wrote in a report released Tuesday.

The report says that helping Black women get jobs — and better paying jobs — is the best way to close the massive wealth gap between Black and white families.

In the Federal Reserve’s 2019 Survey of Consumer Finances, white families were reported to have had a median wealth level of $188,200, eight times larger than the median Black family’s wealth level of $24,100. That gap has changed little since 2016 and is likely to be exacerbated by the COVID-19 pandemic.

Goldman’s report notes that the disadvantages start early in the lives of Black women, caused by systemic barriers in education, access to capital, financial education, and infrastructure.

For example, the report notes that Black women are more likely to attend under-funded primary and secondary schools. Even though Black women have closed the racial high school completion gap, a lack of resources to guide those students to and through college is likely behind the 10% difference in the share of Black women who graduated college (compared to white women).

Narrowing the gap

The report suggests a number of policies that could help close the earnings gap for Black women, such as improving enforcement of pay equity and fair housing laws, raising the minimum wage, improving school funding, raising child tax credits, and boosting health insurance coverage for Black households.

Goldman writes that the private sector has a role to play as well. In addition to investing in projects like affordable housing and high quality health care facilities, the report recommends banks in particular increase access to credit and prioritize relationships with Black women-owned businesses.

Alongside the report, Goldman Sachs announced it would pledge $10 billion over 10 years to invest in Black women.

The banking industry has a complicated history with racism, enabling decades of “redlining” that denied Black families the opportunity to get mortgages in certain neighborhoods. Although the practice is outlawed today, data shows Black homebuyers continue to receive higher interest rates than buyers on average.

Internally, the industry is also attempting to uproot under-representation particularly in senior roles. A McKinsey report from last year notes that people of color account for 40% of entry-level jobs in financial services. But at the C-suite level, nine out of 10 people are white.

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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